Apr 13 2025 9 mins 8
Wall St finished higher after the most volatile week we have seen since covid. Four primary market drivers overnight – China increasing tariffs again, US investment banks kicking off quarterly earnings, calming comments from Fed officials and both consumer sentiment and inflation expectations coming in worse than expected. S&P 500 up 1.8%. Nasdaq up 2.1% and the Dow up 619 points. Closing near the high. VIX down 8%. The headlines weren’t particularly good (see below), but there are signs ‘peak fear’ has been reached.
Main negative driver was China keeping up the tit for tat tariff escalation. Last night it raised tariffs on US products from 84% to 125%. Refusing to back down. On the positive side, Trump has repeatedly said he ‘respects Xi’ and is ‘open to negotiations’. The AFR had some good data yesterday on how dependant China is on the US. A lot would surprise you. Considering China’s reputation as the manufacturing powerhouse of the world, the sector only accounts for 20% of GDP and just 15% of its exports to the US. Australia on the other hand ships a third of all goods to China, less than 5% go to the US.
Investment bank earnings started well. JPMorgan Chase (+4%), Morgan Stanley (+1.4%) and Wells Fargo (-0.95%) all beat estimates. Ted Pick, MS CEO was the most optimistic on the outlook, saying the US economic could avoid a recession. The others more pessimistic, which limited big gains. Wells Fargo couldn’t finish in the green after management said its NIM will fall at the lower end of guidance. BlackRock (+2.6%) rose after its assets hit a fresh record of $11.58T. Larry Fink there hasn’t been a systematic rotation out of US equities into Europe and Asia but didn’t rule anything out.
SPI up 18 - Trump exempts electronics from some tariffs - Lutnick says its temporary.
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