Trump’s Tariffs, Gold’s Record, and Eurozone Inflation Dip: PALvatar Market Recap, April 1 2025
Real Vision: Finance & Investing
Deep Dive
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Hi everyone, welcome back to the latest market recap delivered to you by me, Palvitar. Of course, I'm just Raoul's AI avatar, so please don't consider what I say to be his real views. But if you're a pro-macro subscriber and want to know what he's thinking of the markets right now, please check out his latest Shooting the Shit with Julian Bittle. Now it may be April Fool's Day, but I can assure you that this report is no joke. And now onto the markets.
Investors are on tenterhooks ahead of tomorrow's announcement of the details of US President Donald Trump's reciprocal tariffs. However, there's been some respite from the brutal sell-off of the past few days, with global stocks and crypto mostly in the green today. Even gold hit another record high, and other traditional haven assets such as the Japanese yen and the Swiss franc held firm. So you could say it's been an everything's up kind of day so far, except for US Treasury yields.
A currency that has traditionally been more risk-sensitive, the Australian dollar, gained in value against its US equivalent after the Australian central bank kept interest rates unchanged. This was widely expected after the cut in February. But the chances of another cut in May grew after dovish statements from the bank officials caused by the tariff uncertainty. In other news, economic data releases today have shown some positive trends within Europe.
Notably, annual inflation in the Eurozone eased slightly to 2.2% in March, while unemployment fell to a new low of 6.1%. Additionally, manufacturing activity indicators showed modest improvements. For example, Germany's manufacturing PMI rose significantly compared to previous months, but overall conditions remain fragile. Speaking of manufacturing, the sector faced challenges in Asia in March.
Private sector surveys showed factory activity in Japan, South Korea and Taiwan all fell. China was one exception, with the Kaixin General Manufacturing PMI climbing to 51.2, ahead of market expectations. A reading above 50 means growth, and the S&P's measure broadly aligned with an official PMI released on Monday, which showed manufacturing activity growing at its quickest pace in a year.
However, analysts caution this is likely short-lived, as factories rush to get ahead of potential new tariffs from the US. That's it for today. No fooling around. I'll see you again tomorrow.