Weak European sentiment and tariff uncertainty pressure global markets, despite corporate earnings showing strength. Ifo data and U.S. earnings in focus.
Thursday’s market outlook appears cautious, as weakening business sentiment across Europe and unpredictable trade policies from former U.S. President Donald Trump weigh heavily on investor confidence. Despite encouraging earnings reports from several corporations, broader market sentiment remains fragile.
Germany’s Ifo business climate index, scheduled for release today, is expected to confirm a dip in business morale for April—the latest in a series of downbeat signals from Europe’s largest economy. Just a day earlier, purchasing managers’ index (PMI) data for both the euro zone and the UK painted a similarly pessimistic picture. France and Britain are also anticipated to report lower consumer confidence levels for the month.
Futures trading suggests European stock markets will open flat, while U.S. markets may pull back slightly, following a brief rally sparked by Trump’s softened tone regarding China and the independence of the U.S. Federal Reserve.
Adding to the mixed signals, U.S. Treasury Secretary Scott Bessent remarked on Wednesday that the current high tariffs between the U.S. and China are unsustainable, hinting at the possibility of easing tensions between the economic superpowers.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.5%. However, reports that Trump may exclude car manufacturers from future tariffs helped push Japanese auto stocks higher, with the Nikkei index gaining over 1%.
Tariff relief may not be in store for Canada, though. Trump suggested the possibility of raising tariffs on Canadian automobiles above the existing 25%, even as he mentioned “nice conversations” with Canadian Prime Minister Mark Carney, leaving market observers uncertain.
Meanwhile, South Korean tech firm SK Hynix, a key chip supplier for Nvidia, reported that its first-quarter profits more than doubled, driven by strong chip sales. These results add to a series of robust earnings, though they precede the latest market turbulence caused by tariff announcements.
While Europe has a relatively quiet day in terms of earnings releases, market participants are watching closely to see if positive momentum can continue in the U.S. with upcoming results from major firms such as Merck, Alphabet, and others.
Notable Events to Watch Today:
- Germany’s Ifo Business Climate Index (April)
- Earnings reports from Merck (MRK.N), Procter & Gamble (PG.N), Bristol-Myers Squibb (BMY.N), PepsiCo (PEP.O), and Alphabet (GOOGL.O)
- U.S. seven-year Treasury note auction
- G20 Finance Ministers and central bankers’ press conference following two-day discussions
- France’s April consumer confidence report
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