US Equity Investors to Focus on Trade Deals This Week After Geneva Talks Yield Temporary Cuts in Tariffs
US equity investors are set to focus on trade tariff developments following a deal in Geneva that temporarily cuts tariffs by 115% for 90 days. The US will reduce tariffs on Chinese imports to 30%, while China will lower duties on US goods to 10%. Analysts expect further negotiations to lead to more significant tariff reductions. Additionally, inflation data and quarterly earnings from major companies will be monitored, with S&P 500 earnings showing a 14% year-over-year increase.
US investors will focus on global trade tariff developments this week while keeping an eye on inflation and quarterly earnings.
* Treasury Secretary Scott Bessent reportedly unveiled a deal in Geneva with Beijing in which both sides agreed to cut "reciprocal" tariffs by 115% for 90 days. That means the US levies on Chinese imports will drop to 30% and Chinese duties on inbound shipments from the US will slump to 10%.
* "This is clearly just the start of a broader and more comprehensive negotiations, and we would expect both these tariff numbers to move down markedly over the coming months as deal talks progress," Wedbush Securities analysts, including Dan Ives, said in a note early Monday.
* The US is reportedly developing a list of prioritized countries for trade talks. Bessent has indicated it includes 18 countries such as China, Japan and South Korea, according to a note from Scotiabank late Friday.
* Morgan Stanley said the core consumer price index grew 0.2% month-over-month and 2.8% year-over-year in April. "We don't expect tariffs to boost goods prices meaningfully yet," but it expects services inflation to accelerate. It anticipates the headline rates climbed 0.2% m/m and 2.3% y/y, compared with forecasts, according to data compiled by Bloomberg, of 0.3% and 2.4%, respectively.
* "The last of the stale CPI prints arrives on Tuesday," the Scotiabank note said. "It will be stale because the data covers April and while there were some tariffs imposed during April, most took effect in May and will show up in the next report on June 11."
* Earnings due this week include Simon Property Group , Cisco , Walmart , Deere & Co. , and Applied Materials .
* With more than 90% of companies having reported Q1 results, S&P 500 earnings have increased almost 14% y/y, ahead of the FactSet consensus estimate as of March 31 for an increase of 6.8%, D.A. Davidson said in a note.
