Short lived optimism
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Why did the US equity bounce turn out to be so short‑lived compared with Europe?
Yesterday's bounce in equities in the US seems to have been short lived, although things are looking a lot better for Europe. Why the difference? Well, just a question of timing, or is it a sign that tariffs that will come are now seen as hurting the US more than anybody else? But even though US equities are down and there's so much uncertainty, the Aussie managed to gain some ground after a big fall in the US dollar today. And a more aggressive approach by the RBA. That's the NAB View. It's Friday. It's the eleventh of april twenty twenty five, it's the morning call from Nab. Good morning. Well, that boost to US stocks yesterday, that was short lived, wasn't it? Today the NASDAQ closes down four point three percent, three and a half percent lower for the S P, two and a half percent off the Dow, four point three percent off the Russell two thousand.
Whereas in Europe, stocks were up, the Eurostocks fifty closed up four point three percent, the DAX up four and a half percent, the FTSE one hundred up three percent, uh although, you know, Scott Besson asked about moves on the share market an hour or so back. Max said, I don't see anything unusual today, so why worry? Uh big currency moves though, one point seven percent fall on the DXY, two point two percent rise in the euro. The Aussie is also at one percent to just below sixty two point two US cents, the pound up one point one per cent, the Swiss franc up three point seven per cent, and some readjustments still in bond yields up seven basis points for ten year treasuries, up to four point four percent, down thirteen point.
basis points for ten year GILTs. Aussie ten years yesterday were down seven basis points to four point two three percent, now though up to four point three six percent. That's thirteen basis points higher overnight. And oil falling back down three and a half percent off WTI, three point two percent off Brent, which is now sitting at sixty three forty, and Comics Gold is up three point seven percent, just a whisker from its all time high. But otherwise Yes, well, why such a a short lived burst of optimism? Here's Nab's Gavin friend. I mean first of all, Gavin, this this difference between the US and Europe uh I mean w maybe it's a bit of timing, but the US stock market was already well down uh when Europe closed much higher.
So why this difference? Difference.
Morning Phil. I think the answer to that question is is that um US had such a good day uh on Wednesday, so the ninth best day in the S and P's history and and Europe had to that obviously that news broke after Europe had closed on Wednesday and Europe simply had to play catch up.
How are the escalating US‑China tariffs expected to affect global trade and consumer prices?
And whatever happened today, you know, given the news wasn't really any there was no new news, there was a reality check, if you like, in the broader market today. About, okay, so we've got a 90 day pause, but those tariffs may will come back on. No one knows. We know we've got lots of uncertainty on China. You know, it's not 125%. We learn it's 145%. So your average tariff rate, you know, which let's remember before all this, you know, before Liberation Day was for the US, it was two and a half percent, two and change, up to sort of twenty four, twenty five. five. It's still up there because while everybody else has come down to ten, China's at A hundred and forty five percent or so. So it actually, you know, it it may even be before action if you're not sure.
Well I
mean
let's throw
another number in there. The Peterson Institute of International Economics said if you look at all of it, they tried to sort of weight it based on various factors and said on average it's going to be a hundred and thirty five percent. Doesn't really matter. If it's hundred and thirty five, hundred and forty five, um two hundred and seventy five. I mean it's the same effect, isn't it? It's just it's sure surely that is enough to kill trade. I mean if you've got uh reliant on components like a smartphone, for example, or you're selling a finished product. I mean it's either gonna push up consumer prices or you're just not gonna you're just not gonna buy the good.
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Chapters
8 chapters
1
Why did the US equity bounce turn out to be so short‑lived compared with Europe?
0:01–2:20
2
How are the escalating US‑China tariffs expected to affect global trade and consumer prices?
2:20–4:15
3
What is NAB’s revised outlook for the RBA and how aggressive could rate cuts become?
4:15–6:20
4
Will Donald Trump’s promised trade deals materialise within the next 90 days?
6:20–8:35
5
What do the latest US and China CPI/PPI numbers tell us about inflation trends?
8:35–10:36
6
Why is the Bank of England pausing its quantitative‑easing unwind right now?
10:36–13:58
7
What are Steve Hankey’s arguments about the US money supply and a looming recession?
13:58–16:22
8
How does the overall market uncertainty shape NAB’s near‑term economic outlook?
16:22–18:04