Stocks on Wall Street bounced back from the ‘Sell America’ trade as US Treasury secretary Scott Bessent hinted at a thawing in the cold trade war with China, while the White House has a busy dance card in trying to cut deals over President Donald Trump’s tariff regime, including a high-level framework close to being finalised with Japan and progress made on talks with India after vice-president JD Vance’s meeting with president Narendra Modi.
Industrial conglomerate 3M Co, of post-it notes fame, was among the leaders, holding its earnings outlook despite the threat of mounting tariff costs, and Amazon’s reassurance on plans to keep ploughing billions into artificial intelligence investment supported the likes of chipmaker Nvidia.
Defence contractors were left out in the cold with Northrop Grumman and RTX sinking sharply on gloomier outlooks, and as Tesla’s earnings loom after the bell, some US state treasurers are urging Elon Musk to spend more time on the electric vehicle maker given its important to their regional economies.
And as traders were cheered by the White House’s practising of the art of the deal, the International Monetary Fund slashed its outlook for US and global growth due to the expected impact the Liberation Day tariff regime, while there were tentative steps to reviving ceasefire talks between Ukraine and Russia.
Setting the mood
“The mood music is more positive today, easing the path for a reversal of recent price action,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “That said, scanning the pages of the WSJ, the roll call of companies either downgrading earnings or facing analyst earnings downgrades because of the tariffs is growing.”
Stocks on Wall Street bounced back from their Easter Monday slump with the S&P 500 up 2.5% in afternoon trading, while across the pond, the UK’s FTSE 100 increased 0.6% and Germany’s DAX 30 advanced 0.4%.
Bessent told a JPMorgan investor summit he believes a deal can be made with China and that the trade war will de-escalate, describing the current situation as an embargo that both sides see as unsustainable.
Meanwhile, the White House said it’s received 18 trade proposals and is meeting 34 nations this week to discuss trade, while Reuters reported that the US and Japan are closer to reaching an interim framework.
3M climbed 8% as it said its wide network of factories should help mitigate the impact of the White House’s tariff regime, which could cost it US$675 million a year.
Military corners
The defence sector was rocked as contractor RTX dropped 9% after warning of the hit it faces from tariffs, while Northrop Grumman sank 13% when it missed earnings expectations as it faced increased manufacturing costs.
Meanwhile, Tesla rose 3.9% ahead of its earnings report, which is expected to show a decline in quarterly profit. Treasurers of seven US states have raised concerns about Musk’s lack of focus on the company, which makes big contributions to their local economies.
The IMF cut its forecast for global growth this year to 2.8% from 3.3%, saying the US tariff regime marked the onset of a new era and reset the international system that’s operated for the past 80 years.
The reversal in investor sentiment revived interest in the US dollar and bolstered Bitcoin, which rose 4.7% to US$91,585, while gold prices eased from their latest records.
The kiwi dollar slipped to 59.78 US cents at 7am in Auckland from 60.20 cents yesterday, while the gains in equity markets are likely to flow through to the antipodes with Australian futures pointing to a 1.3% gain for the S&P/ASX 200 index.
No local data is scheduled for today.
Reporting by Paul McBeth. Image from Leif Christoph Gottwald on Unsplash.
