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Earnings season gets into the spotlight, while trade concerns remain the main focus

Investors were holding back at the beginning of this week ahead of a flood of quarterly figures in the coming days from companies such as Novartis, Microsoft, Pfizer, Coca-Cola, McDonald's, Amazon, and Apple. US Treasury Secretary Bessent emphasised that China must take steps to reduce trade tensions, considering the trade imbalance between the US and China. US stock markets remained cautious on Monday and equity indices in the Asia-Pacific region made some gains on Tuesday. 

  • Date
  • Author Alessandro Fezzi, LGT Research Content & Publications
  • Reading time 5 minutes

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Investors on Monday showed caution on US stock markets after recent strong recoveries, lacking concrete news on the trade dispute and awaiting a slew of corporate earnings and key economic data. Despite some fluctuations, the Dow Jones Industrial rose 0.3% to 40,227.59 points, and the S&P 500 increased marginally (+0.06%) to 5528.75 points. The Nasdaq 100, influenced by the tech sector, fell slightly by 0.1% to 19,427.29 points, recovering significantly from the day's low. IBM shares gained 1.6% on a major investment plan, while Nvidia dropped 2.1% due to competition concerns.

Asian stocks rise amid tariff concerns

Asia-Pacific markets mostly increased on Tuesday as investors judged the impact of US President Trump’s tariffs on corporate earnings and upcoming Wall Street economic data. Mainland China’s CSI 300 index decreased by 0.1%, while Hong Kong’s Hang Seng Index slightly rose by 0.1%. India’s Nifty 50 gained 0.2% and South Korea’s Kospi index climbed 0.6%. Australia’s S&P/ASX 200 advanced 1%, while Japanese markets remained closed due to a public holiday.

China urged to de-escalate trade tensions

US Treasury Secretary Scott Bessent stated on Monday that China must take steps to reduce trade tensions, citing the imbalance in trade volumes between the two countries. Speaking on CNBC, Bessent highlighted the unsustainability of high tariffs and noted progress in US trade negotiations, particularly with India. President Trump's recent announcement of global tariffs has kept markets uncertain, but Bessent suggested that a trade deal with India could be imminent. Mr. Bessent added that several countries have proposed favourable tariff deals. He emphasised the consistency of the US trade deal template and highlighted ongoing discussions with China, urging de-escalation. Bessent also noted potential trade agreements with Japan. Additionally, he reaffirmed the US's strong dollar policy and predicted an ECB rate cut to lower the euro's value.

German fiscal boost insufficient to counter tariffs

Germany’s new infrastructure spending bill will support growth, but it will not fully offset the negative impact of the tariffs, according to Alfred Kammer, the IMF’s European director. The IMF now projects euro area growth at 0.8% for 2025 and 1.2% for 2026. Kammer also recommended that the ECB cut interest rates only once more this year, despite ongoing growth risks. The IMF had reduced its euro area growth forecast last week, citing President Donald Trump’s tariff policies. 

Corporate news in focus: Quarterly figures from Adidas, AstraZeneca, Coca-Cola, Deutsche Bank, Honeywell, HSBC, Logitech, Novartis, PayPal, Pfizer, S&P Global, Starbucks, United Parcel Service, and Visa.

Economic data in focus: US goods trade balance (14:30) and US S&P/Case-Shiller home price index (15:00).
 

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.