US jobs and ISM PMI ahead

• Markets roll over as Trump unveils fresh global tariffs.
• Will tariffs spark fresh inflationary surge?
• US jobs and ISM PMI ahead.

Global markets are heading lower as we close out a week of major volatility, with a raft of corporate, economic, central bank, and trade headlines hitting the newswires on a daily basis. For the most part we have seen the strength of US tech earnings and positive trade agreements helping to prop up market sentiment for many markets, although that strength has started to falter as risks grow. With the DAX falling to the lowest level in a month, we have clearly started to see sentiment sour after relative stability. The announcement of tariff levels across the globe has provided a follow up to the initial ‘Liberation Day’ cardboard cutout, with the new levels providing many with lower tariffs than had initially been set out. Notably, those rates come into play in a weeks’ time, providing hope for those seeking fresh trade agreements before the heftier tax levels come into play.

Part of the problem for markets is the question of who will pay for these tariffs, with the best-case scenario being that foreign businesses bear the brunt through lower margins. However, that is not entirely the case, with US consumers starting to feel the pinch through higher prices, while earnings from the likes of GM, Ford, and Apple have highlighted the fact that they are expected to lose billions at the hands of Trump’s tariffs. The earnings theme continues today, with ExxonMobil and Chevron providing an energy focus to close out the week.

While traders are weighing up how Trump’s global tariff assault will impact growth, inflation, and earnings, today brings the latest US jobs report which will tell us more about the direction of travel for the US economy. Thus far, we have seen the payrolls hold up well, with previous weakness in the ADP figures failing to result in a similar decline in the headline NFP figure. Once again markets are expecting to see some signs of weakness, with weaker payrolls and higher unemployment currently being forecast. Traders will also need to keep a close eye out for the latest ISM manufacturing PMI figure, with the recent surge in prices paid (69.7) standing in stark contrast to the weakness seen for the likes of the ISM manufacturing (45) and new orders (46.4) metrics. Essentially the ISM manufacturing survey has highlighted a stagflation problem that has built up, and markets will be watching closely to see if the investment pledges obtained by Trump result in an uptick in activity for US manufacturers.