Key events to watch in the week ahead: 7 – 13 April 2025

This week’s overview

Wall Street endured a sharp risk-off session following Trump’s reciprocal tariff announcement, which markets interpreted as being comparable to the worst-case scenario. The Dow plunged 1,600 points on Thursday, while the S&P 500 (-4.0%) and Nasdaq (-6.0%) logged their steepest declines since 2020.

At the core of the market sell-off is the repricing for higher recession risks, with Trump’s aggressive tariff proposals acting as the key trigger. Whether viewed as a negotiating tactic or a serious bid to reduce the US trade deficit, the scale of these tariffs threatens to weigh on global trade flows, curb investment appetite, and stoke inflationary pressures, which may erode consumer spending.

Heading into the new week, here are four key events to watch.

8 April 2025 (Tuesday, 11.30am SGT): Australia’s Westpac Consumer Sentiment

Australia's Westpac Consumer Sentiment Index surged by 4% in March, reaching 95.9 to its highest point in three years.

This boost was primarily attributed to the Reserve Bank of Australia (RBA)'s interest rate cut in February and a reduction in cost-of-living pressures. The index is now just 4% shy of the neutral mark of 100, which indicates a balance between optimists and pessimists.

The survey revealed widespread improvements, especially with increased confidence in the labour market outlook. Among the top concerns, ‘inflation’ was the most frequently mentioned, followed by ‘budget and taxation,’ ‘employment,’ ‘economic conditions,’ and ‘interest rates.’

Nevertheless, despite the overall positive trend, some worries persist, particularly concerning international issues. Although not the most urgent concern, the ongoing US tariff disputes and tense relations with its allies continue to create unease.

The month (April) the market is looking for a modest retracement to 95, reflecting uncertainty ahead of the upcoming Australian Federal Election and US President Trump's “Liberation Day” tariff announcements.

9 April 2025 (Wednesday, 1pm SGT): Japan’s consumer confidence

Japan’s consumer confidence eased to 35.0 in February, down from 35.2 previously, marking a third consecutive monthly decline and the lowest level since March 2023. Most sentiment indicators weakened, reinforcing a broadly subdued consumer backdrop, though the employment component ticked up slightly to 41.1 from 41.0.

While Bank of Japan (BoJ) Governor Kazuo Ueda had previously expressed optimism that consumption outlook is on track to support further policy normalisation, recent data seems to suggest otherwise. Real consumption remains sluggish, with rising prices still outpacing wage gains. Notably, household spending fell 0.5% year-on-year in February, reversing a 0.8% increase in January—its first annual decline since November 2023.

Looking ahead, consumer confidence is expected to ease further to 34.3, hitting a fresh two-year low. A deeper deterioration in sentiment may signal that a sustainable recovery remains elusive, potentially prompting the BoJ to adopt a more measured approach in its policy normalisation path.

10 April 2025 (Thursday, 8.30pm SGT): US consumer price index (CPI)

For February, the US headline CPI moderated to 2.8%, down from 3.0% in the prior month. Core inflation also eased to 3.1% from 3.3%, marking its lowest level since April 2021, driven in part by softer shelter costs.

While this progress in disinflation could provide more room for potential Federal Reserve (Fed) rate cuts, recent tariffs imposed by Trump may hinder further progress. Consumer inflation expectations have surged in March, while both the Institute for Supply Management (ISM) manufacturing and services prices climbed during the month, complicating the inflation landscape. This may pose some challenges for the Fed in having to navigate a delicate balance between supporting growth and containing inflation.

Any higher-than-expected figures could further stoke stagflation concerns, given that the current CPI reading would not capture the full impact of US tariffs just yet. Expectations are for headline CPI to remain unchanged at 0.2% month-on-month, while core CPI may come in at 0.3% from the prior 0.2%. Market participants are currently leaning towards four 25 basis point (bp) rate cuts by the end of this year.

11 April 2025 (Friday, 10pm SGT): US preliminary University of Michigan (UoM) consumer sentiment index

Last month (March), the final reading of the University of Michigan's consumer sentiment index was revised lower to 57 from an initial estimate of 57.9 and significantly lower than February's figure of 64.7.

It was the third consecutive monthly decline, taking the index to its lowest level since November 2022, as expectations for personal finances, business conditions, unemployment, and inflation have deteriorated.

Consumers remain concerned about possible hardships in light of ongoing economic policy changes. Notably, two-thirds of consumers anticipate an increase in unemployment over the next year, the highest level of concern since 2009. Additionally, inflation expectations for the coming year hit 5%, the highest since November 2022, and long-term inflation expectations were also adjusted upward to 4.1% from 3.9%.

Taken together, the Michigan Consumer Sentiment Survey in March showed worrying signs of stagflation in the US economy—a weakening consumer, slower growth, and increased inflationary pressures.