The Morning Edge: Barclays Slams Brakes on US Auto Sector, Cites Tariff Headwinds

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Global Sentiment: Risk-off
Factors: Tariff worries; China GDP, Fed Powell speech eyed

TODAY’S WATCHLIST

• US Federal Reserve Chair Powell speaks
• China Jan-Mar GDP 
• Eurozone March CPI data 
• US March Retail Sales 

THE BIG STORY
The US auto industry is hitting speed bumps as analysts grow increasingly bearish on the sector's prospects under President Trump's tariff regime. Barclays delivered a stark warning Tuesday by downgrading the entire autos and mobility sector to "negative," citing earnings pressure and stalled investment potential - a move that comes just days after Goldman Sachs slashed its 2024 US auto sales forecast by nearly 1 million units. While the administration has granted some tariff reprieves, the maintained levies on autos (23.5%), steel (25%) and aluminium (10%) continue to cast a shadow over manufacturers, particularly those like General Motors - downgraded to "equal weight" - with nearly half its US-sold vehicles imported from foreign assembly lines.

Barclays' analysis reveals a sector bracing for impact, with even cutting-edge technology firms like Aptiv and Mobileye facing downgrades as automakers may delay tech upgrades to offset tariff costs. The British bank now modestly favours Ford as its predominantly US-based production provides relative insulation - though this may prove cold comfort as analysts warn current valuations still don't fully reflect tariff risks.

DATA
The Labor Department reported Tuesday that US import prices fell 0.1% in March - the first decline since September - contrary to economists' expectations of unchanged prices. The surprise drop, driven by lower energy costs, follows a downwardly revised 0.2% February increase from an initially reported 0.4% and comes alongside other benign March inflation data. With import prices measured before most of President Trump's tariffs took effect, the report suggests inflationary pressures were moderating prior to the new trade measures, potentially giving the Fed more flexibility as it monitors progress toward its 2% inflation target. 

WHAT HAPPENED OVERNIGHT
US stocks edged lower on Tuesday amid ongoing tariff uncertainty, with consumer and healthcare shares weighing on markets despite strong bank earnings.. Boeing dropped 2.4% after reports China halted jet deliveries in response to US tariffs, while Barclays downgraded the auto sector, hitting Ford and GM. 

US Treasury extended their rally, with the 10-year yield dropping 3 basis points to 4.333%, following last week's sharp selloff. Fed Governor Waller warned that Trump's tariffs could force rate cuts to counter recession risks, even amid high inflation.  While, the US dollar strengthened slightly against the euro and yen, recovering from last week's 3% slump, though trade war concerns kept gains in check. The euro fell 0.70% to $1.127, retreating from a three-year high, while the dollar edged up 0.12% to 143.16 yen. Investors remain wary of potential economic fallout from US trade tariffs.

Brent crude oil dipped slightly, with Brent crude easing 0.3% to $64.67 a barrel, as trade war uncertainty weighed on demand outlook. Investors remained cautious over potential economic slowdown risks from escalating US-China tariffs. 

Day’s Ledger
Economic Data

• China Jan-Mar GDP 
• Eurozone March CPI data 
• US March Retail Sales 
• US Weekly Crude Oil Inventories 

Corporate Actions

• January-March earnings are scheduled to be announced by: Wipro, Angel One, Ballarpur Industries, GTPL Hathway, Heera Ispat, India Cements, Capital, Infomedia Press, Lagnam Spintex, Laxmi Goldorna House, Reliance Industrial Infrastructure, Swaraj Engines, and Waaree Renewable Technologies 
• Deep Diamond India to consider rights issue of equity shares
• Trident Lifeline plans to consider fundraising through the issuance of convertible warrants on a preferential basis
• VTM is set to consider bonus share issue

Policy Events

• US Federal Reserve Chair Powell speaks

TICKERS

• ADANI GREEN's energy output rises 28%, operational capacity hits 14.2 gw in 2024-2025
• BLUE DART adds Guwahati to air network, boosts Northeast delivery timelines
• CAIRN OIL & GAS bags 7 new blocks in oalp round 9, expands exploration footprint
• CCI clears merger of Quality Care India with ASTER DM HEALTHCARE
• INDRAPRASTHA GAS faces 20% cut in domestic gas allocation, profitability may be affected
• MAHANAGAR GAS faces 18% cut in domestic gas allocation, profitability may take a hit
• NHPC to begin commercial ops of final Parbati-II unit from Wednesday
• Oil India wins 9 blocks in OALP round 9, doubles exploration acreage
• PwC flags ₹19.79 billion hit to IndusInd Bank from derivatives discrepancies
• Shipping Corp gets ₹1.57 billion tax refund, appeal pending in Bombay HC
• SWIGGY signs Labour Ministry MOU to mobilise 1.2 million jobs via NCS Portal

• JSW Steel to invest ₹500 billion for 10 MTPA green steel capacity for European market
• SEBI Cracks Down On Gensol Engineering; Puts Stock Split On Hold
• India is well placed to navigate world challenges: ITC Chairman
• IMD Sees Southwest Monsoon Rains At 105% Of Normal in 2025
• Telecom minister Jyotiraditya Scindia asks BSNL to make circle-level customer growth, biz plan for FY26
• Delhi govt approves 3-month extension of EV policy, continues power subsidy
• Goldman Sachs acquires majority stake in HR SaaS firm PeopleStrong
• Tata Steel Nederland's union seeks more clarity on restructuring plan
• China already weaponising US Treasury holdings: Alpine Macro