28.04.25 - “Risk on” - despite trade and inflation risk

Tariffs remain a major topic. Rumors of breakthroughs have been denied, and trade tensions are already impacting some supply chains. Early indicators show a marked slowdown in shipments from China to the US. Some retailers have issued warnings that this could lead to shortages of goods. Meanwhile, several factories in China have halted production and sent workers home as the effects of US tariffs take hold. In response, China has announced additional economic support measures and is planning further aid for companies struggling with the external shock.

On the corporate front, this week marks the busiest stretch of the earnings season. Four of the so-called "Magnificent Seven", Apple, Amazon, Microsoft, and Meta, along with many other major firms, are scheduled to release their quarterly reports.

Markets: Nasdaq Futures slightly down, gold fell below USD 3’300, US dollar is consolidating after recent losses, US interest rates trading sideways with the 10-year yield between 4.25 to 4.3%, European and Asian indices mostly higher. Cryptos reflect risk on stance with prices increasing.

My view: Investor sentiment has shifted to a risk-on stance, pushing markets higher over the past few days. However, the upside appears limited, with risks still skewed to the downside in my view. Supply chains are already feeling the impact, and uncertainties for corporates persist, as current tariff suspensions are only in place until the end of July, with no trade deal yet in sight.

Tariffs are likely to remain, as President Trump appears determined to generate additional revenue. His preference for high tariffs constrains potential market gains, as elevated tariffs are expected to slow global growth and drive up prices, ultimately weighing on consumer demand.

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