📊 Market Report.
🌀 We generally try to bring coherence and order to the reports each morning, but the flood of chaotic news is such that it makes it especially complicated. Below I leave you a cascade of the craziest news stories from the last 24 hours.
🇺🇸 President Donald Trump, through his social networks, announced yesterday an immediate increase in the tariff imposed on China to 125%, in response to what he described as a lack of respect for world markets and unsustainable commercial practices. He also emphasised that more than 75 countries have requested negotiations with the United States on economic and trade issues, which led him to authorise a 90-day pause and a reduction of the reciprocal tariff to 10%, also with immediate effect, as a gesture of cooperation and good faith.
🤔 Yesterday, when a journalist asked Trump why he decided to put the tariffs on hold, he replied: ‘I thought people were getting a little bit too excited. They were getting a little bit nervous. They were getting scared.’ Perhaps billionaires from the technology sector put pressure on Trump to stop the bleeding?
📈 Bullish V-shaped rebound on the stock markets yesterday, with a totally manic depressive behaviour, the markets jumped for joy with the announcement of a tariff break from Trump on the rest of the world with the exception of his great commercial enemy, China.
😂 While the networks were ablaze with viral memes of Trump vs China, the Chinese embassy published a video of Ronald Reagan criticising tariffs and praising free trade. Incredible times, with communist China giving free market lessons to a protectionist United States. “This stagnation, combined with retaliatory trade wars, creates a vicious cycle of rising barriers, diminishing competition, and artificially inflated prices” says the Ronald Reagan video shared by Chinese embassy.
⚠️ US Treasury Secretary Scott Bessent warned the EU not to try to veer towards China and away from the US. ‘That would be like cutting off their own throats’. According to Bessent, the Spanish president made certain comments yesterday morning, suggesting that they should perhaps align themselves more with China.
🌐 The WTO also made a statement on what is happening and reiterated what we have been saying in every media intervention we have had in recent days: that we are not risking a recession in the US, but a global recession. WTO: ‘A division of the world economy into two blocs could cause a long-term reduction in global real GDP of almost 7%’.
📉 JPMorgan Chase CEO Jamie Dimon said a recession is a “likely outcome” due to the escalating trade war with China, and the recent steep market declines are deepening fears. Dimon warned that rising interest rates, sticky inflation, and widening credit spreads would lead to more defaults and credit problems in the lending sector. He said the volatile markets are also affecting the ability of companies to raise money, with some bond deals being canceled.
🇫🇷 The Governor of the Bank of France, François Villeroy, said yesterday that the trade war is expected to reduce growth in the Eurozone by at least 0.25%. Curiously, the German and French economies, pillars of the Eurozone, are already growing at a negative rate, -0.2% and -0.1% respectively.
🚫 Bad news for those who were hoping for the arrival of the cavalry in the European market: European Central Bank policymaker Robert Holzmann said there is no reason to cut interest rates further, as they are no longer curbing economic growth in the euro area and inflation continues to decline as expected.
🇨🇳 China: Yesterday a video went viral of someone claiming to be a factory worker in Jiangsu who shared an image of a completely empty manufacturing plant, claiming that the entire production line had been paused indefinitely.
💱 Based in Reuters sources, China’s central bank asks state lenders to reduce dollar purchases. China’s central bank, the People’s Bank of China (PBOC), has instructed major state-owned banks to reduce their U.S. dollar purchases to prevent a sharp decline in the yuan. The central bank has also indicated it will not allow a sharp yuan devaluation to offset the impact of U.S. tariffs on Chinese exports, as that could hurt market confidence. The PBOC plans to assist key Chinese export enterprises through measures like subsidies, tax rebates, and market diversification. Financial market stability seems to remain the priority, even as the U.S.-China trade war severely challenges the competitiveness of China’s massive export sector.
💸 Deutsche Bank sees the end of an era for the U.S. dollar (DXY), stating that we are witnessing a “simultaneous collapse in the price of all U.S. assets.” According to Deutsche Bank’s George Saravelos, the market seems to have “lost faith” in U.S. assets, and instead of buying them, they are being sold. Saravelos says this trend towards “de-dollarization” is happening at a faster pace than even Deutsche Bank anticipated, as the Trump administration’s policies aimed at reducing trade imbalances are “functionally equivalent to lowering demand for U.S. assets.” Deutsche Bank previously stated that the Trump administration is “encouraging a trend towards de-dollarization to safeguard international investors from a weaponization of dollar liquidity.”
🌎 As US Secretary of Defence Pete Hegseth promised last Tuesday: ‘The United States and Panama will work together to take back the Panama Canal from “China’s influence”,’ Yesterday, Panama broke with China and aligned itself with the USA: Mulino abandoned the Silk Road, reactivated military exercises with Washington and closed ranks with Hegseth to shield the Canal, slow migration and contain communist advance in the region.
📢 Moreover, investor Kevin O’Leary, financial commentator and chairman of several investment firms, called on CNN for tariffs of 400% on China. He said they steal technology, produce it and sell it back to us. ‘It’s not about tariffs anymore, we’ve had enough, I have nothing against the Chinese, but their government steals from us and cheats us’.
😂 The Russian embassy in Kenya published a meme showing a man who, from a distance, while smoking, sees how individuals under the flag of the USA, the European Union and China confront each other. Remember, Russia enjoys zero tariffs in the midst of this trade war.
⚔️ After failing to achieve concrete promises from the White House, the “coalition of the willing” formed by the UK and France to safeguard Ukraine following a potential truce runs the risk of stagnating. As French and British leaders discuss whether a peacekeeping force would need a US backup, the group’s defence ministers will convene at NATO today.
🛡️ European allies have raised concerns about the potential destabilization of NATO defenses as the Trump administration signals plans to reduce the U.S. military presence in Europe. With approximately 80,000 American troops stationed across the continent, including in regions most vulnerable to Russian influence, European officials are urging Washington to coordinate any troop withdrawals carefully.
📊 Market View:
📈 Spectacular V-shaped rebound yesterday following Trump’s announcement, as we discussed in the News section. Mini S&P 500 futures fell more than 15% from Wednesday of last week to Monday of this week, but yesterday, following Trump’s words, the total rebound in the S&P 500 was over 13%. It is currently trading at around 5,500 points, specifically at 5,465 points at the moment. Nasdaq 100 futures approached 19,400 points and have since fallen back to the current 19,090 points.
📉 On the European stock markets, DAX 40 futures jumped to 21,700 points, more than 1,000 points up from the prices quoted at the start of the session. They are currently trading at 21,325 points. The EuroStoxx 50, which began the day at a low of close to 4,500 points, rose to 5,000, from where it fell slightly to the current 4,915 points.
💵 The dollar also experienced volatility, rising above 103.30 points, from which it has fallen to the current level of 102.70. The EUR/USD pair, which during the morning approached 1.11, fell hours later to lows of close to 1.0910, from where it has rebounded upwards and is currently trading at 1.0975.
🛢️ Crude oil also experienced an impressive upward rebound, with a rise of more than 12% during the course of yesterday. The price of a barrel of Brent oil approached $66, from where it has fallen to its current level of $65.20.
🏅 Gold reacted like a rocket, moving away from the suspiciously bearish zones detected in yesterday’s report, and shooting up to the $3,150 zone. It is currently trading at $3,138.
💰 Finally, Bitcoin also had its reward, with an upward rebound that saw it rise more than 11.50% yesterday, approaching $83,500, from which it has fallen back to the current $81,935.
