Markets Braced for Further US Tariffs on “Liberation Day”

Upon moving back into the White House, President Trump wasted little time in firing the opening salvos of a global trade war. Today, a day he has dubbed “Liberation Day”, the president is expected to unveil a raft of new measures.

Let’s take a closer look at this in more detail and examine how the markets are behaving ahead of the announcement.

Please note that this material is for information purposes only and is not financial advice.

Eurozone Inflation Falls, Again

First, let's catch up with inflation figures for March from the euro area, which were announced yesterday.

As expected, annual eurozone inflation fell from 2.3% to 2.2% in March, marking the second consecutive month of falling inflation.

Sticky services inflation, which has been a particular nuisance for rate-setters, also fell from 3.7% to 3.4%.

Although headline inflation still sits above the European Central Bank’s (ECB) target of 2%, the latest figures are likely to add to expectations that the ECB will cut rates at their meeting later this month.

The ECB has cut interest rates six times over the last year. However, after its latest cut in March, the central bank noted that “monetary policy is becoming meaningfully less restrictive”, a comment that was perceived to have hawkish undertones.

“Liberation Day”

Tariff. Thus far, this has undoubtedly been one of the defining words of the second Trump administration, and it’s a word we’re going to use quite a lot in the next few paragraphs. 

In his first 73 days in the White House, Donald Trump has implemented tariffs against Canada, China and Mexico as well as imposing worldwide tariffs on aluminium, automobiles, automobile parts and steel.  

In addition to the measures already implemented, the president has threatened a slew of further tariffs on Washington’s trading partners. These measures - and the threat of further action - have unnerved investors, sparked concerns about economic growth and contributed to stock market volatility.  

On Wednesday, a number of tariffs are due to go into effect and the US president is expected to announce a fresh wave, the full extent of which is, as of yet, unknown. 

However, given previous rhetoric, it seems likely that Canada, China, the EU and Mexico will be amongst the nations targeted by the US. Although the UK was hoping to avoid US measures, Downing Street has admitted that it expects to be hit by tariffs later today. 

If you’re having a hard time keeping track of all these tariffs – threatened and implemented – you can follow them on this handy Trump Tariff Tracker.

Markets Braced for Trade War Escalation

Investors are likely to remain cautious ahead of the expected announcement, as nations nervously await the outcome. So, how are the markets looking this morning?

Yesterday, on Wall Street, the S&P 500 and Nasdaq Composite crept up 0.4% and 0.9% respectively, whilst the Dow Jones remained flat. On the other side of the Atlantic, the FTSE 100 rose 0.6% whilst the Euro Stoxx 50 notched a gain of 1.3% on lower eurozone inflation data.

After rising early in trading on Tuesday, crude oil benchmarks Brent and WTI both pared gains, closing the session flat. Prices of both remained steady early on Wednesday morning.

Gold prices have surged almost 20% since the turn of the year, hitting record highs as anxious investors seek refuge in the safe-haven asset. Early on Wednesday morning, the shiny metal extended its gains, easing slightly further upwards.

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