Market Review 1st April 2025
Simplify the craziness
DAILY REVIEW
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4 min read
Markets Rally in Volatile Session Before Trump’s Tariff Reveal
Key Takeaways:
The S&P 500 and Nasdaq Composite posted gains as markets braced for Trump’s upcoming “Liberation Day” tariff announcement.
Dow Jones Industrial Average was flat, reflecting investor caution.
Growth sectors like communication services and consumer discretionary outperformed, while healthcare lagged.
Eurozone inflation slowed, with CPI rising 2.2% YoY in March, down from 2.3% in February.
U.S. job openings fell to 7.6 million, indicating a slight cooling in the labor market.
Manufacturing sector contracted, with ISM Manufacturing PMI dropping below 50.
Bond yields declined, with the 10-year U.S. Treasury yield falling below 4.2%.
Markets Finish Mostly Higher Amid Tariff Speculation
North American equity markets ended Tuesday with mixed results, as traders awaited the April 2 U.S. tariff announcement. The S&P 500 and Nasdaq Composite managed to close higher, while the Dow Jones Industrial Average was mostly flat. The biggest gainers were growth-oriented sectors, including communication services and consumer discretionary, while healthcare stocks declined—Johnson & Johnson (JNJ) was a notable underperformer.
European markets were buoyant following inflation data from the Eurozone, which showed a slight decline in CPI growth to 2.2% YoY, down from 2.3% in February. This suggested moderating price pressures, easing fears of aggressive monetary policy moves from the European Central Bank (ECB).
In fixed income, bond yields trended lower, with the 10-year U.S. Treasury yield closing below 4.2% and Canada’s 10-year bond yield falling to 2.93%. This reflects investor uncertainty ahead of tomorrow’s key announcement.
All Eyes on April 2 Tariff Announcement
The upcoming U.S. reciprocal tariff plan has weighed on markets since mid-February, contributing to a nearly 8% drop from all-time highs in the S&P 500. With the announcement expected tomorrow, markets are eagerly waiting for clarity on whether the U.S. will impose across-the-board tariffs or implement targeted levies.
Potential Market Impact:
A broad-based tariff approach could lead to a significant economic slowdown, raising costs for U.S. businesses and consumers.
Targeted tariffs on specific trading partners might be less disruptive but could still spark retaliatory measures from other economies.
Uncertainty surrounding trade policy has already reduced corporate confidence, impacting hiring and capital investment decisions.
Despite these concerns, diversification strategies have proven effective during recent market volatility. While U.S. large-cap stocks fell over 4% in Q1, international equities outperformed, with:
Developed markets gaining 7%
Emerging markets rising 3%
Canadian large-cap stocks gaining 1.5%
Maintaining a well-diversified portfolio remains key in navigating ongoing uncertainties.
Labor Market and Manufacturing Data in Focus
Two important economic indicators released on Tuesday provided insight into the current state of the U.S. economy:
1. JOLTS Job Openings Report
Job openings declined to 7.6 million, slightly below expectations.
Despite this drop, available jobs still outnumbered unemployed workers, signaling continued labor market strength.
A cooling labor market suggests moderation in wage inflation, which could support a potential Federal Reserve rate cut later in 2025.
2. ISM Manufacturing PMI
The index slipped from 50.3 to 49, indicating a return to contraction.
The new orders component fell to 45.2, marking its lowest level since May 2023.
Certain industries saw an uptick in orders as customers rushed to stock up before tariffs take effect.
If tariff-related uncertainty is resolved, a manufacturing rebound could support broader economic growth in 2025.
Market Reaction and Economic Outlook
Tuesday’s session reflected investor anxiety over tomorrow’s key tariff announcement. Market participants remain in the dark on the scope of the plan, leading to volatile trading conditions.
Key Market Metrics:
S&P 500 rose 0.4%, extending Monday’s gains.
Nasdaq Composite gained 0.9%, leading the market rally.
Dow Jones Industrial Average remained flat, reflecting caution.
Potential Market Risks:
A more aggressive tariff plan could further weigh on consumer spending and corporate margins.
The manufacturing slowdown suggests economic softness, increasing recession risks.
Inflation remains a concern, with higher costs for manufacturers already emerging due to trade policy uncertainty.
Looking Ahead: Key Events to Watch
Investors should prepare for a critical week of economic data:
April 2 – U.S. Tariff Announcement
Markets will analyze the specifics of Trump’s reciprocal tariff plan.
Potential retaliatory measures from global trade partners could impact multinational corporations.
Market volatility is expected to remain elevated until details are clarified.
April 5 – U.S. Nonfarm Payrolls & Unemployment Report
Economists expect 123,000 new jobs added in March.
The U.S. unemployment rate could tick up to 4.2%, reflecting a gradual labor market slowdown.
Canadian employment data is also due, with expectations of 23,000 jobs added and unemployment rising to 6.7%.
Final Thoughts
Tuesday’s market performance underscored the ongoing investor uncertainty ahead of tomorrow’s key tariff decision. While the Nasdaq and S&P 500 managed gains, the Dow’s flat performance highlighted the cautious sentiment surrounding trade policy risks.
Investment Strategies in Volatile Markets:
Diversification remains crucial as global stocks outperform U.S. equities.
Monitoring labor market and inflation trends can provide insights into future Federal Reserve actions.
Staying flexible in response to new trade policies will be key for long-term investors.
With major economic events ahead, market participants should be prepared for continued volatility as global trade tensions and economic data continue to shape investor sentiment.
References
Eurozone Inflation Data – European Central Bank
JOLTS Job Openings Report – Bureau of Labor Statistics
ISM Manufacturing PMI – Institute for Supply Management
U.S. Treasury Yields – U.S. Department of the Treasury
Stock Market Indices – Yahoo Finance
U.S. Reciprocal Tariff Plan – The White House
April 5 U.S. Jobs Report – Bureau of Labor Statistics
Canada’s Employment Data – Statistics Canada
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