Stock Index Futures Slip on Tariff Uncertainty Ahead of U.S. PCE Inflation Data

June S&P 500 E-Mini futures (ESM25) are down -0.20%, and June Nasdaq 100 E-Mini futures (NQM25) are down -0.32% this morning as market participants remain cautious amid uncertainty surrounding U.S. tariffs while also awaiting the release of the Federal Reserve’s first-line inflation gauge.

Investors have been paring back risk ahead of April 2nd, when U.S. President Donald Trump is set to unveil so-called “reciprocal tariffs” that risk escalating the trade war and hurting the global economy. Deutsche Bank analysts said in a note that there are indications investors are growing more worried about the possibility of stagflation in the U.S. due to tariffs.

In yesterday’s trading session, Wall Street’s major indices ended lower. Automakers sank after U.S. President Donald Trump imposed a 25% tariff on auto imports starting next week, with General Motors (GM) slumping over -7% to lead losers in the S&P 500 and Ford Motor (F) falling more than -3%. Also, AppLovin (APP) plummeted over -20% and was the top percentage loser on the Nasdaq 100 after Muddy Waters Research issued a short report against the company. In addition, Advanced Micro Devices (AMD) slid more than -3% after Jefferies downgraded the stock to Hold from Buy. On the bullish side, Dollar Tree (DLTR) surged over +11% and was the top percentage gainer on the S&P 500, adding to Wednesday’s +3% gain after selling its Family Dollar business to Brigade Capital Management and Macellum Capital Management for about $1 billion.

The U.S. Bureau of Economic Analysis said Thursday that the Q4 GDP growth estimate was revised upward to +2.4% (q/q annualized) in its final print, stronger than expectations of no change at +2.3%. Also, the number of Americans filing for initial jobless claims in the past week unexpectedly fell -1K to 224K, compared with the 225K expected. In addition, U.S. pending home sales rose +2.0% m/m in February, stronger than expectations of +0.9% m/m.

“The monthly jobs report may paint a different picture, but [yesterday’s] jobless claims number suggests the labor market is still on solid ground. For markets, though, the question is whether anything will be able to rise above the noise of the tariff story,” said Chris Larkin at E*Trade from Morgan Stanley. “In the near-term, the most likely scenario is more choppy trading,” he added.

Richmond Fed President Tom Barkin said on Thursday that swift policy changes by the Trump administration have created “a sense of instability” among businesses, and the accompanying fall in sentiment could “quiet demand.” With a robust labor market and inflation still running high, the Fed’s “moderately restrictive” stance is a “good place to be,” Barkin noted. Also, Boston Fed President Susan Collins said it seems “inevitable” that tariffs will fuel inflation, at least in the short term, adding that holding interest rates steady for an extended period is likely appropriate.

Meanwhile, U.S. rate futures have priced in an 88.4% chance of no rate change and an 11.6% chance of a 25 basis point rate cut at the May FOMC meeting.

Today, all eyes are focused on the U.S. core personal consumption expenditures price index, the Fed’s preferred price gauge, which is set to be released in a couple of hours. Economists, on average, forecast that the core PCE price index will stand at +0.3% m/m and +2.7% y/y in February, compared to the previous figures of +0.3% m/m and +2.6% y/y. 

U.S. Personal Spending and Personal Income data will also be closely monitored today. Economists anticipate February Personal Spending to be +0.5% m/m and Personal Income to be +0.4% m/m, compared to January’s figures of -0.2% m/m and +0.9% m/m, respectively. 

The University of Michigan’s U.S. Consumer Sentiment Index will be released today as well. Economists estimate this figure at 57.9 in March, compared to 64.7 in February. 

In addition, market participants will be anticipating a speech from Atlanta Fed President Raphael Bostic.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.339%, down -0.69%.

The Euro Stoxx 50 Index is down -0.28% this morning as investors digest a slew of economic data from the region as well as the Trump administration’s latest tariffs. Technology stocks lost ground on Friday. The benchmark index is on track to end the week lower. Data from the Office for National Statistics released on Friday showed that British monthly retail sales unexpectedly grew in February, supported by increased spending on clothing and stronger demand for gold jewelry. Separately, a survey showed that German consumer sentiment improved marginally heading into April. In addition, preliminary data from the statistics agency Insee showed that France’s annual inflation rate remained unchanged at 0.8% in March. Meanwhile, investor sentiment remains subdued after U.S. President Donald Trump announced a 25% tariff on auto imports, set to take effect next week. The European Union is also bracing for Trump’s reciprocal tariffs, set to be announced next week, and is considering deploying one of its strongest trade-policy tools, the so-called anti-coercion instrument, as a potential retaliatory measure. In corporate news, Ubisoft (UBI.FP) climbed over +9% after the French video game company announced it had established a subsidiary that will receive a 1.16 billion euro ($1.25 billion) investment from China’s Tencent.

U.K.’s GDP, U.K.’s Retail Sales, France’s CPI (preliminary), Germany’s Germany’s GfK Consumer Climate Index, Germany’s Unemployment Change, Germany’s Unemployment Rate, Spain’s CPI (preliminary), and Eurozone’s Consumer Confidence data were released today.

U.K. GDP has been reported at +0.1% q/q and +1.5% y/y in the fourth quarter, compared to expectations of +0.1% q/q and +1.4% y/y.

U.K. February Retail Sales came in at +1.0% m/m and +2.2% y/y, stronger than expectations of -0.3% m/m and +0.5% y/y.

The French March CPI arrived at +0.2% m/m, weaker than expectations of +0.3% m/m.

The German April GfK Consumer Climate Index stood at -24.5, weaker than expectations of -22.6.

The German March Unemployment Change came in at 26K, weaker than expectations of 10K.

The German March Unemployment Rate was 6.3%, weaker than expectations of 6.2%.

The Spanish March CPI arrived at +2.3% y/y, weaker than expectations of +2.6% y/y.

Eurozone March Consumer Confidence stood at -14.5, in line with expectations.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.67%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.80%.

China’s Shanghai Composite Index closed lower today as concerns over upcoming U.S. tariffs and an escalating trade war weighed on investor risk appetite. Consumer and energy stocks led the declines on Friday. The benchmark index ended the week flat. Having digested U.S. President Donald Trump’s 25% tariffs on car imports, investors are now gearing up for the implementation of so-called “reciprocal tariffs” on April 2nd. Meanwhile, Trump’s auto and reciprocal tariffs will come on top of the 20% levies already imposed on Chinese goods, further escalating trade tensions. Still, the U.S. president said earlier this week that China could receive a tariff reduction as part of a deal to sell ByteDance’s social video platform TikTok to an American company. Morgan Stanley analysts, led by Laura Wang, said in a note on Friday that sentiment toward mainland Chinese stocks cooled with lower trading volumes. “We expect higher volatility amid tariff uncertainty but believe green shoots on earnings and liquidity warrant further index upside towards year-end,” they said. Investor focus is also on China’s official manufacturing PMI reading for March, scheduled for release on Monday. Activity in China’s huge manufacturing sector likely grew in March despite U.S. tariff headwinds, partly due to Beijing’s stimulus efforts. In corporate news, Nio plunged over -7% in Hong Kong following the electric vehicle maker’s $518 million share placement.

Japan’s Nikkei 225 Stock Index closed sharply lower today, hitting a 2-week low as worries about the potential impact of U.S. President Donald Trump’s tariffs dampened sentiment. Also, Japanese equities slumped partly because Friday marked the ex-dividend date for most companies at the fiscal year-end. Automobile stocks led the declines on Friday, extending yesterday’s losses after President Trump announced a 25% tariff on U.S. auto imports. Financial stocks also underperformed. The benchmark index posted a weekly loss. Government data released on Friday showed that core consumer inflation in Japan’s capital accelerated in March due to rising food prices, keeping the Bank of Japan on course for gradual interest rate increases. Meanwhile, a summary of opinions from the Bank of Japan’s March meeting released on Friday revealed that policymakers were divided this month over how soon to raise interest rates again, with some emphasizing domestic inflationary pressures and others highlighting uncertainty surrounding the U.S. tariff policy. “The bank will need to be particularly cautious when considering the timing for raising the policy interest rate,” the summary quoted one board member as saying. In other news, Japan’s Prime Minister Shigeru Ishiba said on Friday that President Trump’s decision to impose an additional 25% tariff on U.S. auto imports could severely affect the Japanese economy, and he vowed to take measures to safeguard the country’s industries and jobs. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +2.24% to 22.35.

The Japanese March Tokyo Core CPI came in at +2.4% y/y, stronger than expectations of +2.2% y/y.

Pre-Market U.S. Stock Movers

Lululemon Athletica (LULU) plunged over -10% in pre-market trading after the yogawear brand reported weaker-than-expected Q4 comparable sales and issued disappointing FY25 guidance.

KLA Corp. (KLAC) fell more than -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.

Oxford Industries (OXM) tumbled over -16% in pre-market trading after the owner of Tommy Bahama and Lilly Pulitzer provided below-consensus Q1 and FY25 revenue guidance.

Argan (AGX) surged more than +12% in pre-market trading after reporting better-than-expected Q4 results.

Braze (BRZE) climbed over +9% in pre-market trading after the cloud-based software company posted upbeat Q4 results and issued solid full-year guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - March 28th

SBC Medical Holdings (SBC), Humacyte (HUMA), China Automotive (CAAS), So-Young (SY).