The past few trading days were characterized in particular by the highly dynamic developments in the customs dispute. As in the previous week, the renewed escalation in the tariff conflict led to increased volatility on the stock markets on both sides of the Atlantic. Despite Donald Trump's announcement of a 90-day tariff pause for numerous countries, the conflict with China appears to be escalating further. As expected, the US consumer price data also provided a talking point.
DAX
Source: TradingView
Trade conflict between the USA and China escalates further
US President Donald Trump has put the majority of his announced punitive tariffs on hold for 90 days and initiated at least temporary relief. In response, the EU also withdrew its previously announced punitive tariffs for the same period.
However, the trade dispute between the world's two largest economies has escalated further. Trump announced his intention to introduce a total of 145% tariffs on Chinese goods. According to the Ministry of Finance in Beijing, China plans to impose tariffs of 125% on US goods from Saturday. The trade dispute between the two countries could escalate further in the coming week.
EU retail sales with a ray of hope - Fed notes signal "cautious approach"
At the beginning of the week, retail sales for the eurozone signaled an upward trend. Compared to the same month last year, the sector grew by 2.30% and thus more strongly than expected (1.80%), after 1.50% in the previous month.
The Fed minutes published late on Wednesday evening revealed that the US central bank had already adopted a cautious approach before the escalation of the trade conflict. Uncertainty about economic developments prompted the Fed to adopt a "cautious approach".
Powell had recently emphasized that the punitive tariffs could fuel inflation. However, it is still too early to say which monetary policy course will be the right one, he said.
US inflation falls surprisingly sharply - interest rate cut fantasies gain momentum
US consumer prices rose by 2.40% in March compared to the same month last year, which is significantly slower than in February (2.80%). Economists had previously expected an increase of 2.6 percent.
The core inflation rate, which excludes the drivers energy and food, rose by 2.80% in the same period after 3.10% in the previous month. A rate of 3.0% had been expected in advance.
Overall, this could have given momentum to interest rate cut fantasies. The CME Group's "Fed Watch Tool" currently calculates that there is a 31.2% chance of a rate cut of a quarter of a percentage point at the May meeting. On Wednesday, the probability of this scenario was still at 20.4 percent.
US producer prices are also likely to be of interest on the last trading day of the week, as they could possibly provide important inflation signals once again (14:30).
Consumer confidence (Reuters/University of Michigan) rounds off the trading week from the perspective of the economic calendar (16:00).
US reporting season starts with banking sector - BlackRock figures also expected
Investors should also keep an eye on the start of the US reporting season on the last day of trading. JP Morgan, Wells Fargo, Morgan Stanley and the Bank of New York Mellon are expected to release their figures for the past financial quarters. Asset manager BlackRock will also present its figures.
Dow Jones Industrial Average Index
Source: TradingView
