By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets
A calmer mood has pervaded world markets this week, as a torrent of upcoming U.S. economic health reports and corporate updates are corralling stocks and hopes are rising for trade war de-escalation.
But anxieties remain about volatile policymaking in Washington. In today’s column, I look at the action the Trump administration could take that could truly create a dollar shock.
Now onto the market news.
Today’s Market Minute
* Canadian Prime Minister Mark Carney’s Liberals retained power in the country’s election on Monday. “Our old relationship with the United States, a relationship based on steadily increasing integration, is over,” Carney said in a victory speech in Ottawa.
* President Donald Trump’s administration will seek to reduce the impact of his automotive tariffs by alleviating some duties imposed on foreign parts in domestically manufactured cars, officials said.
* BP on Tuesday reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading and announced the departure of its strategy chief as it tries to shore up investor confidence.
* HSBC warned that loan demand and credit quality could suffer from the broader fallout of U.S. President Donald Trump’s global trade war, signalling tougher times for trade-focused banks even as the lender’s first quarter profit beat forecasts.
* Some third-party Amazon merchants who previously sold China-made goods during the online retailer’s premier July shopping event are sitting it out this year or reducing the amount of discounted merchandise they offer.
Trade fears ebb, Canada’s Carney returns
As Wall Street awaits numbers on GDP, inflation, jobs and megacap earnings, the latest twists in the tariff standoff have been in a positive direction. Washington appears to be rowing back some of the tensions, and there is now the prospect of at least some bilateral deals emerging over the coming week.
President Donald Trump’s administration will move to reduce the impact of his automotive tariffs on Tuesday, according to officials, by ensuring car companies paying tariffs will not be charged other levies, such as those on steel and aluminum.
Meanwhile, Treasury Secretary Scott Bessent said many top trading partners of the United States had made “very good” proposals to avert U.S. tariffs. He also noted that one of the first deals to be signed would likely be with India this week or next.
These slightly more positive soundings were enough to turn around intraday losses for the main U.S. stock indexes on Monday, and the S&P 500 ended flat, with futures a touch higher before Tuesday’s bell.
North of the border, one clear political implication of Trump’s trade and diplomatic policies also unfolded overnight.
Canadian Prime Minister Mark Carney was set to return as the country’s leader as his Liberal Party, miles behind in opinion polls as recently as January, looks set to be the biggest party after Monday’s election, albeit just shy of an overall majority.
The Canadian dollar, which has appreciated more than 3% against the greenback this month and almost 4% for the year so far, held firm as the results streamed in.
Back on Wall Street, there was a heavy diary slated for Tuesday, including April consumer confidence readouts and March trade data. March job openings numbers also kick off the week’s big labor market tallies.
U.S. Treasuries rallied on Monday in advance, with a dour manufacturing survey from the Dallas Federal Reserve for April acting as a tailwind by nudging up bets for Fed rate cuts a tad.
Staying with Treasuries, 2- and 10-year yields hit their lowest in more than three weeks on Monday, although they backed up a bit today. The dollar – seemingly hurt whether Treasury yields go up or down these days – ebbed again, most obviously against China’s yuan.
Sterling also hit a more than three-year high against the dollar on Monday, with positive momentum behind UK stocks building and the Bank of England dragging its feet on interest rate cuts. It has ticked back only marginally today.
The rally in Treasuries came despite what appeared to be worrying U.S. government borrowing projections. The Treasury said on Monday it expects to borrow $514 billion in the second quarter, $391 billion higher than its February estimate, mainly due to a lower cash balance at the beginning of the quarter and projected lower net cash flows.
These figures likely do not include any revenues from tariffs, though these are still highly uncertain, and markets assume the Treasury will leave most of its auction sizes unchanged for the fifth straight quarter when it announces its refunding plans on Wednesday.
In Europe, most of the market attentionSTOXX> was on the earnings season there.
Shares of HSBC rose 2.5% after the London-based lender launched a $3 billion share buyback, while Deutsche Bank advanced almost 3% after Germany’s largest lender posted a 39% rise in first-quarter profit.
BP was a darker story, with its shares down 3.5% after the oil giant reported a deeper-than-expected 48% drop in net profit to $1.4 billion on weaker refining and gas trading.
Finally, make sure to check out my column today, where I turn to the U.S. and consider what could happen if the Trump administration were to take the previously unthinkable step of leaving the IMF.
Chart of the day
Surprise, surprise! Economic “surprise” indexes that measure incoming economic data relative to consensus forecasts show that U.S. gauges are marginally back in positive territory for the first time since mid-February. The rebound in the index likely says as much about the extent to which forecasts have been slashed due to tariff-related uncertainties as it does about any upturn in activity per se.
But financial markets price expectations, so the fact that expectations are no longer being undercut by the actual numbers has helped calm the horses, at least for now.
Today’s events to watch
* US April consumer confidence, March international goods trade balance, March retail/wholesale inventories, March JOLTS hob openings data, February house prices, Dallas Federal Reserve April service sector survey
* Canada election results stream in
* European Central Bank conference on spillovers from monetary policy, with ECB board member Piero Cipollone and ECB supervisor Sharon Donnery; Bank of England Deputy Governor Dave Ramsden speaks
* EU Trade Commissioner Maros Sefcovic meets UK Foreign Minister David Lammy and Trade Secretary Jonathan Reynolds in London
* U.S. corporate earnings: Pfizer, Corning, Regeneron, Visa, Starbucks, UPS, Coca-Cola, Edison, Kraft Heinz, General Motors, Honeywell, PPG, Ecolab, S&PGlobal First Solar, Hilton Worldwide, Paccar, Seagate, Sysco, Co-Star, Sherwin Williams, American Tower, AO Smith, Altria, Booking, Caesars Entertainment, Regency Centers, Royal Caribbean, Incyte, XYlem, Zebra, Veralto, Essex Property, Entergy, Expand, Mondelez, ONEOK
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Paul Simao and Sharon Singleton)
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