Stock markets started the week on a downward trajectory following President Donald Trump’s announcement of new tariffs on imports from Mexico, Canada, and China. The U.S. planned to impose a 25% tariff on goods from Mexico and Canada, alongside a 10% tariff on Chinese imports.
However, by the end of Monday, the tariffs on Mexico and Canada were temporarily postponed to allow for further negotiations.
This brief relief, combined with strong corporate earnings, helped markets recover some of their initial losses as the week progressed.
Trump defended the 25% tariff plan, citing the need to protect American jobs and industries. “We must protect our workers and our industries,” he stated, emphasizing his administration’s push for domestic production over foreign imports.
While the tariffs aim to support U.S. industries, they could also increase production costs, leading to higher prices for consumers.
For Mexico and Canada, the proposed tariffs pose significant economic risks, particularly in manufacturing and agriculture, which are heavily dependent on trade with the U.S. A decline in exports could slow economic growth and impact GDP in both countries.
Meanwhile, the 10% tariff on Chinese imports escalates ongoing trade tensions between the U.S. and China, which have been fueled by disputes over intellectual property rights and trade imbalances.
The move is expected to drive up costs for American businesses and consumers while potentially weakening China’s position as a dominant global exporter.
Equity markets experienced fluctuations throughout the week, with the S&P 500 and Dow Jones Industrial Average closing slightly lower amid a series of market-moving developments.
Meanwhile, the tech-heavy Nasdaq managed a modest gain of just under a tenth of a percent, despite widespread volatility driven by key corporate earnings and economic concerns.
Technology stocks played a significant role in market swings, with companies like Apple and Amazon seeing notable price fluctuations due to ongoing supply chain disruptions and regulatory pressures. Tesla also faced downward pressure following a mixed earnings report, adding to the uncertainty.
Meanwhile, financial giants JPMorgan Chase and Goldman Sachs sparked further market discussions, as their quarterly results fueled speculation about the economic outlook and future interest rate decisions.
Despite the broader volatility, the Nasdaq’s resilience was supported by better-than-expected earnings from major tech firms like Microsoft and Alphabet, which helped stabilize investor sentiment.
However, contrasting performances within the sector saw companies like Facebook and Netflix decline due to concerns over slowing user growth and intensifying competition. This divergence underscored the mixed trends shaping the tech sector’s performance for the week.
Europe’s Markets Rise on Strong Earnings and Economic Optimism
European stocks ended the week on a largely positive note, with key indices such as the EU 50 and Germany’s DAX posting gains. Investor confidence was buoyed by encouraging economic data and strong corporate earnings that exceeded expectations.
Leading the charge were industrial and technology firms, with Siemens reporting robust quarterly results and SAP benefiting from increased demand for its software solutions. Luxury goods companies, including LVMH, also saw gains as consumer spending in Europe remained steady.
The combination of resilient economic indicators and solid corporate performance helped drive optimism in European equities, counterbalancing concerns from global markets.
MIDDLE EAST
Japanese stocks tumbled over 1.5% as traders sought safety in response to rising expectations of interest rate hikes by the Bank of Japan (BoJ). The sell-off was triggered by speculation that the BoJ might shift its monetary policy stance amidst increasing inflationary pressures and a strengthening economy.
Market analysts have been closely monitoring the BoJ’s comments and economic indicators, leading to heightened expectations that the central bank may soon begin to raise interest rates from their historically low levels. This potential shift is seen as a response to the need to manage inflation, which has been creeping up due to global supply chain issues and rising commodity prices.
As traders reacted to these developments, they moved away from equities and sought safer investments, such as government bonds and cash. This flight to safety reflected concerns about the impact of higher borrowing costs on corporate profits and economic growth, leading to the significant decline in Japanese stock prices.
Uber Technologies Inc. rallied over 11%, making it our stock of the week following its latest earnings report, which showed that revenues and gross bookings exceeded estimates. On the company’s earnings call, CEO Dara Khosrowshahi acknowledged that while Uber continues to achieve solid growth and margin expansion, there are notable currency risks, particularly concerning operations in Argentina, Mexico, and Brazil—three of the top 20 countries where Uber operates.
Uber is listed on the New York Stock Exchange (NYSE) under the ticker symbol UBER. The currency risks mentioned by Khosrowshahi arise from the potential volatility in exchange rates that could affect the company’s revenues when converting local earnings back to U.S. dollars. While the top line may experience some impact due to these fluctuations, the bottom line is somewhat insulated because drivers and merchants are paid in local currencies, creating a natural hedge against currency risk. This means that while Uber may face challenges in revenue reporting due to currency changes, its operational costs remain stable, helping to protect overall profitability.
The CEO confirmed the company’s commitment to Autonomous Vehicles and positioned Uber as the indispensable go-to-market partner for autonomous players through aggressive investments. This announcement prompted many analysts to maintain a Buy rating on the stock, with the majority raising their price targets. This positive outlook was reinforced on Friday when prominent investor Bill Ackman, founder of Pershing Square Capital Management stated, “We believe that Uber is one of the best managed and highest quality businesses in the world.”
COMMODITIES
Silver, Gold, and Copper all performed well over the week, with gains of 1.63%, 2.24%, and 7.24%, respectively. Natural Gas experienced a significant increase of 8.71% for the week, largely due to China’s announcement of retaliatory tariffs of 15% on its Natural Gas exports to the U.S.
This surge in Natural Gas prices can be attributed to the market’s reaction to geopolitical tensions and trade disputes between the U.S. and China. The imposition of tariffs typically raises costs for importers, which can lead to supply concerns and push prices higher. As China imposed tariffs on its exports, traders anticipated a potential decrease in the availability of Natural Gas in the U.S. market, driving prices up as demand remained steady or increased.
Oil prices fell by 2.11%, marking the third consecutive week of declines. This downward trend in oil prices can be attributed to various factors, including oversupply concerns, changes in demand, or geopolitical issues affecting production.
In contrast, several agricultural commodities experienced gains, with Wheat rising by 4.16%, Corn by 1.14%, Sugar by 0.72%, and Coffee by 7.01%. These increases could be influenced by factors such as weather conditions, harvest yields, or shifts in consumer demand.
On the flip side, Cocoa prices dropped for the second week in a row, losing 8.82%. This decline is primarily due to slowing demand for cocoa as high prices compel chocolate manufacturers to alter their recipes, often substituting cocoa with other ingredients to manage costs.
By BBC News
