MARKET WRAPS

Stocks:

European stocks fell with investors parsing earnings and waiting to see if European Central Bank policymakers can offer any update about how tariffs have affected their economic outlook at their rate decision today.

While a 25bp cut was widely expected, markets also priced in a low 6% probability of a 50-basis-point rate cut, according to LSEG data.

In other tariff-related news, Spain's Santander took the crown from UBS as continental Europe's largest bank by market cap.

The announcement of U.S. tariffs hit the Swiss lender's shares particularly hard given its higher levels of global diversification and exposure to markets compared with some of its peers.

Santander's stock has gained 35% in value since Jan. 1 and was worth $103 billion as of Wednesday's close while UBS's market cap stood at $98 billion.

Economic Insight

Eurozone energy prices will be on average 1% lower on year over 2025, according to Pantheon Economics' calculations, which will take a couple of decimal points off headline inflation, with knock-on implications for monetary policy in the currency area.

U.S. Markets:

Stocks looked set to pare back some of their recent losses, with the world's largest contract chip maker Taiwan Semiconductor Manufacturing Company reporting better-than-expected earnings , welcome news after tech stocks tumbled Wednesday when Nvidia disclosed fresh curbs on its exports to China.

But TSMC's Chief C.C. Wei warned that Trump's tariffs could be a headwind.

Forex:

The euro fell ahead of the ECB decision and the currency's outlook remained positive on rising reserve demand and bets that ample fiscal spending will accelerate European growth, Swissquote bank said.

Lagarde could refrain from committing to future rate cuts as this depends on trade developments, eurozone fiscal responses and the impact on the eurozone's economy and inflation, and the euro's unexpected strength in the first quarter and the significant decline in energy prices were supportive of growth, and there's also a chance of an EU-U.S. trade deal in coming weeks, it added.

However Commerzbank said the risks look skewed towards a weaker euro given factors that support the case for further ECB rate cuts, adding that the central bank doesn't tend to be swayed by events like U.S. tariffs and changes its stance gradually.

In addition, the currency's recent strong appreciation and the risk of a flood of cheap Chinese goods into Europe reduced the risk of higher inflation, which means the ECB was unlikely to sound more cautious about future cuts.

The dollar's recent selloff took a pause as investors weighed the latest trade developments and remarks from Jerome Powell.

Trump said there was big progress in trade negotiations with Japan while Bloomberg reported that China was open to talks.

Powell warned tariffs could lead to higher inflation and said the Fed's obligation is to keep longer-term inflation expectations well anchored.

The dollar still faces further falls as the "general sell U.S. vibe" persists, Pepperstone said, however the currency has weakened considerably in a short space of time and could be "due something of a pause in the downside momentum."

Bonds:

Ten-year Bund yields continued to flirt with sub-2.5% territory and could drop below, helped by the widely anticipated ECB rate cut, Commerzbank said.

Commerzbank sticks to buying Bunds tactically "as the tone for further ECB cuts should remain conducive."

Bunds were the main beneficiaries of the evolving global environment due to a number of factors, Commerzbank said separately, including speculation about FX reserve rotation out of Treasurys and private investors discovering that bonds no longer offer a hedge for risk assets.

Another factor might be that investors simply wish to reduce dollar exposure.

On the German side, market participants realize that the country's fiscal impulse won't happen quickly, it added.

The eurozone government bond yield curve was set to steepen further, leading to a wider gap between short- and long-end bond yields, Carmignac said.

UniCredit said long-dated Treasury yields could increase further if uncertainty surrounding U.S. trade policies lingered because foreign private investors would likely sell long-dated Treasury holdings.

"The rise in the market share of private foreign investors [in the Treasurys market] is a factor to consider because they do not usually have a buy-and-hold approach, likely leading to higher volatility."

Private investor demand for Treasurys could resurface if the political and trade environment stabilizes, it added.

Energy:

Oil rose after the U.S. imposed fresh sanctions aimed at curbing Iranian oil exports and some OPEC+ members submitted plans to make further output cuts to compensate for producing above quotas.

Still, demand concerns linger, with Powell warning consumers were likely to face higher prices as a result of U.S. tariffs and that the central bank could have less flexibility to quickly cushion the economy.

Gas

European natural-gas prices rose, supported by a report that China would be open to trade talks with the U.S. under certain conditions.

Meanwhile, EU countries were seeking extra flexibility on the bloc's gas storage targets ahead of the winter season.

Metals:

Gold futures eased after hitting a record, pulling back somewhat as investors take profit ahead of the long holiday weekend, Exness said.

The Fed might delay interest rate cuts until the impact of Trump's trade policies becomes clear--a cautious sentiment that could weigh on the precious to an extent--but uncertainty was also likely to keep safe-haven demand elevated, it added.

Pepperstone said the outlook for gold remained constructive, and if current conditions continued, its medium- to long-term target was projected around $3,734.

EMEA HEADLINES

Hermes Revenue Growth Slows as Trade Uncertainty Looms

Birkin bag maker Hermes reported higher revenue for the first quarter, but growth slowed as the luxury sector faces an uncertain environment due to waning demand and the threat of U.S. tariffs.

The French company said revenue for the first three months of the year was 4.13 billion euros ($4.71 billion), up 7.2% on year at constant exchange rates. The result compares with analysts' forecasts of revenue of 4.14 billion euros, according to a Visible Alpha poll.

ABB Posts Increase in Earnings, Plans Robotics Business Spinoff

ABB's first-quarter earnings increase exceeded analysts' expectations, and the company said it intends to spin off its robotics division.

The Swiss industrial-technology company said it achieved $1.10 billion in net profit for the first three months of the year, compared with $905 million a year prior, on revenue that grew 1% to $7.935 billion.

Pernod Ricard Backs Guidance as Trade Headwinds Brew

Pernod Ricard confirmed it expects sales to fall for the current fiscal year as the Absolut Vodka owner grapples with trade turmoil and a downturn in demand.

The French liquor maker said Thursday that it continues to expect a low single-digit decline in organic net sales for the year to June as it seeks to maintain profitability. In February, the group lowered its expectations, citing economic and geopolitical uncertainties.

GLOBAL NEWS

Anxious Trading Partners Promise to Buy American to Stave Off Trump's Tariffs

In the two weeks since President Trump's "Liberation Day," many U.S. trade partners have a clear plan to convince Washington against reimposing stiff tariffs on their exports to the U.S.: buy more American stuff.

Many are rushing to do so in a bid to eliminate their trade deficits with the U.S., while others are urging a collective response to stave off pressure from Washington. Some countries, however, can't, or won't, open up their wallets at all.

U.S. Tries to Crush China's AI Ambitions With Chips Crackdown

New U.S. chip-export limits that rocked global markets on Wednesday are the clearest sign yet from the Trump White House that whatever advances China makes in AI will have to happen without America's help.

Trump administration officials have signaled for months that they were considering a crackdown on exports of processors from U.S. companies such as Nvidia that have helped enable major Chinese advances in artificial intelligence. The latest reckoning came this week, with U.S. authorities moving to stop the flow of billions of dollars of Nvidia and Advanced Micro Devices artificial-intelligence chips to the country.

Trump Administration Asks IRS to Start Process to Revoke Harvard's Tax-Exempt Status

The Trump administration has requested that the Internal Revenue Service start the process of revoking Harvard University's tax-exempt status, according to people familiar with the matter.

Officials at the Treasury Department asked the IRS's acting chief legal counsel, Andrew De Mello, to move ahead with a plan to revoke Harvard's key status, which lets donors get tax deductions for contributions and keeps the university from paying taxes on any net earnings. Harvard is exempt from federal income tax as it operates as a 501(c)(3) educational institution.

Judge Finds Probable Cause to Hold Trump Administration in Criminal Contempt

A federal judge said Wednesday he had found probable cause to hold Trump officials in criminal contempt for willfully disregarding an order barring the removal of Venezuelan migrants from the country.

U.S. District Judge James Boasberg in Washington said in an order that the government must act quickly to avoid possible prosecution, including potentially seeking custody of the migrants sent to a notorious prison in El Salvador. The order escalated a clash about how much power the courts have to rein in White House policies, as Trump's swift deportation drive has put the administration on increasingly precarious legal terrain.

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April 17, 2025 05:04 ET (09:04 GMT)

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