Today
Equity markets are set to extend yesterday’s rally, buoyed by a softer tone from the U.S. administration on both China, its primary trade war target, and the Federal Reserve. Just days after President Trump appeared to challenge the Fed’s independence by stating that Powell’s “termination (couldn’t) come fast enough”, he walked back those remarks, saying he had “no intention to fire him.” Asian and European markets also posted gains in response to the less confrontational rhetoric out of the U.S. Trump signaled a softer stance toward China, saying he plans to be “very nice” in trade talks and is open to substantial tariff cuts if a deal is reached, amid mounting market pressure and high U.S. Treasury yields. He emphasized he won’t “play hardball” with President Xi Jinping or bring up the pandemic, a sensitive issue for China. In response, China reiterated its openness to dialogue, provided mutual respect is shown, and has positioned key negotiators for potential talks. Shifting from rhetoric to real data, investors will turn their attention to this morning’s U.S. PMI data, as well as another wave of corporate earnings, including results from several members of the “Mag Seven.” See below for company-specific earnings highlights.
Stocks rallied yesterday, with investors growing more optimistic about the White House making progress on key trade deals with China, Japan, and India. The TSX climbed 1.2% yesterday, reaching its highest closing level since April 3, buoyed by gains in technology and energy sectors amid optimism over easing global trade tensions. The rally followed U.S. Treasury Secretary Scott Bessent’s comments suggesting the tariff standoff with China is unsustainable and likely to de-escalate. Treasury yields climbed and the dollar rebounded slightly. Despite the rally, concerns persist around the global economic impact of the ongoing trade war, with the IMF cutting growth forecasts and central bankers urging caution.
On the topic of growth targets, the IMF has slashed its global forecast, warning that escalating trade tensions are pushing the world economy toward a potential downturn. Global GDP is now expected to grow just 2.8% in 2025, the weakest pace since the pandemic, and the risks are clearly tilted to the downside. The Fund sees a 40% chance of a U.S. recession and has downgraded growth projections for both the U.S. and China, citing supply shocks, inflationary pressures, and declining productivity. Officials at the IMF described the moment as a fundamental reset of the global economic order. With policy decisions changing day to day, the IMF emphasized that the forecasts were rushed in response to the surprise tariffs and may still understate the damage if trade tensions intensify further.
Facing steep new tariffs, companies are turning to U.S. Customs-approved foreign trade zones (FTZs) and bonded warehouses to delay or avoid duty payments. These secure storage and manufacturing sites allow goods to be held without paying tariffs until they’re moved into the U.S. market, offering financial flexibility and cost savings, especially amid soaring tariff rates. Interest in FTZs has drastically risen, with the National Association of Foreign Trade-Zones reporting record membership and growing inquiries from potential grantees. While setting up an FTZ can be expensive, it’s becoming a more attractive option as traditional duty relief methods like drawback don’t apply to the new tariffs.
In a rare, unified move, six U.S. automotive policy groups have jointly urged the Trump administration to reconsider the 25% tariffs on imported auto parts. Representing franchised dealers, suppliers, and nearly all major automakers (excluding Tesla, Rivian, and Lucid), the groups say the tariffs, set to take effect by May 3, could push already-struggling suppliers into bankruptcy, trigger production halts, job losses, and cost the industry over $100 billion. They argue that while they support reshoring supply chains, such transitions require time, and abrupt policy changes risk collapsing the sector that supports 10 million U.S. jobs and contributes $1.2 trillion annually to the economy.
As U.S. companies begin reporting first-quarter earnings, investors are watching closely to gauge how much firms will absorb or pass on rising tariff costs, a decision that could heavily influence inflation. While many corporations still enjoy near-record profit margins and may have room to cushion the blow, consumer fatigue and recession risks are limiting their ability to raise prices. Estimates vary widely, with forecasts placing core inflation anywhere from just over 3% to nearly 5% by year-end. Larger firms like Walmart can leverage global supply chains to mitigate costs, but others (including Nike, Target, and smaller businesses) face tough choices, including shrinking margins or raising prices. The recent drop in wholesale and retail margins indicates that companies are already taking a financial hit rather than risking customer backlash.
A record-breaking 7.3 million Canadians voted in advance polls over the weekend, marking a 25% increase from the 2021 federal election, according to preliminary data from Elections Canada. Advance polls were open from Friday through Monday, with more than two million people casting their ballots on Friday alone, a single-day record. While it’s too early to determine whether this rise in early voting will translate into higher overall turnout, experts noted that past elections saw more advance votes without an increase in total participation. With less than a week until Canada’s federal election on April 28, according to a Leger poll, Mark Carney’s Liberal Party holds a narrow lead over Pierre Poilievre’s Conservatives, with 43% to 39% support among decided voters. The Liberals look strong in Ontario and Quebec, key provinces holding 58% of parliamentary seats, while the Conservatives look to dominate western Canada. This election, a central issue influencing voters seems to be who can best handle Trump, whose tariffs and controversial remarks have loomed over the campaign. Unfortunately, some neighbourhoods were not ready for the surge with lineups up to two hours discouraging some voters into waiting until April 28 to cast their ballots.
Diversion: The trip may be worth the view
