Hold onto your portfolios—because the week ending April 11, 2025, felt like a financial roller coaster. While the global spotlight remained on intensifying trade tensions, there was a lot more unfolding beneath the surface. From tariff tit-for-tats to surprising economic data and central bank caution, markets around the world were left scrambling to keep up.

U.S. Markets: A Rebound with Caveats

Despite all the noise, U.S. equities posted strong weekly gains:

• S&P 500: +5.7%

• Nasdaq: +7.3%

• Dow Jones: +5.5%

Much of the bounce stemmed from midweek optimism after the U.S. announced a temporary 90-day pause on certain tariffs. However, this rally was short-lived. Tariffs on Chinese goods were simultaneously hiked to a staggering 145%, and China swiftly responded with its own increase to 125%, reigniting market volatility.

Fed Minutes and Inflation Outlook

The Federal Reserve’s March meeting minutes revealed a cautious stance. Policymakers are caught between persistent inflation and concerns over slowing growth. March CPI showed a 2.4% year-over-year rise—the lowest since early 2021—offering some relief. But consumer sentiment dropped to its lowest in nearly three years, with inflation expectations spiking to 6.7%, a level not seen since 1981. This disconnect between actual inflation and consumer anxiety is weighing heavily on economic confidence.

Europe: Trade Headwinds and Internal Weakness

In contrast to U.S. gains, European markets struggled:

• Euro Stoxx 600: -1.9%

• Germany’s DAX: -1.3%

• France’s CAC 40: -2.3%

Weaker industrial production in Germany and Italy, along with a sharp downgrade of Italy’s 2024 GDP forecast (from 1.2% to 0.6%), dampened sentiment. These internal vulnerabilities, combined with global trade frictions, left the Eurozone in a precarious position.

Central Bank Vigilance

Both the ECB and Bank of England stepped up monitoring. The BoE delayed several gilt auctions due to liquidity concerns. Even as UK GDP for February showed strong growth (+0.5% MoM, +1.4% YoY), markets remained cautious. The FTSE 100 dipped 1.1%, reflecting the disconnect between strong data and market risk perceptions.

Japan: Trade Pain with a Glimmer of Hope

Japan, though included in the temporary U.S. tariff pause, remained under a 25% levy on auto exports. This weighed on equities:

• Nikkei 225: -0.6%

The yen strengthened to 142/USD as investors sought safe havens, prompting concern from Japanese officials. Despite the volatility, BoJ Governor Ueda reiterated the intention to normalize monetary policy, separating Japan from other global central banks leaning dovish.

China: Market Slump and Stimulus Signals

Chinese markets fell hard:

• Shanghai Composite: -3.1%

• Hang Seng: -8.4%

While tariffs escalated, China hinted at strategic restraint rather than continued tit-for-tat retaliation. More importantly, whispers of a new fiscal stimulus sparked a late-week rally. Economists warn the tariffs could shave 1–2 percentage points off China’s 2025 GDP growth, but many believe Beijing has the fiscal tools to counterbalance the damage.

Key Events to Watch: Week of April 14, 2025

United States

• Monday–Tuesday: Treasury auctions

• Wednesday: Retail sales, industrial production, capacity utilization, business inventories

• Thursday: Jobless claims, housing starts, housing market index

• Friday: Markets closed for Good Friday

Eurozone

• Thursday: ECB interest rate decision (25 bps cut expected)

UK

• Thursday: Retail sales data

Japan

• Monday: Final industrial production & capacity utilization (Feb)

• Tuesday: 20-year government bond auction

China

• Tuesday: Q1 GDP (expected 5.1% YoY)

Conclusion

The week was dominated by escalating trade tensions, a flurry of economic data, and mixed signals from central banks. Investor sentiment swung wildly with each new headline. While stimulus talk from China adds a new layer of complexity, the undercurrents of inflation concerns and geopolitical friction continue to shape market behavior.

FAQs

1. Why did U.S. markets rise despite trade tension? The gains were largely driven by midweek optimism over a temporary tariff pause, although the broader picture remains volatile.

2. What’s the key message from the Fed? The Fed remains cautious, balancing between inflation control and avoiding a growth slowdown.

3. Why are European markets struggling? A combination of internal weakness in Germany and Italy, plus external trade pressures, is weighing on investor sentiment.

4. How is China responding to new tariffs? While raising their own tariffs, China is signaling that further escalation may not be their strategy, instead focusing on possible stimulus.

5. What will be most important to watch this coming week? Key economic data across the U.S., Europe, and Asia—especially China's Q1 GDP and the ECB rate decision—will offer critical insights.

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