The Morning Edge: Barclays Joins Wall Street’s S&P 500 Pessimism as Tariff Fears Mount

Barclays has outlined its base case for tariffs, anticipating no further escalation on Chinese imports while characterizing President Trump’s proposed tariffs on Canada and Mexico as primarily political. The brokerage expects reciprocal tariffs of around 5% on other trading partners, reflecting a cautious but measured approach to global trade tensions. In a significant revision, Barclays cut its S&P 500 earnings-per-share estimate to $262 from $271, citing the economic ripple effects of tariffs and policy uncertainty. 

The brokerage also reshuffled its sector outlooks, upgrading US financials to 'positive' from 'neutral' due to strong near-term earnings momentum. Conversely, it downgraded consumer discretionary stocks to 'negative' as weakening sentiment, slowing growth, inflation pressures, and tariff risks weigh on the sector. The adjustments underscore Wall Street’s growing unease as trade policies reshape the investment landscape. With earnings forecasts trimmed and sector allocations shifting, Barclays’ latest moves signal a defensive pivot in an increasingly volatile market. 

Data
Orders for long-lasting US manufactured goods unexpectedly rose 0.9% in February, defying forecasts of a 1% decline, as businesses raced to avoid impending tariff-driven price hikes. The Commerce Department reported strong demand for primary metals of +1.2%, fabricated metal products +0.9%, and electrical equipment +2.0%, likely propping up Q1 capital spending. This follows January’s upwardly revised 3.3% surge, suggesting short-term stockpiling. Yet economists caution the rebound masks deeper weakness: manufacturing which is 10.3% of the economy still faces headwinds from trade policy chaos and high borrowing costs. While tariff prep boosted February’s numbers, the underlying trend points to a slowing Q1 economy as businesses and households navigate an unstable trade landscape.

Markets
Overnight
US stocks took a beating on Wednesday as investors braced for President Trump’s long-threatened auto tariffs, sending shares of Tesla and General Motors tumbling 5.6% and 3.1% respectively. The selloff spread to tech, with Nvidia plunging 6% and Broadcom dropping 5%, dragging the chip sector down 3.3%. The market’s skittishness reflects deeper fears: Trump’s pending announcement—expected to include reciprocal tariffs effective April 2—could inflate car prices, disrupt supply chains, and provoke global retaliation. With auto and tech stocks in the crosshairs, traders are bracing for a trade war escalation that could ripple far beyond Detroit.

US Treasury yields on benchmark 10-year notes rose 4.2 basis points to 4.333%, recovering from an earlier dip after a $70 billion five-year note auction. The move higher comes as Federal Reserve officials, including Minneapolis Fed President Neel Kashkari and St. Louis Fed President Alberto Musalem, have recently warned against cutting rates too quickly amid ongoing economic uncertainty. Their cautious stance suggests the central bank may keep borrowing costs elevated for longer than some investors expect. With Fed speakers pushing back on aggressive rate cut bets, traders are reassessing the timeline for potential easing.

The US dollar index climbed 0.33% to 104.56, with the euro slipping 0.37% to $1.0751 as the greenback rebounded, marking its fifth gain in six sessions. The dollar also strengthened 0.43% against the yen to 150.55 after Bank of Japan Governor Kazuo Ueda signalled the need for rate hikes if rising food costs drive broader inflation. Meanwhile, sterling fell 0.45% to $1.2885 after UK finance minister Rachel Reeves scaled back spending plans to meet fiscal targets, following data showing a sharper-than-expected slowdown in British inflation.

Brent crude oil prices climbed after government data revealed a decline in US crude and fuel inventories last week. Prices found additional support from supply concerns as the US threatened tariffs on countries purchasing Venezuelan crude, potentially tightening global markets further. The dual catalysts—falling stockpiles and geopolitical risks—drove the rally, though lingering demand uncertainties kept gains in check. The US crude settled up 0.94% at $69.65 per barrel, while Brent rose 1.05% to $73.79 per barrel, reflecting heightened market uncertainty over potential trade disruptions.

Day’s Ledger

Economic Data:

• US Weekly Jobless Claims Data
• US Oct-Dec GDP data
• US February Goods Trade Balance Data
• US February  Pending Home Sales Data

Corporate Actions:

• United Spirits board to consider dividend
• Hilton Metal Forging board to discuss fundraising plans
• Sundaram Finance board to discuss fundraising plans

Policy:

• Finance Ministry, RBI to Release Apr-Sep Borrowing Calendar
• ECB's De Guindos Speaks
• ECB's Schnabel Speaks
• ECB President Lagarde Speaks

Tickers

• BANDHAN BANK received income tax demand for ₹1.19 billion due to disallowed deductions for AY 2023–24.
• BANK OF INDIA’s  Gift City branch borrowed JPY 15 billion for on-lending and general overseas use.
• BHARAT FORGE informed that Defence Ministry signed ₹69 billion contracts with Bharat Forge and Tata Advanced Systems for artillery and towing vehicles.
• BSE board to meet on March 30 to consider bonus share issue.
• HDFC BANK fined ₹7.5 million by RBI for non-compliance with KYC norms.
• INDIAN HOTELS COMPANY infused $9 million into Netherlands-based subsidiary IHOCO BV, which will use funds to repay U.S. debt.
• JB CHEMICALS AND PHARMACEUTICALS’ promoter Tau Investment may sell 10.2% stake via block deal worth ₹25.76 billion at ₹1,625/share.
• LIC likely to buy 40-49% stake in ManipalCigna; primary and secondary deal values company at ₹35 billiion.
• MAX FINANCIAL SERVICES’ promoter Max Ventures may offload 1.59% stake via block deal worth ₹6.12 billion at ₹1,117.6/share, per CNBC-TV18.
• NBCC (INDIA) signed MoU with MAHAPREIT for ₹250 billion consultancy, EPC, and redevelopment projects to be executed over 3–5 years.
• PIRAMAL ENTERPRISES invested ₹6 billion in Piramal Finance via rights issue for business and general corporate needs.
• RESTAURANT BRANDS ASIA raised ₹5 billion via QIP, issuing 8.33 crore shares at ₹60 each. Investors include SBI MF, MIT, Arisaig, ICICI Pru Life, Motilal Oswal.
• ROLTA INDIA declared fraud by Bank of India. NPA amount is ₹6.16 billion.
• SUNTECK REALTY to invest $10–20 million in subsidiary Sunteck Lifestyle International for Dubai project investment.
• TORRENT POWER sold equity in 10 subsidiaries to Torrent Green Energy for ₹4.74 billion.
• TVS SUPPLY CHAIN SOLUTIONS will invest ₹2.5 billion in three wholly owned overseas subsidiaries based in UK, Singapore, and USA.
• WIPRO won a £500 million 10-year deal with Phoenix Group to manage life and pension business administration for ReAssure and accelerate operational transformation.

Must Read

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Daily Mantra
Our greatest weakness lies in giving up. The most certain way to succeed is always to try just one more time. - Thomas A. Edison