Nasdaq Surges 300 Points Amid Trade War Uncertainty, Rate Cut Hints
1min read On April 25, during the midday session, U.S. stocks maintained their upward momentum, with the Nasdaq rising over 300 points. Market attention remained focused on the latest developments in the trade war initiated by Donald Trump. The president of the Federal Reserve Bank of Cleveland hinted at the possibility of a rate cut in June.
This news comes as the market continues to grapple with the uncertainty surrounding Trump's tariff policies. Earlier in the week, Trump indicated a willingness to adopt a less confrontational approach in trade negotiations. Additionally, U.S. Treasury Secretary Steven Mnuchin stated that significant trade deals were possible. However, the Chinese Ministry of Commerce denied any ongoing trade negotiations and demanded the removal of unilateral tariffs.
Gaurav Mallik, Chief Investment Officer at Pallas Capital Advisors, commented, "While the more dovish tone from the U.S. government on tariffs is encouraging, U.S. stocks remain in a range-bound pattern. The market truly needs tariff rollbacks or substantive trade agreements, and this adjustment could last for several months."
The Cleveland Fed's Loretta Mester suggested that a rate cut in June is possible, advocating for patience in monetary policy amid high uncertainty. She emphasized that the Federal Reserve would closely monitor data and remain open to policy changes if necessary. Mester stated, "If we have clear and convincing data before June and know the right action to take at that point, I believe the committee will act."
This sentiment was echoed by Morgan Stanley, which believes that a rate cut by the Federal Reserve would present significant opportunities for U.S. Treasuries. The firm noted that U.S. Treasuries have greater upside potential compared to European bonds, as traders have underestimated the extent of the Fed's rate cuts relative to the European Central Bank. Myles Bradshaw, an analyst at Morgan Stanley, predicted that the U.S. economy would face slower growth rather than higher inflation due to Trump's tariffs, necessitating more substantial rate cuts in the future.
Global investors, including Pacific Investment Management Company, are beginning to see the appeal of U.S. government bonds again, following a period of selling driven by concerns over Trump's tariff policies. The recent economic data showed that initial jobless claims in the U.S. remained stable at 222,000 for the week ending April 19, in line with expectations. Additionally, demand for durable goods in the U.S. surged in March, as businesses secured orders ahead of Trump's tariff announcements. The U.S. Department of Commerce reported a 9.2% increase in orders for goods expected to last at least three years, driven by a 27% rise in transportation equipment orders and a 24% increase in capital goods orders.
