Markets rise ahead of Trump's tariff announcement, with stocks up and Treasuries weaker.

From Yahoo Finance: 2025-04-02 17:03:00

U.S. markets rise on Wednesday ahead of Trump’s tariff announcement, with stocks up and Treasuries weaker. Central bankers face tough decisions on growth and inflation as a result. Key market moves include S&P 500 up 0.7%, Nasdaq up 0.9%, and Tesla shares jumping 5.3%. Global stocks mixed with European indexes falling and Japanese futures pointing to a 2% drop. Euro hits a two-week high, dollar at a two-week low.

Trump’s tariff announcement adds to protectionist actions since inauguration, prompting cautious responses from countries like Britain and Mexico. Concerns over negative global impact raised by ECB President and Bank of Japan Governor. Mixed economic indicators in Q1 with varying growth levels in different countries. Forecasts for U.S. GDP being revised lower by economists.

Fed policymakers may need to ease policy in response to tariffs to stimulate economy and offset inflationary impact. Historical data shows tariffs have adverse effects on growth, with a 3.6% increase resulting in a 0.4% decline in GDP five years later. Fed officials maintaining cautious outlook with potential rate cuts, focusing on impact of tariffs on activity, prices, and employment.

Market uncertainty continues as investors await response to tariffs. Focus on “stag” over “flation” as businesses report higher prices and inflation expectations, while bond yields fall and rate futures price in cuts. Fed likely to prioritize growth stimulation over inflation concerns if tariffs lead to recession. Key market movers on Thursday include economic data from Japan, China, UK, and the U.S.



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