Weekly Data Summary Report
As of April 05, 2024
In this report, we will assess major economies, including the United States, the United Kingdom, the Eurozone, and China, mainly based on their economic indicators and economic events that have occurred within this week.
The United States
Last week, the market was more focused on Trump’s tariff escalation, rising recession fears, and persistent inflation pressures than on the data itself. This led to a plummet in the US stock market and significant volatility in the commodities market.
On “Liberation Day,” Trump declared a universal 10% tariff on imports on April 05, while higher reciprocal tariffs—such as 54% on China, 20% on the European Union, 49% on Cambodia, and many more—were set to begin April 9. Not only were the major trading partners being affected, but even small countries also faced the same problem. All are raising the bar on recession, and fear led the investor to leave the market, resulting in lower liquidity in the market, which pushes to higher volatility in the market—stocks dumped, US 10-year yield down, GOLD prices down, and VIX up. These showed that uncertainty is rising to the point (fear over greed) that gold and other asset classes have become less attractive to investors.
As shown in our previous post, we also mentioned that fear overtakes greed. Therefore, what we can monitor from now is when the stock market opens. Is Jim Cramer’s warning about Black Monday coming true?
Taking a step back on the data release, the majority are supporting higher inflation pressure, while the business activities are scaling back most negatively. While some labor data gave a mixed picture, we also see layoffs starting to mount and slow hiring activities in industries, particularly in retail and manufacturing reliant on imports.
Even Powell and experts from investment banks are also citing a possibility of a recession while the markets are pricing in the FED Fund rate cut earlier, to June this year.
In short, mixed labor market conditions + higher inflation + weak economic growth + tariff tensions → higher uncertainty in the market → stocks plunged last week and might continue to do so.
The United Kingdom
For the UK economy, the 10% tariffs came on top of the existing 25% tariffs on steel, aluminum, and automobiles, which have led many UK stocks to slump further due to fears of a global trade war escalating. Although the UK avoided the higher reciprocal tariffs, many businesses still worried over the potential external shock that might influence higher pricing and slower demand. Even the National Institute of Economic and Social Research (NIESR) also forecasts near-zero economic growth in 2025 if this tension escalates. One thing is for sure: inflation will surely eat up everyone’s purchasing power unless Trump achieves the zero-trade policy.
The European
Meanwhile, the Europeans also faced the same problem with a tumbling stock market and a decline in growth forecasts amid higher inflation. With a fragile economic outlook skewing around the recession risk, Goldman Sachs has already expected a 0.7% GDP reduction by the end of 2025, while the European Central Bank (ECB) is anticipating slower growth at 0.1% in Q2, 0% in Q3, and 0.2% in Q4. Therefore, they projected a potential rate cut in April and June.
→ My concerns fall on the German economy, which is export-oriented and reliant on the manufacturing sectors. With ongoing trade tension, this economy will be affected the most, with a possibility of recession looming.
China
After Trump announced a 54% tariff on China on April 04, China struck back with a 34% tariff on all US imports effective April 10, alongside a WTO complaint and export controls on rare earths like samarium, gadolinium, and dysprosium—critical for U.S. tech and defense industries. This has led the US-China trade war to escalate while dipping both Chinese stocks and US stocks even further as uncertainty arose.
