While tariffs continue to dominate the news flow, recession is the new investment word of the day as fears rise in the US. While conviction levels remain in the toilet, we’re likely to see continued headline-obsessed market whipsawing. In short, no-one has a clue how to call markets right now.
Sentiment signals
An anonymous post in social media platform X stating that Trump would pause tariffs moved the market $4 trillion higher, but markets fell sharply again after its contents were dismissed by the Whitehouse. This tells you everything you need to know about how sentiment is driving market movements.
Recession warnings grow louder
The worsening trade war has prompted economists to raise the probability of a US recession, and investors are concerned about the impact on capital flows, geopolitics, and fiscal sustainability. While speaking on Bloomberg Television’s Wall Street Week, former US Treasury Secretary Lawrence Summers added his voice to the growing chorus, warning that a recession caused by tariff increases would potentially put 2 million Americans out of work. “We’ll see losses in household income of $5,000 per family or more”, he said. JPMorgan Chase & Co. says recession fears in stocks acutely tied to America’s economy have spiked to nearly 80%, and the S&P 500 (VOO-NASQ) is pricing in a 62% chance of an economic downturn.
European rate cuts coming
According to analysts at JPMorgan Chase, the European Central Bank will cut interest rates at its next four meetings as the economic costs of US tariffs mount. Published in Bloomberg, the investor note said that euro-zone growth will take a bigger hit than previously expected in the near term, resulting in “very weak” expansion over the next three quarters.
Corporate debt defaults loading
President Trump’s global trade war is already priming financial markets for the next wave of corporate defaults. A Bloomberg News measure of distressed debt worldwide swelled the most in at least 15 months, sending more than $43 billion of bonds and loans to levels that make it challenging to refinance. While the president clearly stated his intention to raise tariffs, few had expected Washington to go after so many of its key trading partners with such high duties, especially considering the risk of upending global supply chains that entire US industries rely on. Investors are scouring their holdings for companies likely to be hit the hardest while sizing up the impact on consumer spending and industries like travel and leisure.
Tariffs to dampen Christmas cheer
It looks like Christmas (and a whole lot of other things) will be more expensive this year for American consumers. Bloomberg reports that Christmas ornaments made at a factory in China’s Zhejiang province for Walmart (WMT-NASQ) no longer have price tags attached before shipping the goods to the US, as was common practise. This reflects the deep price uncertainty that President Trump’s global tariffs have introduced into the global supply chain. Elsewhere, US retailers are suspending orders and halting shipments as the global supply chain grinds to a near-halt.
Wall Street volume explodes
Roughly 30 billion shares changed hands on US exchanges during Wall Street’s best day since the 2008 global financial crisis after President Trump paused tariffs for 90 days on April 9. The day also saw the highest trading volume ever, spurred by hedge funds short-covering and aggressive retail buying.
Broadcom buyback
Broadcom (AVGO-NASQ) announced a share buyback of as much as $10 billion, saying it remains confident in the chip industry. The announcement “reflects the Board’s confidence in the strength of Broadcom’s diversified semiconductor and infrastructure software product franchises.” The company supplies semiconductors to Apple (AAPL-NASQ) and other big tech companies, and believes it is “uniquely positioned in mission critical infrastructure software and enabling hyper-scalers to drive innovation in generative AI into their expanding subscriber platforms.”
GNU hopes linger
Comments from the ANC and DA suggested that while both parties are disgruntled over various issues, there is willingness to keep the GNU intact. DA leader John Steenhuisen said in a statement that the party is willing to discuss power-sharing with the ANC. While uncertainty remains, the positive sentiment lifted SA Inc shares. However, local markets remain vulnerable to trade tariffs.
Peabody reviews Anglo coal deal
Peabody Energy Corp. is reviewing a deal worth up to $3.78 billion to buy Anglo American’s (AALL-TRQX) steel-making coal business after a fire at an Australian mine. Anglo said last year it would receive $2.05 billion in cash upfront from Peabody, with other payments dependent on issues including the coal price and the reopening of the Grosvenor mine.
Stock focus: WeBuyCars
WeBuyCars (WBC-JSE) rose +4.6% in a volatile market. While momentum is still negative, the stock should be less impacted by auto tariffs on a relative basis compared the rest of the sector. As one of the best growth stories in South Africa at the moment, there is a lot to remain positive about with this stock.
