Trade tensions Trigger Market Sell-Off

European markets, including Milan’s Piazza Affari, faced a challenging trading day as anxieties surrounding the US-China trade conflict intensified. The downturn was sparked by the implementation of reciprocal tariffs imposed by the United States on numerous countries, including a substantial 104% levy on Chinese goods. beijing responded wiht a white paper cautioning that trade wars produce no winners and protectionism offers no solutions. This progress dashed hopes fueled by earlier indications of progress in US-China negotiations,which ultimately failed to materialize.

The impact was felt across major European indices:

• Frankfurt’s DAX: Down by 2.32%
• London’s FTSE 100: Fell by 2.16%
• Paris’s CAC 40: Dropped by 2.29%

Bond Market Volatility Adds to Uncertainty

Adding to the market unease, US government bonds experienced accelerated selling pressure. Typically, investors flock to Treasury bonds during anticipated recessions and monetary easing by central banks. However, the current trend indicates the opposite. Factors contributing to this include speculation about China selling off US assets, the unwinding of “basis Trade” positions, and weak demand for 3-year Treasury notes. analysts at ING have voiced concerns about a potential “Sell America Inc.” risk.

The most worrying narrative recently is the idea of what we call a “Sell America Inc.” risk.

ING analysts

Central Banks Respond to Economic Headwinds

In response to the deteriorating global economic outlook, the Reserve Bank of New Zealand (RBNZ) lowered its benchmark interest rate to 3.50%, a move widely anticipated by markets.Meanwhile, within the Eurozone, European Central Bank (ECB) officials are increasingly concerned about a potential demand shock stemming from the new US tariffs. Joachim Nagel of the German Bundesbank stated that Washington’s new trade policies have significantly worsened the global situation, while Gediminas Simkus suggested that a 25-basis point rate cut next week will be needed. This highlights the growing consensus among central bankers regarding the need for accommodative monetary policy in the face of escalating trade tensions.

Milan’s Stock Exchange Suffers Heavy Losses

The Italian stock exchange experienced a particularly arduous session,with the FTSE MIB index plummeting by 2.60%. The broader FTSE Italia All-Share index followed suit, closing at 34,855 points. Mid-cap and small-cap stocks also faced significant declines, with the FTSE Italia Mid Cap index down by 1.9% and the FTSE Italia Star index falling by 1.96%.

Individual Stock Performance

On a day where no blue-chip stocks managed to post positive gains,several companies experienced notable declines:

• Saipem: -5.17%
• STMicroelectronics: -4.75%
• ENI: -4.22%
• Recordati: -3.80%

Among mid-capitalization stocks, Anima Holding (+1.35%) and Comer Industries (+0.76%) were among the few to buck the negative trend. Though, Alerion Clean Power (-4.25%), Ferragamo (-3.96%), Banco di Desio e Brianza (-3.69%), and Ferretti (-3.40%) all experienced significant losses.

currency and Commodity markets React

Amidst the market turmoil, the Euro gained ground against the US dollar, rising by 0.95%. Gold also saw a significant increase, climbing by 2.11% as investors sought safe-haven assets. Conversely, oil prices (Light Sweet Crude Oil) declined by 2.43%, trading at $58.13 per barrel.

Italian bond Market Under Pressure

The spread between Italian and German 10-year government bonds widened to +127 basis points, an increase of 7 basis points. The yield on the 10-year Italian BTP rose to 3.87%,reflecting increased investor concerns about Italian sovereign debt.

Key Economic Data on the Horizon

Investors will be closely watching upcoming macroeconomic data releases for further insights into the global economic outlook:

Wednesday, April 9, 2025

• USA: Wholesale Inventories (Monthly) – Expected: 0.3%,Previous: 0.8%
• USA: Weekly Crude oil Stocks – Previous: 6.17 million barrels

Thursday,april 10,2025

• Japan: Producer Price index (Monthly) – Previous: 0%
• China: Producer Price Index (Annual) – Expected: -2.3%, Previous: -2.2%
• China: Consumer Price Index (Annual) – Expected: 0.1%, Previous: -0.7%
• Italy: Industrial Production (Monthly) – Expected: -1%, Previous: 3.2%
• Italy: Industrial Production (Annual) – Previous: -0.6%