Trump defends tariffs, Economists warn of risks 05/03/2025

HOT stories for today

US market wrap:
 

• U.S. stocks declined for the second straight day as President Donald Trump’s 25% tariffs on Canada and Mexico took effect, prompting retaliatory measures from Canada, Mexico, and China, which also faces an additional 10% duty. Commerce Secretary Howard Lutnick told Fox Business that the U.S. may seek a compromise with Canada and Mexico to ease trade tensions.
• Michael Green, chief strategist at Simplify Asset Management, highlighted the uncertainty Trump’s policies create, noting that a single tweet or data release can significantly shift market sentiment. He also warned that escalating trade tensions could weigh on economic growth, though the long-term impact remains unclear. Meanwhile, major retailers like Target and Best Buy are raising concerns about how tariffs could strain consumers, and Bitcoin bulls struggle to defend a key support level amid broader market uncertainty.

Trump defends tariffs, Economists warn of risks
 

• President Donald Trump downplayed concerns over new tariffs in his speech to Congress, calling them a step toward “making America rich again” and insisting any disruption would be minimal. Markets reacted negatively, with the S&P 500 dropping 3% in two sessions. Deutsche Bank economists warned that rising trade uncertainty, tighter financial conditions, and slowing growth could push the U.S. toward a recession.
• Trump reaffirmed plans for 25% tariffs on aluminum, copper, lumber, and steel, while Commerce Secretary Howard Lutnick suggested a possible deal to ease tariffs on Canada and Mexico. He also called for the repeal of the Chips Act, pledged to boost U.S. production of critical minerals, and announced plans for a White House shipbuilding office with tax incentives to revive the industry. Democrats criticized his policies, warning they could fuel inflation and weaken consumer confidence, which recently saw its sharpest drop in four years.

 
Stocks on the move: 
      

• Ross Stores (ROST) — The discount retailer edged up about 1% after posting stronger-than-expected fourth-quarter earnings of $1.79 per share, surpassing analysts’ forecast of $1.66 per share, according to LSEG.
• CrowdStrike (CRWD) — The cybersecurity firm dropped 6% as its full-year revenue outlook ranged between $4.74 billion and $4.81 billion, aligning with the $4.77 billion consensus estimate from FactSet. However, its first-quarter revenue guidance of $1.10 billion slightly missed expectations of $1.11 billion.
• Box (BOX) — Shares sank nearly 8% after the cloud services provider issued a weaker-than-expected first-quarter revenue forecast of $274 million to $275 million, falling short of analysts' $279.5 million projection. Still, its fourth-quarter revenue of $280 million slightly topped Wall Street expectations of $279 million.
• AeroVironment (AVAV) — The drone manufacturer plunged 17% after delivering a disappointing full-year outlook. The company expects adjusted earnings between $2.92 and $3.13 per share on revenue ranging from $780 million to $795 million, raising concerns among investors.

Today’s action
 

• Asia-Pacific markets were mostly higher on Wednesday as investors assessed China’s growth and inflation targets while weighing the impact of U.S. tariffs and global trade tensions. Australia’s S&P/ASX 200 slipped 0.77%, despite the country’s economy expanding 1.3% year-on-year in the fourth quarter, slightly beating forecasts of 1.2%. Japan’s Nikkei 225 gained 0.37%, while the Topix index added 0.38%. South Korea’s Kospi rose 1.11%, with the Kosdaq up 0.91%. Hong Kong’s Hang Seng Index climbed 1.65%, while China’s CSI 300 edged up 0.32%. Investors are closely monitoring China’s "Two Sessions", an annual parliamentary gathering that began Wednesday with the National People’s Congress. European Markets Poised for Gains Amid Hopes of Tariff Compromise
• Meanwhile, U.S. stock futures rebounded after sharp losses in the previous two sessions. Dow Jones futures gained 195 points (0.46%), while S&P 500 and Nasdaq 100 futures rose 0.62% and 0.72%, respectively. Key economic data releases on Wednesday include the ADP private payrolls report for February and the Purchasing Managers’ Index (PMI), providing insight into the health of the U.S. labor market and business activity. Several major companies, including Thor Industries, Abercrombie & Fitch, Campbell’s, and Brown-Forman, are set to report earnings.

Wahtclist: CRWD, COIN, BOX, CPB, ANF, NVDA, SMCI, META 

Bitcoin

• Bitcoin plunged to $82,618 on Tuesday, extending its losses as the broader cryptocurrency market tumbled 12%, bringing the total valuation down to $2.72 trillion. Over $1 billion in liquidations swept through the market as traders scrambled to adjust to shifting sentiment. The downturn erased gains from the weekend, which had been fueled by President Donald Trump’s proposal for a U.S. strategic crypto reserve. Optimism quickly faded as investors questioned the approval timeline and feasibility of the plan.
• By Tuesday, the total crypto market cap had dropped 12.3% to $2.85 trillion, with altcoins suffering even steeper declines. Analysts warn that regulatory uncertainty and macroeconomic concerns could keep the market under pressure in the coming days.
  Watchlist: Bitcoin: 80 000-100 000, Ethereum:2000-2600, Solana: 120-176

Forex

• USD/JPY edged higher to 149.75 in Wednesday’s Asian session, rising 0.50% as traders awaited President Donald Trump’s speech for fresh direction. However, concerns over slowing U.S. economic activity and expectations of a hawkish stance from the Bank of Japan (BoJ) could limit further upside. Later in the session, the focus will shift to the US ISM Services PMI for February.
• EUR/USD surged 1.4% on Tuesday, breaking above 1.0600 as markets reacted to trade war speculation rather than economic data. Investors are betting that Trump may reconsider his tariff threats, fueling a selloff in the US Dollar. Key events ahead include the European Central Bank (ECB) rate decision on Thursday and the U.S. Non-Farm Payrolls (NFP) report on Friday, both of which could drive further volatility in currency markets.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 149-158.80

Basic Materials

• West Texas Intermediate (WTI) crude traded lower around $67.65 in Wednesday’s early Asian session as OPEC+ confirmed plans to increase production from April. Despite a 1.455 million-barrel decline in U.S. crude stockpiles, concerns over Trump’s tariffs on Canada, Mexico, and China weighed on market sentiment, adding to downside pressure.
• Gold prices pulled back as rising U.S. Treasury yields dampened demand for non-yielding assets. However, safe-haven demand could offer support amid the implementation of U.S. tariffs, which took effect Tuesday. Trump's 25% tariffs on Mexico and Canada and a hike in Chinese duties to 20% have escalated trade tensions, leading to retaliatory measures and increased market volatility. Gold also found some buyers after the U.S. halted military aid to Ukraine, further fueling geopolitical uncertainty.
  Watchlist: GOLD 2600-2945, US Oil: 67.50-79.00

Key Economic Events Today:

EST time

08:15 am: USD ADP Non-Farm Employment Change
09:45 am: USD Final Services PMI
10:00 am: USD ISM Services PMI, Factory Orders
10:30 am: USD Crude Oil Inventories
02:00 pm: USD Beige Book

Earnings

BMO (Before the US Market opens)
CPB         The Campbell’s Comp.
THO          Thor Industries
ANF          Abercombrie & Fitch

AMC (After the US Market closes): MRVL, MDB,ZS

The TEFS Analyst team wishes you a successful day!