This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
U.S. President Donald Trump had not yet imposed his so-called “reciprocal” tariffs on the rest of the world when the Federal Open Market Committee convened in March.
However, Fed officials were already preparing for the effects of trade restrictions. The FOMC raised its inflation forecast and decreased its U.S. economic outlook at the end of that meeting. “A good part” of the pessimistic outlook, according to Fed Chair Jerome Powell, “is coming from tariffs.”
Even the most gloomy market observers were taken aback on April 2 when Trump raised the board with a list of tariffs on numerous nations that were greater than anticipated. The Fed appears to be acting under the (very uncertain) premise that Trump could reintroduce those eye-watering tariffs at any time, although he has now suspended them.
Powell’s post-meeting news conference at the FOMC’s most recent meeting, which ended Wednesday, was more direct than it had been in March. This time, he blamed Trump’s tariffs directly, claiming that they “are likely” to result in increased unemployment, slower economic growth, and hotter inflation—all of which are signs of stagflation.
That is now the most explicit warning from a U.S. authority about the potential harm that tariffs could cause. It is unclear that Trump would follow the Fed’s admonition, though, given that he has not only voiced his dissatisfaction with Powell but also stated on Wednesday that he would not consider dropping the 145% tariff on China to begin trade negotiations with the nation.
What To Note Today
Fed Holds Rates Steady, Warns of Economic Slowdown
The U.S. Federal Reserve left interest rates unchanged at 4.25%-4.5%, maintaining the level set since December. Fed Chair Jerome Powell warned that Trump’s larger-than-expected tariffs could increase inflation, slow growth, and raise unemployment risks.
UK Poised to Sign Trade Pact with U.S. — NYT Reports
According to the New York Times, the U.K. is reportedly close to finalizing a trade agreement with the U.S.. While Trump hinted at an upcoming announcement, it’s unclear if the deal will be finalized or merely a framework.
U.S. Markets Climb on Disney, Nvidia Gains
Wall Street rallied Wednesday with the Dow up 0.7%, led by a 10.8% surge in Disney shares. Nvidia’s rise also boosted the Nasdaq. Meanwhile, Asia-Pacific markets gained, with Hong Kong’s Hang Seng lifted by a 75% debut surge from bubble tea brand Auntea Jenny.
U.S. to Ease AI Chip Export Rules, Boosting Nvidia
Nvidia shares jumped 3.1% as the Trump administration plans to scrap the Biden-era “AI diffusion rule,” potentially loosening export restrictions for AI chips based on country-specific tiers.
Apple Exec Predicts AI Will Replace Search Engines
Apple’s Eddy Cue sparked a tech selloff after saying AI tools could eventually make traditional search engines like Google obsolete. Alphabet shares dropped 7.5% on the news. Meanwhile, Apple seeks court approval to resume charging fees for in-app payments routed externally.
JPMorgan Tips on Trump’s Upcoming ‘Big Announcement’
Trump teased a major announcement ahead of his Middle East trip, stirring market buzz. JPMorgan advises clients on strategic plays to benefit from potential policy shifts or investor sentiment changes following the reveal.
Disney Expands with New Theme Park in Abu Dhabi
Disney is partnering with Miral to open a new theme park and resort on Yas Island, UAE. Disney Imagineers will creatively lead Disney’s seventh global project, which will be fully funded and developed by Miral. Disney will earn royalties.
