Financial markets are expected to be less volatile this week after China suggested that it won’t be raising its 125% tariff on US goods any higher — dismissing potential further hikes from the US as a “joke”. The Trump administration also announced tariff exemptions for electronic products coming from China over the weekend, although more levies could arrive as part of a state probe into semiconductors.
This shift is likely to refocus investors’ attention on economic fundamentals and key events, including the European Central Bank’s (ECB) interest rate decision and China’s quarterly GDP. Additionally, global companies will begin the earnings season, with key results from ASML and Netflix in the spotlight. These earnings reports will offer insights into the broader economic impact of escalating trade tensions and help shape future market sentiment.
Europe
The ECB is expected to continue cutting key policy rates by 25 basis points amid a worsening growth outlook and mounting risks of inflation stemming from tariffs. The bank lowered interest rates for the second consecutive time in March, bringing the deposit rate down to 2.5%. A further reduction would see the rate fall to 2.25%.
The Governing Council appears divided over the rate path. Some members argue that a strong euro and persistent economic uncertainty may prolong deflationary pressures in the eurozone, while others strike a more cautious tone due to fears of tariff-fuelled inflation.
Economists forecast that the ECB will implement at least three further cuts after April, bringing the deposit rate to 1.5% by year-end. Nevertheless, the central bank is expected to reaffirm its “data-dependent” and “meeting-by-meeting” approach through its next decision.
Germany’s ZEW economic sentiment for April is set to be released this Tuesday, delivering an outlook for Europe’s biggest economy. In March, the index rose to 51.6, the highest since February 2022, due to optimism towards the country’s historical debt reform and the EU’s plan to increase spending. However, consensus suggests that economic sentiment will sharply decline to 10.6, or a three-month low, as the US continues its chaotic tariff threats.
Additionally, Europe’s biggest chip equipment manufacturer, ASML, is set to report its first-quarter earnings on Wednesday. The Dutch firm is expected to report earnings per share of $6.12 (€5.4), an 81% year-on-year surge. Its guidance is critical for stock performance as uncertainty over Trump’s tariffs continue to concern investors.
United States
The retail sales change for March in America is set to be a key indicator for the country’s consumer sentiment. In February, the data increased 0.2% month on month, rebounding from a downwardly revised 1.2% drop in the previous month. Despite tariff woes, retail sales are expected to grow 1.4% in March. And the core data, excluding automobiles, is forecast to increase 0.4%, up from 0.3% in February.
Netflix will be the first major tech company to report its quarterly earnings this week. The streamer remains the most resilient performer among big tech firms, as the industry is not directly impacted by Trump’s tariffs or retaliatory measures from other nations. In recent quarters, Netflix has delivered robust earnings that consistently exceeded analysts’ expectations, supported by its ad-tier programme and crackdown on password sharing. The company is expected to report earnings per share of $5.70 (€6.50) on revenue of $10.5 billion (€12 billion), reflecting year-on-year increases of 8% and 12%, respectively, according to FactSet.
Asia-Pacific (APAC)
China is set to release its first-quarter Gross Domestic Product figures on Wednesday, a key indicator for assessing the country’s economic trajectory. Analysts expect the economy to expand by 5.1% year-on-year in the first three months, marking a slowdown from 5.4% in the previous quarter. Beijing has set a growth target of 5% for 2025. However, economists forecast that the world’s second-largest economy will grow by just 4.5% this year, weighed down by persistently weak consumer demand and ongoing trade tensions with the United States.
The country will also publish other key economic indicators for March, including industrial production, retail sales, and fixed asset investment. Retail sales are projected to improve, rising 4.2% year on year, up from February’s 4.0% growth. However, industrial output is expected to ease slightly, slowing to 5.7% from 5.9% in the previous month.
