Some calm has come back to financial markets

Summary

Marketplace Morning Report: "Some Calm Has Come Back to Financial Markets"
Release Date: April 8, 2025
Host: David Brancaccio

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Introduction

In the April 8, 2025 episode of Marketplace Morning Report, host David Brancaccio delves into the recent fluctuations and emerging stability within the global financial markets. The episode provides a comprehensive analysis of stock market movements, the impact of erroneous information on market volatility, ongoing US-China trade tensions, and the dynamics of oil pricing amidst regulatory changes. This summary captures the key discussions, insights, and conclusions from the episode, enriched with notable quotes and organized into clear sections for ease of understanding.

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Market Calm Amidst Recent Volatility

David Brancaccio opens the discussion by noting a return to calm in the financial markets:

"Some calm has come back to financial markets this morning." (00:01)

Despite a backdrop of uncertainty, overseas stock markets and US stock index futures indicated upward movements. Notably, the S&P futures experienced a significant rise of 1.5%, and the volatility index (VIX) showed a decrease, signaling reduced market fear compared to the previous day. Brancaccio contrasts today's stability with yesterday's extreme volatility:

"A sharp contrast to yesterday when in the hour after Wall Street's opening bell, stock indicators went from way down to way up in a few seconds, a 7% swing." (00:20)

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Impact of False Information on Market Swings

Nova Safo, Marketplace’s market analyst, elaborates on the unprecedented market swing experienced the previous day, attributing it to misinformation:

"The whole thing happened within minutes in the 10 o'clock hour Eastern time. It appears been a false report that circulated on social media that the Trump administration may be considering a 90-day pause on the global tariffs it announced last week." (00:51)

This false report led to a dramatic $2.5 trillion influx and subsequent withdrawal from the stock market within approximately half an hour—a movement comparable to some of the largest swings seen in the past 50 years, including the 1987 stock market crash and the 2008 financial crisis. Safo emphasizes the rarity and potential continuation of such volatility, especially as the market enters the earnings season.

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Global Market Updates

Brancaccio provides a snapshot of global market performances, highlighting significant gains despite escalating US-China trade tensions:

• London: Up 1.5%
• Germany: Up 1.2%
• Tokyo: Soared 6% overnight
• Hong Kong: Up 1.5%

Jennifer Pak reports from Shanghai, indicating that Japanese markets rose on expectations of favorable trade negotiations with the Trump administration. However, tensions remain high as President Trump threatens additional tariffs on Chinese exports, which the Chinese government denounces as "blackmail."

"China's Commerce Ministry calls this threat blackmail, while the Foreign Ministry says if the US insists on waging a tariff and trade war, China will fight to the end." (03:40)

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US-China Trade Tensions and Tariffs

The episode delves into the escalating trade tensions between the US and China. President Trump has signaled potential increases in tariffs, aiming to pressure China into negotiations. The implications for US consumers are significant, with expectations of higher prices on a range of goods, including smartphones, coffee, and vehicles.

Jennifer Pak underscores the precarious situation:

"If China does not withdraw these tariffs, says President Trump, there will be even more." (03:40)

The threat extends to a possible 54% increase in tariffs on Chinese exports by Wednesday, with further increases on the table. This aggressive stance has led to strong pushback from Chinese authorities, highlighting the precarious balance of international trade relations.

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Oil Prices and Domestic Production

A notable segment of the episode focuses on the declining wholesale price of crude oil, currently at $61 per barrel, a decrease to levels seen during the second pandemic year of 2021. Kaylee Wells explores the multifaceted implications of this drop:

"Just like any commodity in the market, there's a supply side and a demand side. The oil demand is responding like it would during any economic downturn." (04:11)

The discussion reveals a paradox where, despite decreasing demand due to recession fears and tariffs, oil prices are further suppressed by increased production from OPEC+:

"OPEC plus said they were going to increase production, and that also suppresses prices." (04:32)

Energy experts express concern over the strategy's long-term impact on market share and domestic oil production. Mark Finley from Rice University points out the fragility of domestic producers who require prices above $60 per barrel to profitably drill new wells:

"Domestic oil producers already have faced thin margins recently. They need prices above $60 per barrel to profitably drill a new well." (05:18)

The Trump administration's response to the declining oil prices, which includes promises of regulatory easing to offset lower prices, is met with skepticism. Kaylee Wells highlights the limited effectiveness of such measures in counterbalancing the price drops:

"It's hard to see how less regulation can completely offset the decline of lower oil prices." (06:08)

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Conclusion

David Brancaccio wraps up the episode by summarizing the current state of the markets, reflecting on the nuanced impacts of misinformation, international trade tensions, and commodity pricing on the global economy. He provides a brief update on retail gas prices, which have risen contrary to the declining wholesale oil prices, indicating a complex interplay of factors influencing consumer costs.

"For the Nasdaq, they're up 1.3%. For the Dow, up 750 points, 2%." (06:27)

The episode effectively underscores the delicate balance of market forces and the significant influence of political and economic policies on financial stability.

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Notable Contributors:

• David Brancaccio: Host and Presenter
• Nova Safo: Market Analyst, Marketplace
• Jennifer Pak: Reporter, Marketplace
• Kaylee Wells: Energy Analyst, Marketplace

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Note: This summary excludes advertisements, intros, outros, and non-content sections to focus solely on the substantive discussions and analyses presented in the episode.

Transcript

[David Brancaccio]

Some calm has come back to financial markets this morning. I'm David Brancaccio in Los Angeles. Overseas stock markets and US Stock index futures are showing a move upward in prices on this Tuesday even as bonds turn down, pushing up interest rates. The benchmark US 10 year rate 4.16% now after moving below 4% for a stretch during the wild. Volatility over tariffs. S and P futures are up 1.5% now. Volatility is down. A sharp contrast to yesterday when in the hour after Wall Street's opening bell, stock indicators went from way down to way up in a few seconds, a 7% swing. This was a move based on false information. The Trump team might be willing to pause the new tariffs marketplace's Nova Safo and I had seldom seen such a swing for the S&P 500. Nova.

[Nova Safo]

That's right, David, you and I were both watching it happen in real time yesterday morning and it was a sight to behold. The whole thing happened within minutes in the 10 o'clock hour Eastern time. We have a better sense today of what caused it. It appears been a false report that circulated on social media that the Trump administration may be considering a 90 day pause on the global tariffs it announced last week. Except for China. Well, the whole thing was wrong. But CNBC had picked up on that rumor. Other outlets did too. And markets reacted violently, swinging from a sharp loss to a substantial gain. Some $2.5 trillion went into the stocks and then out again according to the Wall Street Journal's calculation. And that was all in the time span of just about a half hour.

[David Brancaccio]

David, that's quite a tsunami. And I was looking over at my screen, saw the reversal, started to do that percentage calculation. I could see this was a very rare event. But an example of what this VIX volatility index for the stock market, Wall Street's fear gauge has been telling us markets are going every which way.

[Nova Safo]

That's right. And Reuters calculated that the intraday swing was one of the largest in the last 50 years. The others were almost all during the 1987 stock market crash, the 2008 financial crisis and during the early. So that gives you a little context there. And that volatility we're seeing could continue. We are now entering earnings season. Companies are preparing to release their first quarter results and Wall street will be listening for corporate leaders to talk about tariffs and how they may impact their businesses going forward. David.

[David Brancaccio]

All right, thank you very much. Excuse me. Staying with stocks. London is up 1.5%, Germany up 1.2%. Tokyo's key stock index soared 6% overnight, Hong Kong up 1.5%. This even with the US China trade tensions escalating. Here's marketplaces Jennifer Pak in Shanghai, shares.

[Jennifer Pak]

In Japan ended higher on hopes that the Japanese will get priority in trade talks with the Trump administration and avoid a blanket tariff of 24% on Japan's exports. While China is the first in the region to retaliate against Trump's additional tariffs, an extra 34% on all American exports. If China does not withdraw these tariffs, says President Trump, there will be even more so reminder On Wednesday, the U.S. will levy extra tariffs on Chinese exports totaling 54%. President Trump. Trump says he could add another 50% on top. The Chinese Commerce Ministry calls this threat blackmail, while the Foreign Ministry says if the US Insists on waging a tariff and trade war, China will fight to the end. In Shanghai, I'm Jennifer Pak for Marketplace.

[David Brancaccio]

As US Consumers think about buying items, they expect to get much more expensive as President Trump's import taxes take hold. Could be smartphones, coffee, entire cars and trucks. One price that's going down is the wholesale price of crude oil this morning at $61, down where it was in the second pandemic year of 2021, when people weren't traveling much. While low wholesale prices can thwart President Trump's intention to increase domestic oil production, there are other effects. Marketplace's Kaylee Wells explains.

[Kaylee Wells]

Just like any commodity in the market, there's a supply side and a demand side. The oil demand is responding like it would during any economic downturn.

[Nova Safo]

On the demand side, the tariffs and recession fears, et cetera, show a weaker economy, and that means suppressed demand for oil.

[Kaylee Wells]

Morgan Bazillion directs the Paine Institute for Public Policy at the Colorado School of Mines. He says lower demand usually means suppliers cut back supply. That makes the response this time more puzzling.

[Nova Safo]

OPEC plus said they were going to increase production, and that also suppresses prices.

[Kaylee Wells]

It sounds counterintuitive, but Hugh Daigle, who teaches petroleum engineering at the University of Texas at Austin, says as other producers decrease supply, if OPEC and increases supply, then they can gain market share because.

[Nova Safo]

Every time the price of oil goes up, but they don't take advantage of that. By increasing the amount that they're producing, other people will make up the slack for the demand. That's implied by that increase in prices.

[Kaylee Wells]

Which decreases their market share over time. So Dagle says this is an opportunity to up production and claw that market share back. It's good news for Trump's campaign promise to lower oil prices. It's not good news for his other goal of increasing domestic oil production.

[Nova Safo]

There's not a lot of room for those extra barrels. Nobody really wants them.

[Kaylee Wells]

Domestic oil producers already have faced thin margins recently. They need prices above $60 per barrel to profitably drill a new well, says energy economist Mark Finley with Rice University. And we fell to $60 this week.

[Nova Safo]

What the administration's response to oil producers domestically has been is don't worry lower oil prices will be offset by easier regulation, he says.

[Kaylee Wells]

The hope of the Trump administration was to have lower prices and increase domestic production.

[Nova Safo]

But it's hard to see how less regulation can completely offset the decline of lower oil prices.

[Kaylee Wells]

Finley says decreased regulation could increase profits for companies anywhere from two to $4 a barrel. But by the beginning of this week, crude oil prices have already fallen by $10. I'm Kayley Wells for Marketplace.

[David Brancaccio]

Kailey was focused on wholesale pricing, using AAA's calculation for retail gas prices. Those are actually higher than they were a week ago and a month ago. Checking stock index futures 2 1/2 hours before official trading begins. For the Nasdaq, they're up 1.3%. For the Dow, up 750 points, 2%. Our producers are James Graham, Naomi Raney, Arianna Rosas, Alex Schroeder and Erica Soderstrom. The senior producer is Meredith Garrettson Morby It's Marketplace Morning Report from APM American Public Media.

[Jannelli Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined From Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Jannelli Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially inclined Wherever you get your podcasts.