Date Issued – 2nd April 2025
Preview
Markets remain on edge as U.S. tariff uncertainty looms, pressuring Asian stocks and commodities like oil, which steadied below $75 per barrel ahead of President Trump’s announcement. Tesla’s Q1 delivery figures, expected to decline sharply to 390,000 units, highlight challenges from CEO Elon Musk’s political controversies and growing competition, particularly from China’s BYD. Meanwhile, Johnson & Johnson shares plunged 7.6% after a judge rejected its $8.9 billion talc settlement plan, raising legal risks. Schroders faces strategic crossroads as shifting investor preferences toward passive and private funds weigh on its traditional active management model, prompting a £150m cost-cutting overhaul. Investors should brace for heightened volatility while seeking opportunities in resilient sectors and emerging market leaders.
Markets on Edge as Tariff Uncertainty Looms
Asian stocks traded cautiously on Wednesday amid heightened nerves over U.S. President Donald Trump’s impending tariff announcement, expected to intensify global trade tensions. While Japan’s Nikkei managed a 0.25% gain after earlier losses, South Korea’s benchmark fell 0.6%, and Hong Kong’s Hang Seng remained flat. European futures pointed to a subdued open, while Wall Street showed mixed results overnight, with the Dow slipping slightly and the Nasdaq rising. Gold, a safe-haven asset, hovered near record highs at $3,116.96 per ounce, reflecting investor unease. U.S. economic data added to the gloom, with manufacturing contracting in March, inflation pressures rising, and job openings declining. Meanwhile, Treasury yields fell, signaling a cautious stance in bond markets.
Investment Insight: With escalating tariff risks and signs of economic strain, investors should brace for prolonged volatility. Safe-haven assets like gold remain attractive amid uncertainty, but a focus on high-quality equities in less trade-sensitive sectors may offer resilience. Monitoring policy developments and second-half growth projections will be critical for navigating the shifting landscape.
Oil Rally Stalls Ahead of US Tariff Announcement
Oil prices steadied on Wednesday as traders awaited U.S. President Donald Trump’s highly anticipated tariff measures, which could have far-reaching economic implications. Brent crude traded below $75 per barrel, while West Texas Intermediate remained just above $71. Market sentiment has turned cautious after last month’s robust rally, as concerns grow over potential global demand disruptions from new tariffs. Adding to the uncertainty, U.S. crude inventories surged by 6 million barrels last week, raising fears of a supply glut amid ongoing geopolitical tensions involving Russia and Iran. With OPEC and its allies increasing production this month, traders are scaling back risk exposure ahead of Trump’s announcement.
Investment Insight: Oil markets face conflicting forces, with rising inventories and trade uncertainties weighing on prices, while geopolitical risks and production constraints could limit downside risks. Investors should focus on energy companies with strong balance sheets and diversified revenue streams to weather potential volatility. Additionally, a cautious approach to crude futures may be prudent until clearer demand signals emerge following U.S. tariff decisions.
Tesla’s Q1 Deliveries in Focus Amid Mounting Headwinds
Tesla is set to report its first-quarter delivery figures on Wednesday, with analysts forecasting a significant decline to 390,000 units, down from an earlier estimate of 460,000. The EV giant faces headwinds from CEO Elon Musk’s political controversies, intensified competition from Chinese automakers, and slowing demand in key markets. European sales fell 49% year-on-year, while deliveries in China dropped 49% in February. Despite stronger U.S. sales and limited exposure to Trump’s proposed auto tariffs, Tesla’s share price has plunged 36% this year, erasing $460 billion in market value. Analysts remain cautious, citing BYD’s rapid growth and technological advancements as key challenges to Tesla’s market dominance.
Investment Insight: Tesla’s declining deliveries and intensifying competition signal a challenging road ahead for the EV leader. Investors should closely monitor Tesla’s ability to innovate and maintain its market share, particularly in China and Europe. Diversifying exposure to emerging EV market leaders, such as BYD, may provide a strategic hedge against Tesla’s volatility.
Market price: Tesla Inc (TSLA): USD 268.46
Johnson & Johnson Plunges After Judge Rejects Talc Settlement
Johnson & Johnson (JNJ) shares tumbled 7.6% on Tuesday, leading S&P 500 decliners, after a judge rejected the company’s proposed settlement of thousands of talc-related liability claims. The failed $8.9 billion settlement, which relied on a “prepackaged bankruptcy” plan for a subsidiary, marks J&J’s third unsuccessful attempt to resolve the litigation. The stock closed at $153.25, slipping below key technical levels, including the 50- and 200-week moving averages. Despite the sharp drop, J&J shares remain up 6% year-to-date, outperforming the S&P 500’s 4% decline. Investors now turn to critical support levels around $147 and $137, with resistance at $167 and $180.
Investment Insight: Johnson & Johnson’s legal setbacks compound downside risks, as the stock remains under pressure within a descending channel. Investors should monitor support levels for potential entry points but maintain caution as further legal challenges could weigh on sentiment. For long-term investors, J&J’s robust dividend yield and defensive healthcare positioning may provide a degree of resilience, but short-term volatility is likely as litigation uncertainties persist.
Market price: Johnson & Johnson (JNJ): USD 153.25
Schroders Faces Strategic Crossroads Amid Industry Shift
Historic fund manager Schroders is grappling with declining relevance as the investment landscape shifts toward low-cost passive funds and private capital. Despite growing assets under management to £780bn, the firm’s traditional active stock-picking model is under pressure, with outflows in public markets and slowing growth in private capital. The firm’s share price remains 45% below its 2021 peak, eroding the wealth of the Schroder family, which owns 44% of the business. CEO Richard Oldfield has unveiled a £150m cost-cutting plan, signaling a pivot toward efficiency and rethinking its private capital strategy. Yet questions linger over whether Schroders can succeed in both public and private markets or if a more radical restructuring, such as pivoting fully to wealth management, will be necessary.
Investment Insight: Schroders’ struggle underscores the challenges facing traditional asset managers as market dynamics evolve. For investors, the firm’s success hinges on its ability to drive inflows in private capital and streamline operations. While the wealth management arm, anchored by Cazenove Capital, offers a potential growth path, uncertainty remains. Investors may consider Schroders a high-risk, long-term turnaround play, while exploring opportunities in more agile competitors in the passive fund and private capital spaces.
Conclusion
Global markets are grappling with heightened uncertainty as geopolitical risks, legal challenges, and evolving industry dynamics weigh on sentiment. From Tesla’s delivery struggles and Johnson & Johnson’s legal setbacks to Schroders’ strategic pivot, investors face a complex landscape requiring careful navigation. Safe-haven assets like gold and defensive sectors offer resilience, while opportunities in private capital and emerging market leaders could provide growth. As tariff announcements loom, the focus shifts to policy developments and economic indicators for clarity. Staying diversified and strategically positioned will be key to weathering the volatility and capitalizing on opportunities in an increasingly uncertain environment.
Upcoming Dates to Watch
- April 3rd, 2025: Initial Jobless Claims, US Trade deficit
- April 4th, 2025: US Employment Report, Fed Chair Jerome Powell to Speak
Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $350 million AUM and over 1000 Clients.
Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.
