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.
Do you recall when investors eagerly awaited inflation readings as much as they did Nvidia’s earnings announcements? The TNC Daily Open doesn’t forget. Stocks likely would have soared if Thursday’s consumer price index report—which revealed prices declining month over month and core inflation falling to the lowest level since 2021—had been issued before the tariff chaos caused by US President Donald Trump.
Instead, Thursday saw a decline in the U.S. stock market as the relief surge from the day before soon waned. The White House’s announcement of enacting a 145% tariff on Chinese goods, which was 20% higher than initially anticipated, significantly affected investor sentiment. According to Erica York, vice president of federal tax policy at the Tax Foundation’s Center for Federal Tax Policy, that essentially shuts down all trade between the two nations.
The March consumer price index report does not include price fluctuations brought on by tariff policy. It isn’t easy to see businesses, especially those with as large a budget as Apple, bearing the extra expense if they must pay more than twice as much for goods from China. Therefore, the April inflation report may have a greater impact than any tariff news.
What To Note Today
A Brief Rally For Relief
After the White House confirmed to CNBC that the tariff rate on China would equal 145%, U.S. markets plummeted Thursday, giving up gains from the historic rise the day before. Losses accelerated. The Nasdaq Composite fell 4.31%, the Dow Jones Industrial Average fell 2.5%, and the S&P 500 fell 3.46%. U.S. President Donald Trump responded, “I haven’t seen it,” when asked about his thoughts on today’s market sell-off. Meanwhile, Trump’s senior trade advisor, Peter Navarro, told CNN that the “retracement” is “no big deal.”
Depression Is Bad; Recession Is Fine
According to The Wall Street Journal, which cited sources familiar with the discussions, Trump privately stated that he didn’t desire a depression but was aware that his expansive and steep levies proposal, which was announced last week, may cause the country to enter a recession. Economists believe that a depression occurs when a recession worsens and involves increased unemployment and a longer downturn.
Core Inflation At Its Lowest Level In Years
March saw a seasonally adjusted 0.1% decline in the U.S. consumer price index, bringing the 12-month inflation rate down from 2.8% in February to 2.4%. Core inflation, which does not include food and energy, rose 2.8% yearly and 0.1% monthly. Since March 2021, that was the lowest core inflation rate per year. According to the Dow Jones consensus, Wall Street had anticipated headline inflation of 2.6% and core inflation of 3%.
China Is Unlikely To Depreciate Yuan
The People’s Bank of China put its midpoint rate at its lowest level since 2023 earlier this week, which caused the Chinese offshore yuan to plummet to a historic low of 7.4287 against the US dollar. However, most market analysts surveyed by TNC stated that China cannot use a weaker yuan as a weapon in its intensifying trade war with the United States due to worries that such a move could generate financial market volatility.
A Mixed Day For Assets In Asia
Friday’s Asia-Pacific markets were erratic. While South Korea’s Kospi dropped 0.7% and Japan’s Nikkei 225 lost almost 3.4%, Hong Kong’s Hang Seng Index increased by more than 1.8%, and mainland China’s CSI 300 gained about 0.5%. The price of gold futures touched a fresh high of $3,226 per ounce during Asian trading hours. Bitcoin prices increased 1.8% to $80,951.20, reversing some overnight declines.
China Tariffs’ Impact On Apple
Trump increased tariffs on China to an astounding 145% while pausing them on most of the United States’ trading partners. Apple’s stock has plummeted this week, with the company relying on China for an estimated 80% of its production capacity. Analysts disagree over Apple’s potential future approach.
More Updates
How exporters from China are rushing to lessen the effects of punitive U.S. tariffs
The United States has increased import duties from China to triple digits. For China’s exporters, this means increasing American pricing, speeding up efforts to diversify their business, and, in certain situations, halting shipments completely.
According to Ryan Zhao, director of Jiangsu Green Willow Textile, certain American companies have paused their intentions to import textiles from China, which could result in losing access to some products for U.S. consumers in June.
In addition to his current Chinese suppliers, Tony Post, CEO of the U.S.-based running shoe manufacturer Topo Athletic, intends to expand his collaboration with Vietnamese suppliers. Post stated, “I don’t know for sure what impact that is going to have on our business, but I’m going to have to raise prices eventually.” Post forecasted about $100 million in sales this year, mostly from the United States, before Trump enacted tariffs.
