US stocks moved higher for the second consecutive session on Monday but remain lower than before US President Donald Trump’s “Liberation Day” announcement on 2 April.
Monday’s gains came after the White House announced certain exemptions on tariffs and the president suggested he could pause duties on the auto industry. Let’s take a look at the latest news in more detail.
Tariff Uncertainty Far from Over
Although a number of US tariffs have been paused in recent days, many remain in place. Moreover, the unpredictability of trade policy announcements means uncertainty lingers in the markets.
On Wednesday, 2 April, US President Donald Trump stood in the White House Rose Garden and unveiled sweeping new tariffs against Washington’s trading partners.
A week later, on 9 April, following days of turbulence in the financial markets, the US president announced a 90-day pause on a range of these tariffs. However, a baseline duty of 10% on all US imports remained in place.
Targeted tariffs on Chinese exports were also excluded from the 90-day pause and, following a tit-for-tat escalation between the two, the US and China have now imposed levies exceeding 100% on each other.
On Saturday, Washington declared that these tariffs would not apply to imports of Chinese-made smart phones which, in terms of value, is China’s number one export to the US. Nevertheless, Trump later added that smart phones and other electronic goods were, in fact, being moved into a “different tariff bucket”.
Furthermore, on Monday, President Trump suggested that he could grant exemptions to tariffs in the auto industry, giving automakers time to relocate production. Shares of US tech and auto companies rose in Monday’s session in response to both pieces of news.
What’s Going on in the Markets?
Despite the continued uncertainty surrounding tariffs, US stocks notched two consecutive days of gains on Friday and Monday. However, the Dow Jones, Nasdaq Composite and S&P 500 all remain lower than before President Trump’s “Liberation Day” announcement.
Last week, US 10-Year Treasury yields recorded their biggest one-week increase since 2001 (bond yields move inversely to price). However, yields have eased at the beginning of this week as investors seemingly take some comfort from recent tariff reprieves.
The US dollar has weakened considerably in recent sessions and currently sits around a three-year low against the euro. The US dollar index, which measures the greenback against a basket of foreign currencies, has fallen almost 4% since 2 April.
US Federal Trade Commission vs. Meta Platforms
Elsewhere, on Monday, an antitrust trial began against Facebook owner Meta Platforms, which could result in the break-up of the US tech giant.
The US Federal Trade Commission (FTC) allege that Meta’s acquisition of Instagram and WhatsApp over a decade ago helped give the company a monopoly. Meta CEO, Mark Zuckerberg, appeared in court on Monday to answer questions, with Meta’s legal team stating that the company “has no monopoly”.
The trial is expected to stretch on for several months. Even if the FTC does win, -to force a break-up of Meta, it would need to demonstrate at a second trial that measures such as Meta disposing of Instagram or WhatsApp would help restore competition in the market.
Economic Announcements
There have also been a number of important economic announcements over the last few days.
On Thursday 10 April, the Bureau of Labor Statistics (BLS) released the latest inflation data in the US. Annual headline inflation fell by more than expected in March to 2.4% whilst annual core inflation also slowed by more than expected to 2.8%.
On Friday 11 April, the UK’s Office of National Statistics (ONS) announced its Gross Domestic Product (GDP) estimate for February, which surprised to the upside. UK GDP, which was expected to grow by 0.1%, is in fact estimated to have expanded by 0.5%.
On Monday, China’s customs administration announced that exports soared by 12.4% year on year in March, considerably outpacing the expected growth of 4.4%. Surging exports indicate that businesses frontloaded shipments in March to avoid imminent US tariffs.
On the other hand, the same data from China showed that imports continued to decline, reflecting sluggish domestic demand in the world’s second largest economy. In March, imports fell by 4.3%, more than twice as much as had been expected.
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