Global Markets Kickstart: Go Soft for Tech?
Go Soft for Tech?
Chart of the Week:
Trump Initiates Reciprocal Tariffs, Europe, India, and Vietnam Likely Next Targets
Trump replaced an executive order with a memorandum on reciprocal tariffs, aiming to match tariffs between the U.S. and its trade partners. Non-tariff policies like VAT leading to unfair trade will also face retaliation. U.S. trade officials will propose new tariffs based on individual countries to ensure fairness. This approach sacrifices long-term geopolitical interests to maximize U.S. benefits by lowering tariffs from trade partners. With findings expected on April 1, new tariffs could be implemented, causing short-term volatility.
Market Recap:
Trump’s Tariff War Hits, Equities Faces Volatility at High Levels
Trump announced a 25% tariff on U.S. imports of automobiles, semiconductors, and pharmaceuticals, impacting non-U.S. automotive stocks. The EU is in talks with the U.S. to reduce tariffs on car imports. U.S.-Russia talks raised hopes that the Russia-Ukraine conflict may end soon, potentially improving relations. As 4Q24 earnings wrap up, 74% of S&P 500 companies exceeded expectations, with earnings per share up 15.3% YoY, surpassing the 9.6% forecast. Major U.S. indices, excluding the Dow, gained this week.
What’s Trending:
Xi Meets Private Tech Companies, Chinese Tech Stocks Surge
On the 17th, Xi Jinping held a roundtable with private sector leaders, including Huawei’s Ren Zhengfei, Alibaba’s Jack Ma, and DeepSeek’s Liang Wenfeng. This is the first such meeting since 2018, with a significant rise in tech entrepreneurs, signaling potential policies to support platform economy development.
In Focus:
U.S. Tech Stocks Excel in Software, AI Hardware Calls for Short Term Caution and Long-Term Accumulation
DeepSeek’s cost-effective, high-performance models reduce AI server costs for cloud providers, raising concerns about the AI arms race ending prematurely. This has led to downgrades for AI hardware stocks that led last year. Meanwhile, major cloud providers like Meta, Alphabet, Amazon, and Microsoft are seeing positive outlooks, with software stocks becoming the new market favorites.
