On Tuesday, investors were on edge as financial markets reacted to the looming tariffs set by Trump for April 2, dubbed “Liberation Day.” Major asset prices were volatile, with gold and oil easing from Monday’s highs, and U.S. bond yields along with the dollar sliding due to the uncertainty surrounding these tariffs.
Missed the latest trading headlines? Here’s a quick roundup!
The Reserve Bank of Australia held rates steady at 4.10%, prompting a rebound in the Australian dollar as Governor Bullock dampened some dovish expectations. In Japan, the Tankan manufacturing index met forecasts at 12, while the non-manufacturing index increased to 35, surpassing expectations.
A glance at China reveals the Caixin manufacturing PMI rose to 51.2, beating forecasts and previous figures, with a slight improvement in the job market. In Japan, the au Jibun Bank’s final manufacturing PMI for March was adjusted slightly upward, showcasing the strongest job creation in 2025 so far, while output inflation eased to a five-month low.
France and Germany both saw their HCOB final manufacturing PMIs for March underperform slightly against forecasts, though they marked improvements compared to previous readings. The Euro Area’s final manufacturing PMI was also a tad under expectations. Meanwhile, Euro Area’s CPI was slightly higher month-on-month, influenced by core CPI figures who failed to meet the forecast.
Switzerland’s manufacturing PMI slid below expectations, the UK’s PMI dipped lower than anticipated, and Canada’s rating also saw a decline from previous numbers. In the U.S., the S&P Global manufacturing PMI eked out a better than expected result but was still down from the prior month. The ISM manufacturing PMI indicated contraction, with prices rising sharply, while employment dropped.
The JOLTs Job Openings report showed less than expected vacancies, and there was a slight reduction in quit rates. FOMC’s Tom Barkin warned that Trump’s tariffs might exacerbate inflation and unemployment, while European Commission President Ursula von der Leyen hinted at possible retaliations targeting U.S. service exports, including major tech companies.
Canadian PM Mark Carney also mentioned he might implement counter-measures if more tariffs are imposed on Canadian products by April 2.
On the market front, assets were erratic as anticipation built over Trump’s potential tariff announcement. A Washington Post piece suggested a proposed 20% tariff rate on numerous imports, though no concrete decisions were confirmed. Trump’s later remarks about a “reciprocal” and “kind” approach kept the suspense alive.
This uncertainty fueled a shift to safer investments, slashing 10-year Treasury yields to December lows. Equity markets in the U.S. were marked by volatility, with dips led by biotech and pharmaceutical sectors, whereas software stocks held up relatively well. European markets, meanwhile, saw some positive movement, with Germany’s DAX climbing significantly.
Gold prices edged slightly lower from record numbers, WTI oil retreated on potential supply issues linked to Trump’s oil tariffs threat, and Bitcoin swung wildly before stabilizing. On the economic front, the U.S. manufacturing sector’s sluggishness contrasted with an encouraging rise in construction spending.
Currency markets saw significant movement as the U.S. dollar fluctuated amid mixed economic data and policy developments. Initially, stronger Chinese PMI figures lifted risk sentiment, reducing safe-haven demand for the dollar. Despite weaker Euro Area PMI figures, the dollar found some footing after lower inflation numbers suggested an increased chance of a rate cut by the European Central Bank.
In the U.S., disappointing manufacturing and job data hinted at possible Federal Reserve rate cuts, causing a sharp dollar sell-off as 10-year Treasury yields hit a December low. However, expectations for a targeted tariff approach from Trump provided some stabilization, though the dollar ended the day mixed.
Upcoming economic events include the French government budget balance, Spain’s unemployment data, U.S. ADP employment changes, factory orders, and crude oil inventories. All eyes will be on Trump’s evening speech and the ADP report for insights ahead of the key Employment Situation report.
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