Earnings in focus as firms outline weight of tariff uncertainty

EU mid-market update: Market turns red, signalling need for material progress on trade front; Earnings in focus as firms outline weight of tariff uncertainty.

Notes/observations

- EU stocks and US futures turn lower. Market not convinced of rhetoric by Trump admin about lower tariffs and softer China stance, given latest comments from China Foreign Ministry that China and US are not yet in talks over tariffs. Analysts expect market to tread water until earnings season gets fleshed out or real tangible developments are seen on trade front (e.g. signed deal or confirmation of China/US talks).

- German IFO beats across climate, current assessment and expectations survey, following beat in manufacturing PMI yesterday. However, remains in very weak zone and services PMI did not please like manufacturing. German 10-year yield edged up to 2.49%.

- Regarding trade deals, UK-US talks are stalled but Chancellor Reeves sees deal as possible; Initially rejected US demands on food and car safety standards reasons but is aware of option to cuts tariff on US auto imports from 10% to 2.5%. Meeting US Treas Sec Bessent on Fri.

- Earnings season enters high gear with notable EU reports seen from Adidas, STMicro, Unilever, Renault, Nestle, Thales, Sanofi, Roche, Dassault Systemes, Anglo American, Eni, Nokia.

- Flexport's Founder: Ocean freight bookings from China to the U.S. have plunged over 60% since the new tariffs took effect, prompting carriers to cancel a quarter of sailings and reroute capacity to other trade lanes. This sudden supply shock risks triggering surge pricing on par with 2021–22 highs—harming U.S. importers and potentially causing widespread shortages this summer if tariffs aren’t swiftly rolled back. While businesses have temporarily buffered stocks ahead of April 2, they urgently need policy reversal to prevent escalating logistics bottlenecks and crippling price spikes.

- Asia closed mixed with Hang Seng underperforming -0.7%. EU indices -0.3% to -0.6%. US futures -0.8% to -1.0% Gold +1.6%, DXY -0.6%; Commodity: Brent +0.5%, WTI +0.6%; Crypto: BTC -1.8%, ETH -2.6%.

Asia

- South Korea Q1 Advance GDP Q/Q (1st of 3 readings): Q/Q-0.2% v +0.1%e; Y/Y: -0.1% v 0.0%e.

- South Korea Apr Business Manufacturing Survey: 93.1 v 91.9 prior; Non-Manufacturing Survey: 84.5 v 82.9 prior.

- Japan Mar PPI Services Y/Y: 3.1% v 3.0% prior.

- New Zealand Apr ANZ Consumer Confidence: 98.3 v 93.2 prior.

- Japan Fin Min Kato stated that wanted to base upcoming talks with US Tsy Sec Bessent on existing FX pacts.

Global conflict/tensions

- European Parliament said to be in late stages of discussions with China to remove sanctions. Move seen as way to resume normalized relations between EU and China.

- China said to be preparing to lift sanctions on European lawmakers as it tries to revive an investment deal with the EU after losing most of its access to the US market in Donald Trump’s trade war.

- US Sec State Rubio stated that Politico story on Russian sanctions 'unequivocally false'; Had not spoken with special envoy Witkoff on lifting Russian sanctions.

Europe

- ECB Chief Lagarde reiterated seeing tariffs impacting PMI and hiring numbers; Levies were probably more disinflationary than inflationary; The net effect of tariffs was still uncertain.

- ECB's Villeroy (France): It's appropriate for the ECB to cut rates further this year; Inflation effect of tariffs, specifically in the Eurozone, was uncertain, but it could be to the downside; Currently there was no inflationary risk in Europe; Key interest rate will likely drop further.

- ECB's Muller (Estonia): Monetary policy was no longer restrictive; Rates might need to be cut below neutral due to trade; Too soon to say whether June ECB meeting would be a cut or pause.

- ECB's Knot (Netherlands): Best for rates to be at neutral levels for now; The current situation presented an opportunity for the Euro; 2% inflation was within reach.

- UK Chancellor (Fin Min) Reeves stated that a trade deal with US could be done, including tech partnership; UK not going to rush into trade deal with US.

- Finland PM Orpo: To lower income tax by €1.1B and corporate tax by 18%.

Americas

- Fed Beige Book noted that economic activity was little changed but uncertainty over international trade was pervasive across reports.

- Fed's Hammack (non-voter for 2025 noted that uncertainty was causing companies to pause investments. Saw more runway for Fed balance sheet cuts.

- US Treasury Sec Bessent won't seek currency target talks with Japan. Reiterated call for Tokyo to abide by long-standing Group of Seven commitments on market-determined exchange rates.

- President Trump stated that lowering China's tariffs would depend on them; Tariff rate for China could come in the next 2-3 weeks; There's going to be fair deals, not rip-off deals. US could make special trade deal with China. To include auto parts from China in some tariff exemptions.

- White House was said to consider slashing China tariffs; One Official said that tariffs could go down to 50-65% from 145%; In China's policymaking circles, Trump's comments Tuesday were viewed as a sign of him folding.

- Pres Trump stated that Canada's auto tariffs could go up; Did not want cars from Canada; Reiterated desire to build cars in the US; Currently working on a deal with Canada. Not considering any changes to auto parts or auto tariffs.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.46% at 514.40, FTSE -0.24% at 8,383.36, DAX -0.57% at 21,807.35, CAC-40 -0.61% at 7,436.76, IBEX-35 -0.22% at 13,139.97, FTSE MIB +0.34% at 36,580.00, SMI -0.02% at 11,804.80, S&P 500 Futures -0.68%].

Market focal points/key themes: European indices opened mixed but turned lower in the early hours of trading; Iceland closed for holidays; better performing sectors include real estate and materials; sectors inclined to the downside include telecom and health; focus on US durable goods orders later in the day; earnings expected in the upcoming US session include Alphabet, Intel, Vinci and Michelin.

Equities

- Consumer discretionary: Adidas [ADS.DE] +2.0% (prelim results - post close), Kering [KER.FR] -6.5% (earnings), Nestle [NESN.CH] -0.5% (results), EssilorLuxottica [EL.FR] -3.5% (earnings) - Consumer staples: Unilever [UNA.NL] +1.5% (results) - Energy: Eni [ENI.IT] +2.0% (earnings; buyback).

- Financials: BNP Paribas [BNP.FR] -3.5% (results).

- Healthcare: Sanofi [SAN.FR] -1.0% (earnings), Roche [ROG.CH] -0.5% (earnings).

- Industrials: Renault [RNO.FR] +2.0% (results), Thales [HO.FR] -4.5% (results).

- Technology: STMicroelectronics [STM.FR] +3.0% (results; guidance) - Telecom: Nokia [NOKIA.FI] -9.5% (results).

-Materials: L'Air Liquide [AI.FR]+1.5% (results).

Speakers

- ECB's Rehn (Finland) noted that must retain full freedom of action, be agile. Should not rule out larger interest rate cuts. Did see many reasons to pause easing cycle.

- Poland Central Bank (NBP) Member Wnorowski saw a chance for 50bps rate cut in May.

- China Commerce Ministry (MOFCOM) stated that had yet to be in talks with the US over tariffs. Respect was condition for any talks to happen; US needed to stop threats if it wants talks. US ‘tariff tsunami’ broke WTO rules and that the US should revoke all unilaterally tariffs.

Currencies/fixed income

- USD softened during the session. The green back did register a slight recovery on Wed as concerns over the US-China trade war eased and Fed independence was assured for the time being. President Trump had begun to soften his stance.

- EUR/USD at 1.1380 and received a slight lift after the German IFO survey beat consensus.

- USD/JPY at 142.70.

- 10-year German Bund yield at 2.48% and 10-year Gilt yield at 4.54%. 10-year Treasury yield at 4.36%.

Economic data

- (EU) Euro Zone Mar EU27 New Car Registrations: -0.2% v -3.4% prior.

- (FI) Finland Mar Unemployment Rate: 10.1% v 9.4% prior.

- (FI) Finland Mar PPI M/M: -0.2% v 0.0% prior; Y/Y: 0.5% v 0.7% prior.

- (JP) Japan Mar Final Machine Tool Orders Y/Y: 11.4% v 11.4% prelim.

- (FR) France Apr Consumer Confidence: 92 v 91e.

- (ES) Spain Feb Total Mortgage Lending Y/Y: 9.3% v 18.4% prior; Mortgage Approvals Y/Y: 4.3% v 11.0% prior.

-(ES) Spain Mar PPI M/M: -3.9% v +1.3% prior; Y/Y: 4.9% v 6.7% prior.

-(CZ) Czech Apr Consumer Confidence: 97.7 v 98.6e; Business Confidence: 96.5 v 99.1e.

- (TR) Turkey Apr Real Sector (Manufacturing) Confidence : 100.8 v 103.2 prior; Real Sector Confidence NSA (unadj): 103.2 v 104.1 prior; Capacity Utilization: 74.3% v 74.4% prior.

- (DE) Germany Apr IFO Business Climate Survey: 86.9 v 85.2e; Current Assessment Survey: 86.4 v 85.4e; Expectations Survey: 87.4 v 85.0e.

-(PL) Poland Apr Consumer Confidence: -16.5 v -15.6e.

- (PL) Poland Mar Unemployment Rate: 5.3% v 5.3%e.

Fixed income issuance

- (UK) DMO sold £1.75B in 4.75% Oct 2043 Gilts; Avg Yield: 5.155% v 5.232% prior; bid-to-cover: 3.38x v 2.97x prior; Tail: bps v 0.5bps prior.

- (IT) Italy Debt Agency (Tesoro) sold €3.0B vs. €2.5-3.0B indicated range in 2.55% Feb 2027 BTP bonds; Avg Yield: 2.00% v 2.38% prior; bid-to-cover: 1.65x v 1.55x prior.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa Mar PPI M/M: 0.6%e v 0.4% prior; Y/Y: 0.7%e v 1.0% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (UK) Apr CBI Industrial Trends Total Orders: -35e v -29.0 prior; Selling Prices: 20e v 22 prior; Business Optimism: No est v -47 prior.

- 06:00 (IE) Ireland Mar PPI M/M: No est v -0.9% prior; Y/Y: No est v -0.5% prior.

-06:00 (VN) Vietnam Finance Ministry announcement on upcoming bond issuance (held on Wed).

- 06:00 (CZ) Czech Republic to sell CZK5.0B in 3-month Bills.

- 06:00 (RO) Romania to sell combined RON1.5B in 2026 and 2031 bonds.

- 07:00 (BR) Brazil Apr FGV Consumer Confidence: No est v 84.3 prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (DE) ECB's Nagel (Germany).

- 08:00 (US) Treasury Sec Bessent and USTR Greer with South Korea officials on trade.

- 08:30 (US) Mar Chicago Fed National Activity Index: 0.12e v 0.18 prior.

- 08:30 (US) Mar Preliminary Durable Goods Orders: 2.0%e v 1.0% prior; Durables (Ex Transportation): 0.3%e v 0.7% prior; Capital Goods Orders (non-defense/ex-aircraft): +0.1%e v -0.2% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.2%e v 0.8% prior.

- 08:30 (US) Initial Jobless Claims: 222Ke v 215K prior; Continuing Claims: 1.86Me v 1.885M prior.

- 08:30 (CL) Chile Central Bank Traders Survey.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Apr 18th: No est v $655.8B prior.

- 09:00 (BE) Belgium Apr Business Confidence: -16.0e v -15.1 prior.

- 09:00 (CL) Chile Mar PPI M/M: No est v -0.8% prior.

- 09:00 (IE) ECB's Lane (Ireland, chief economist).

- 09:00 (UK) BOE's Lombardelli.

- 09:00 (SE) Sweden Central Bank (Riksbank) Seim on panel.

- 10:00 (US) Mar Existing Home Sales: 4.15Me v 4.26M prior.

- 10:00 (EU) ECB's Simkus (Lithuania).

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Apr Kansas City Fed Manufacturing Activity: -5e v -2 prior.

- 11:30 (FI) ECB's Rehn (Finland).

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 5 Year Bonds.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 17:00 (US) Fed's Kashkari.

- 19:01 (UK) Apr GfK Consumer Confidence: -21e v -19 prior.

- 19:30 (JP) Japan Apr Tokyo CPI Y/Y: 3.3%e v 2.9% prior; CPI Ex-Fresh Food Y/Y: 3.2%e v 2.4% prior; CPI (ex-fresh Food/energy) Y/Y: 2.8%e v 2.2% prior.

- 20:30 (SG) Singapore Q1 URA Private Home Prices Q/Q: No est v 0.6% prior.

- 21:10 (JP) BOJ Outright Bond Purchase Inflation-indexed bonds.

- 21:10 (JP) BOJ Outright Bond Purchase 3~5 Years; 5~10 Years and 10~25 Years.

- 32:30 (JP) Japan to sell 3-Month Bills.