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Morning Research Notes - 14.04.25
Despite escalating U.S.-China trade tensions and concerns about consumer sentiment and inflation, US stocks closed the week with significant gains, driven by strong earnings reports and easing long-term Treasury yields. Commodities performed well on Friday. Gold increased by 2.9% to $US3173.48 an ounce, iron ore rose by 2.6% to $US97.25 a tonne, contrastingly, Brent Crude (Oil) decreased by 3% to $US63.52 a barrel.
Wall Street closed higher on Friday, ending a volatile week on a positive note despite escalating U.S.-China trade tensions and concerns about consumer sentiment and inflation. The S&P 500 rose 1.7%, the Dow Jones Industrial Average gained 1.6%, and the Nasdaq added 2.1%. The market was driven by strong earnings reports from major banks like JPMorgan Chase, Wells Fargo, and Morgan Stanley, which offset worries about the broader economy. Additionally, the April consumer sentiment survey from the University of Michigan fell to its second lowest level on record, reflecting concerns over tariffs and inflation. Falling long-term Treasury yields, with the 30-year yield slipping to 4.836%, and reassurances from the Federal Reserve also helped ease investor fears. Apple saw significant gains, contributing to the overall market uplift.
On Friday, the Australian market closed on a down note, with the ASX200 index falling by 0.83%. Major sectors, including Materials, Financials, Information Technology, Healthcare, and Utilities, all ended the day in the red, closing lower by 0.24%, 0.89%, 1.16%, 2.68%, and 2.07%, respectively. In contrast, major commodities had a bullish run, with aluminium, copper, zinc, and nickel all ending the day with gains.
Following President Trump's announcement of a pause on tariffs exceeding 10% for most countries, the market responded positively. This came despite the imposition of a 125% tariff on Chinese imports, which may adversely affect tech firms like Apple. Major trading partners such as Canada, Mexico, and the EU continue to face elevated tariffs, yet market sentiment remained buoyant on the day of announcement. Goldman Sachs analysts have reduced the probability of a recession, though risk persists as global negotiations with Trump must conclude within 90 days to avoid the reimplementation of these levies.
Source: Mckinsey
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