Cautious Calm in Global Markets Amid U.S. Tariff Freeze Hints:
Global financial markets experienced a wave of cautious calm after U.S. President Donald Trump
hinted at the possibility of suspending tariffs on certain consumer electronics
and a potential freeze on tariffs for automobile imports and spare parts.
This move boosted markets and sparked speculation about the potential for future trade settlements through negotiation.

Contents

Notable Recovery

Mixed Reactions

Market Insights

S&P 500 in Focus

Major Companies

Investment Strategies

Dollar Under Pressure

The Federal Reserve

China

Notable Recovery in Stock and Bond Markets

In this context, the S&P 500 index rose by approximately 1% after futures pared earlier losses.
Japanese stocks gained more than 1%,
driven by strong performance from companies like Toyota Motor and Honda Motor.
Apple shares continued to rally for the second day,
climbing over 6%, while Chinese and Hong Kong markets showed partial recovery despite ongoing volatility.

In fixed-income markets, U.S. Treasury bonds ended a five-day losing streak,
accompanied by a slight rise in the U.S. dollar index,
which regained part of the losses it recorded earlier in the week.

Mixed Reactions and Recession Warnings

Despite the apparent optimism, political volatility continues to worry investors.
While Trump hinted at a more flexible approach,
JPMorgan CEO Jamie Dimon warned that efforts to reshape
the global trade system could push the U.S. economy into a recession.
Meanwhile, Hideyuki Ishiguro from Nomura Asset Management
said the Japanese market may have bottomed out,
with signs of a potential recovery emerging.

Conversely, Trump’s remarks on automotive tariff exemptions
added further uncertainty to the direction of trade policy,
raising concerns over consumer price hikes and supply chain disruptions.
The U.S. administration also escalated trade tensions by launching investigations
that could lead to tariffs on semiconductors and pharmaceuticals.

Market Insights: Between Optimism and Caution

This cautious calm in global markets is largely attributed to investors’ hopes
for negotiated trade resolutions despite ongoing political turbulence and policy ambiguity in the U.S.

Matt Maley of Miller Tabak noted that markets are beginning to anticipate a softening in U.S. trade stances
. Chris Larkin from E*TRADE, owned by Morgan Stanley, emphasized the need for clearer signals from the White House.
Similarly, Kyle Rodda from Capital.com warned that risks to the real economy remain,
with market confidence still shaky and high-risk assets exposed to continued volatility.

S&P 500 Faces Historic Volatility

Despite the recent gains, the S&P 500 remains down year-to-date in 2025,
having suffered a 15% loss due to tariffs imposed on imports from China, Canada, Mexico, and the European Union.
Although it rebounded following the tariff delay announcement,
data from Ryan Detrick of Carson Group shows that a 15% drop in April has occurred 16 times since 1957,
and only three of those years ended in gains: 1982, 2009, and 2020.

Cali Cox from Ritholtz Wealth Management noted
that markets may be approaching a “capitulation moment,”
suggesting widespread fear could pave the way for a future rebound.

Major Companies in Focus as Volatility Drives Gains

In the corporate arena, Goldman Sachs reported its best quarter ever in equity trading,
while JPMorgan and Morgan Stanley also posted record-breaking results driven by market swings.

According to IDC, iPhone shipments rose by 10% in Q1,
and Mark Zuckerberg testified in federal court amid the FTC’s case to break up Meta.
Meanwhile, Nvidia announced plans to invest $500 billion in AI infrastructure in the U.S.,
and Intel agreed to sell 51% of its programmable chip unit, Altera.

Investment Strategies: BlackRock Bullish, Citi Cautious

Analysts at BlackRock, led by Jean Boivin and Wei Li,
increased their exposure to U.S. and Japanese equities,
citing lower risk of a financial catastrophe and more stable policy conditions.
This led them to extend their tactical outlook from 6 to 12 months.
In contrast, Citigroup, led by Beata Manthey,
downgraded U.S. equities due to pressure on economic growth and corporate earnings.

Dollar Under Pressure and the Fed on Standby

U.S. Treasury Secretary Scott Besant sought to reassure markets,
denying that foreign investors were dumping U.S. bonds and pointing to strong demand
in recent 10- and 30-year bond auctions.
He also dismissed concerns about dollar weakness, insisting that the U.S. still holds the global reserve currency.

However, Garfield Reynolds from Markets Live argued that the ongoing trade war
undermines the dollar’s position as a safe haven, possibly pushing it into a long-term downward trend.

The Fed: Inflation Is Temporary, Rate Cuts Possible

Christopher Waller, a member of the Federal Reserve Board,
presented two scenarios for how trade policy might impact the U.S. economy.
In both cases, he concluded the inflationary effect would likely be temporary.
He added that interest rate cuts would be a strong option
in the second half of 2025 if inflationary pressure remains limited.

China on the Move: Xi Jinping’s Asian Tour

On the geopolitical front, Chinese President Xi Jinping began his first foreign tour of the year,
visiting Vietnam, with plans to travel to Malaysia and Cambodia.
Analysts see this tour as an effort by China to present itself
as a more stable trading partner than the U.S. under Trump’s leadership.

Cautious Calm in Global Markets Amid U.S. Tariff Freeze Hints

Cautious Calm in Global Markets Amid U.S. Tariff Freeze Hints

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