Daily Market Reports | Apr 10 2025
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The world discovered just how mighty the US Treasury market is, as a 4.5% US 10-year yield forced the US President’s hand on tariffs. A record breaking rally ensued with the ASX200 futures up over a whopping 6%.
| World Overnight | |||
| SPI Overnight | 7895.00 | + 490.00 | 6.62% |
| S&P ASX 200 | 7375.00 | – 135.00 | – 1.80% |
| S&P500 | 5456.90 | + 474.13 | 9.52% |
| Nasdaq Comp | 17124.97 | + 1857.06 | 12.16% |
| DJIA | 40608.45 | + 2962.86 | 7.87% |
| S&P500 VIX | 33.62 | – 18.71 | – 35.75% |
| US 10-year yield | 4.40 | + 0.14 | 3.24% |
| USD Index | 102.72 | – 0.06 | – 0.06% |
| FTSE100 | 7679.48 | – 231.05 | – 2.92% |
| DAX30 | 19670.88 | – 609.38 | – 3.00% |
Good Morning,
Markets discovered where the Trump put was last night with the US President pivoting on tariffs, with a 90-day reprieve, markets staged the third best rally since WWII.
What happened overnight: Extract from NAB Markets Today:
Eliciting some of the most dramatic 24 hour market moves since the onset of the pandemic, and before that the GFC, thirteen hours after the April 2 tariffs took effect, President Trump announced a 90-day moratorium on all but the 10% baseline tariff, while at the same time retaliating against China’s decision to add another 50% to its US import tariff rate to 84%.
China’s US import tariff rate is now set at 125% (from 104%).
The 2-year US Treasury note jumped 38bps from its intraday low of 3.65%, to 4.03% and 60bps from last Friday’s low (3.90% now)
The NASDAQ has soared by 12.3% from its low and AUD/USD has gone from zero to hero, rising from its intra-day low of 0.5915 shortly after China announced its latest retaliation to US tariffs to a high of 0.6176, a 4.4% intra-day turnround (so far).
Erstwhile Trump supporter and legendary hedge fund investor Bill Ackman should be feeling particularly smug this morning, having called a few days ago for a 90-day mortarium on the liberation day tariffs, which at the time sparked rumours this was about to happen, only to be slapped down by US administration officials as ‘fake news’.
One can only shudder to think how much money was made in the last few days by stock, bond or FX investors able to correctly second guess what ‘Donald does next’ (none of them in the government, surely? Ed)
In justifying his decision, President Trump told reporters that, “I thought that people were jumping a little bit out of line. They were getting a little bit yippy, a little bit afraid”.
And in a hint that it was the bond market as much as the stock market which prompted the president to blink, Trump said, “The bond market is very tricky. I was watching it. But if you look at it now, it’s beautiful – the bond market right now. But I saw last night where people were getting a little queasy”.
The president also said he is “going to take a look at” tariff exemptions for some US companies and will decide “on instinct”. “Some companies, through no fault of their own, happen to be in an industry that’s more affected. You have to be able to show a little flexibility, and I’m able to do that,” Trump said. (Bloomberg reporting)
Treasury Secretary Scott Bessent couched the turnabout as a victory for Trump, telling reporters the president “created maximum negotiating leverage for himself” and that “It took great courage for him to stay the course until this moment.“This was his strategy all along.”
Prior to this news and either side of the Liberation Day tariffs kicking in on cue at one minute past midnight Washington time, including the 50% top up for China in addition to the 34% April 2 announcement, US Treasuries led a global bond market sell-off, culminating in 10-year Treasury yields hitting 4.50% (before retracing to 4.35% later in the APAC session).
This was up from a low of 3.90% on Monday.
One (amongst several) possible explanations for the move was the unwind of basis trades – in this instance, highly leveraged trades entailing buying US cash bonds against sales of equivalent futures contracts, allowing hedge funds (the largest market participants) to collect the small arbitrage on offer. The volume of basis trades are estimated by the Fed to be worth hundreds of billions of dollars.
Whatever the truth, of particular note yesterday was the very atypical divergence between US Treasury yields (sharply higher) and the US dollar (lower), testament to the fact that the rise in yields represent a rise in the term premium, not a rise in real yields or inflation expectations.The latter has in fact been falling not rising this month, largely in conjunction with the slump in oil prices.
Major movers on the day
The S&P500 rallied 9.52% the third highest rally since WWII after the October 13, 2008, rally of 11.58% and October 28, 2008, rally of 10.79%.
On March 24, 2020, the rally hit 9.38% and March 13, 2020, the S&P500 rose 9.20%.
Many of the most influential stocks in the market logged double-digit percentage gains. Nvidia up 18.7%, Apple up 15.3%, Tesla up 12% and Microsoft up 10.1%.
All eleven S&P500 sectors closed at least 3.9% higher. The technology sector led the upside charge, registering a 14.2% gain, followed by consumer discretionary, up 11.4% and communication services rising 10.0%.
Year-to-date performance from US Indices
-Dow Jones Industrial Average: -4.6%
-S&P500: -7.2%
-S&P Midcap400: -10.3%
-Nasdaq Composite: -11.3%
-Russell2000: -14.2%
The Uncertain Outlook: Extract from Howard Marks
I consider the tariff developments thus far to be what soccer fans call an “own goal”, a goal scored for the other side when a player accidentally puts the ball into his own team’s net. In this way, they’re highly analogous to Brexit, and we know how that turned out. Brexit cost the British mightily in terms of GDP, morale, and alliances, and it harmed their reputation for governance and stability. All of this damage was self-inflicted.
I like the way things have gone during my lifetime, which conveniently spans 99% of the post-war period I’ve been discussing. Some of our government expenditures have certainly been misspent, both at home and abroad, and our national debt is nothing to celebrate. But I’ve enjoyed living in a peaceful, prosperous, and increasingly healthy world, and I’m not eager to see that change.
Just a couple of months ago, the U.S. economy was performing well, the outlook was positive, the stock market was at an all-time high, and there was much talk about American exceptionalism.
Now, if Trump’s tariffs are put into effect, the U.S. economy is likely to experience a recession sooner than otherwise would have been the case, higher inflation, and extensive dislocation. Even if the tariffs are reversed entirely, it’s unlikely the other nations will dismiss this incident and conclude that they have nothing to worry about in terms of relations with the U.S.
No one should rule out the achievement of some of the goals of tariffs listed above. U.S. manufacturing could increase, bringing new jobs and more dependable supply chains. Our treatment in world trade could become fairer. And the Treasury’s take could increase.
On the other hand, some of the hoped-for benefits are probably beyond reach.
In particular, as for reducing our trade deficit, the U.S. is unlikely to ever buy less from other countries than they buy from us as long as the U.S. is bigger and more prosperous and thus has greater buying power. This will be especially true as long as our workers are better paid, meaning most U.S.-made goods cost more than goods produced elsewhere.
The hoped-for results might materialize, or the negative consequences might be felt, or some combination of the two. It must be borne in mind, however, that whereas the negative ramifications from tariffs will probably be felt almost immediately, any gains are likely to come only in the long run, following a multi-year period of adjustment.
And what about the financial markets? In the last few days there’s been a massive shift in the economic outlook and a huge stock market decline in reaction.
As always, the key question surrounds the appropriateness of the response to date: has it been just right, inadequate, or excessive? It’s even harder to answer that question than usual, since there can be little confidence that the economic world of the future won’t be significantly different from and probably worse than the one we’ve lived in up to now.
On the one hand, if the tariffs remain as announced and retaliation leads to an all-out trade war, the economic consequences could be truly dire. But on the other hand, cooler heads (and highly negative political and stock-market reactions) could prevail, causing the tariffs to be rolled back to less harmful levels, perhaps even leading to gains for free trade.
How is the Fed likely to respond? The threat of recession might call for accelerated rate cuts to bolster economic activity. Or the threat of inflation might cause rates to stay higher, with cuts postponed. Note, however, that inflation-fighting measures such as higher rates are probably less likely to succeed against inflation caused by the addition of tariffs to selling prices than they would be against the more typical demand-driven inflation. Today’s title is particularly applicable to the Fed’s actions: certainly nobody knows.
In Oaktree’s markets, fear of defaults (not unfounded) has caused risk compensation in the form of yield spreads to increase substantially.
Corporate news in Australia
-TPG Telecom ((TPG)) buys a majority stake in Five Good Friends.
-ACCC approves Woolworths Group’s ((WOW)) acquisition of ready meals maker Beak & Johnston.
-Mineral Resources ((MIN)) is considering the sale of its Wodgina lithium operations alongside an equity raising due to debt and liquidity concerns.
On the calendar today:
-JP March PPI
-CH March PPI, CPI
-US March CPI
-AUSSIE BROADBAND LIMITED ((ABB)) investor briefing
-COSOL LIMITED ((COS)) ex-div 1c (100%)
-NETWEALTH GROUP LIMITED ((NWL)) 3Q Qtr update
-SANTOS LIMITED ((STO)) AGM
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3114.69 | + 121.45 | 4.06% |
| Silver (oz) | 30.93 | + 1.25 | 4.22% |
| Copper (lb) | 4.47 | + 0.37 | 9.06% |
| Aluminium (lb) | 1.06 | + 0.01 | 0.95% |
| Nickel (lb) | 6.27 | – 0.15 | – 2.40% |
| Zinc (lb) | 1.16 | + 0.01 | 0.73% |
| West Texas Crude | 62.77 | + 2.73 | 4.55% |
| Brent Crude | 65.70 | + 3.71 | 5.98% |
| Iron Ore (t) | 99.05 | – 0.20 | – 0.20% |
The Australian share market over the past thirty days
| Index | 09 Apr 2025 | Week To Date | Month To Date (Apr) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 7375.00 | -3.82% | -5.97% | -5.97% | -9.61% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALD | Ampol | Downgrade to Neutral from Outperform | Macquarie |
| ANN | Ansell | Downgrade to Neutral from Outperform | Macquarie |
| BGL | Bellevue Gold | Downgrade to Hold from Buy | Bell Potter |
| EVN | Evolution Mining | Downgrade to Underweight from Equal-weight | Morgan Stanley |
| FMG | Fortescue | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| HUB | Hub24 | Upgrade to Buy from Neutral | Citi |
| IGO | IGO Ltd | Upgrade to Buy from Neutral | Citi |
| Upgrade to Equal-weight from Underweight | Morgan Stanley | ||
| LYC | Lynas Rare Earths | Downgrade to Hold from Buy | Ord Minnett |
| NIC | Nickel Industries | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| NST | Northern Star Resources | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| NWL | Netwealth Group | Upgrade to Buy from Neutral | Citi |
| PLS | Pilbara Minerals | Upgrade to Buy from Neutral | Citi |
| RIO | Rio Tinto | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| TNE | TechnologyOne | Upgrade to Buy from Hold | Bell Potter |
| VEA | Viva Energy | Downgrade to Neutral from Outperform | Macquarie |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)
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CHARTS
For more info SHARE ANALYSIS: ABB - AUSSIE BROADBAND LIMITED
For more info SHARE ANALYSIS: COS - COSOL LIMITED
For more info SHARE ANALYSIS: MIN - MINERAL RESOURCES LIMITED
For more info SHARE ANALYSIS: NWL - NETWEALTH GROUP LIMITED
For more info SHARE ANALYSIS: STO - SANTOS LIMITED
For more info SHARE ANALYSIS: TPG - TPG TELECOM LIMITED
For more info SHARE ANALYSIS: WOW - WOOLWORTHS GROUP LIMITED