The Morning Edge: IMF Cuts Global Growth Forecast Amid Trump's Tariff Impact

QUICK SNAPSHOT
Global Sentiment:  Risk-on 
Factors:  Easing Trade Tensions, Upbeat Earnings

TODAY’S WATCHLIST

• RBI MPC April meeting minutes 
• India April provisional PMI data
• US April provisional PMI data

THE BIG STORY
The International Monetary Fund delivered a sobering assessment of the world economy Tuesday, cutting its 2025 global growth forecast by 50 basis points to 2.8% and warning that President Trump's sweeping tariffs—now at century highs—are fundamentally resetting eight decades of trade relations. In a remarkably swift revision compiled just 10 days after Trump's universal tariff announcement, the IMF's updated World Economic Outlook projects slower growth for nearly all major economies, with US and advanced-nation inflation now expected to remain stubbornly high at 4.3% in 2025 and 3.6% in 2026.

IMF Chief Economist Pierre-Olivier Gourinchas framed the moment as historic, declaring the post-WWII economic order "is being reset" as tariff walls reshape global commerce. The report—labelled a "reference forecast" given the unprecedented policy volatility—reveals how quickly Trump's trade measures are reverberating worldwide, with China's outlook downgraded alongside America's as supply chains reconfigure. With suspended tariffs looming as potential additional drags, the IMF's stark revisions suggest policymakers may be underestimating the cumulative shock to a global economy already struggling with persistent inflation and fractured trade relationships.

DATA
Japan's factory activity remained in contraction for a tenth straight month in April, with the au Jibun Bank flash manufacturing PMI inching up marginally to 48.5 from March's 48.4—still firmly below the 50.0 growth threshold last crossed in June 2023. The sector showed deepening stress as new orders plummeted at their fastest pace since February 2024, while manufacturer confidence cratered to near five-year lows since June 2020 over fears of Trump's escalating tariffs. In a silver lining, services sector activity rebounded into expansion territory as improving consumer demand boosted sales, offering some offset to the industrial gloom. The stark divergence highlights how protectionist trade policies are reshaping Japan's economic landscape, with export-reliant manufacturers bearing the brunt while domestic-focused services show resilience.

WHAT HAPPENED OVERNIGHT
US stocks rallied Tuesday as easing trade tensions and strong earnings from companies like 3M. The rebound gained momentum after Trump walked back his threat to fire Fed Chair Powell, easing political uncertainty. 

Trump on Tuesday said he has “no intention” of firing Federal Reserve Chair Jerome Powell before his term leading the US central bank ends next year.  Investors also welcomed signs of progress in US-China talks, though sector-specific tariff risks kept volatility elevated. Trump during a White House news conference said that high tariffs on goods from China will “come down substantially, but it won’t be zero”.

US Treasury long-term yields edged lower Tuesday, with the 10-year Treasury retreating 1.5 basis points to 4.391%, as concerns over Trump's trade policies potentially slowing economic growth revived safe-haven demand for bonds.  The US dollar rebounded sharply, with the dollar index gaining 0.6% to 98.937 after Treasury Secretary Scott Bessent hinted at easing US-China trade tensions in private remarks.

Brent crude oil prices recovered strongly on Tuesday, climbing more than $1 a barrel as fresh US sanctions on Iran and a broader rally in equity markets buoyed investor sentiment. 

Day’s Ledger
Economic Data:

• India April provisional PMI data
• Eurozone February trade data
• US April provisional PMI data
• US weekly crude inventory data

Corporate Actions 

• Jan-Mar Earnings:  Tata consumer products, Bajaj Housing Finance, Den Networks, Khaitan Chemicals & Fertilizers, Tata Teleservices (Maharashtra), Can Fin Homes, Filatex India, LTIMindtree, Maharashtra Scooters, Rallis India, Supreme Petrochem, Syngene International, Thyrocare Technologies, Tamilnad Mercantile Bank, Wendt (India), 360 ONE WAM, Dalmia Bharat, Eimco Elecon (India), and Mangalam Global Enterprise, 
• Biocon board to consider fund raising plans
• Housing & Urban Development Corp board to consider fund raising plans
• NHPC board to consider fund raising plans
• Swan Defence and Heavy Industries board to consider fund raising plans.

Policy Events

• Minutes of RBI MPC April meeting
• US Fed Waller Speaks  
• US Beige Book release

TICKERS

• Aditya Birla Capital gets IRDAI nod to operate as corporate insurance agent
• AU Small Finance Bank Jan-Mar profit dips sequentially on higher microfinance provisions
• Balrampur Chini’s cane crushing falls 1.8% in 2024-25 season; higher diversion to ethanol hits sugar output
• Bharti Airtel, Bharti Hexacom to acquire 400 MHz spectrum from Adani Data Networks
• CCI clears Bharat Forge’s acquisition of AAM India with voluntary modifications
• HCL Tech guides for 2–5% revenue growth in FY26; Jan-Mar profit down 6% sequentially
• Hyundai Motor, Indian Oil team up to assess hydrogen fuel cell vehicles in India
• IndusInd Bank denies forensic audit by EY, says internal review underway
• Jindal Stainless commissions 30-MW solar project at Jajpur plant in Odisha
• PNC Infratech emerges lowest bidder for ₹2.40-bln flyover project in Rajasthan

MUST READ

• Trump says China tariffs will drop ‘substantially – but it won’t be zero’
• Trump says he has ‘no intention’ of firing Fed Chair Powell
• PM Modi cuts short Saudi Arabia visit following deadly Pahalgam terror attack
• IMF cuts India’s growth forecast to 6.2% in FY26
• Ather Energy IPO to hit the Street on April 25
• India must drop some non-tariff barriers: JD Vance
• GE Aerospace CEO Culp advocates tariff-free regime for aviation industry
• Limited impact on consumption, investment due to headwinds: RBI report
• VC investment in India dips as investors fret amid global uncertainties
• Flipkart plans India IPO next year, targets up to $70 billion valuation
• Sebi revises NAV cut-off timings for MF overnight scheme redemptions
• Dr Reddy's, Lupin recall products in US due to manufacturing errors: USFDA
• Air India CEO Wilson steps down as chair of low-cost airline arm, Aggarwal to take over