📉 Market Report.
📉 Stocks fell and bond yields slid in Asia as new U.S. tariffs on Canada, Mexico, and China took effect, threatening to escalate global trade tensions. The sell-off tracked the biggest losses on Wall Street this year, with the S&P 500 sliding 1.8% and the Nasdaq dropping 2.6%. U.S. Treasury yields extended declines, with the 10-year yield dropping to the lowest since October, while gold and crude oil prices also fell.
🇺🇸 U.S. President Donald Trump, who seems dissatisfied with both nations’ attempts to strengthen their borders, announced that the 25% tariffs on Canada and Mexico will be imposed Today following a months-long suspension. Trump confirmed that they “go into effect tomorrow” during a White House event on Monday, saying there was “no room left for Mexico or for Canada” to negotiate. On top of the 10% tax that was already put in place in February, another 10% tariff will also go into effect on China.
🇪🇺 In Europe, in February, the regional Stoxx 600 did better than the S&P 500. Additionally, Stoxx 600 gained ground on Monday due to the increase in defence goods. There is an old saying in economics, ‘war creates and destroys at the same time’ and the announcements of the start of a period of rearmament in Europe seem to act as a stimulus in a stagnant economy.
🛡️ Ursula von der Leyen, president of the European Commission, has stated that she will provide additional information about the “rearm Europe plan” Today.
📊 Inflation in the Eurozone eased to 2.4% in February, slightly down from 2.5% in January, yet still surpassing the 2.3% forecasted by a Reuters survey. Core inflation, which excludes volatile components such as food, energy, alcohol, and tobacco, stood at 2.6% in February, showing a modest decline from the prior month. Market expectations suggest that the European Central Bank is likely to announce another interest rate cut this Thursday.
🛢️ The oil price declines were driven by reports that OPEC+ will proceed with a planned oil output increase in April, as well as concerns over the potential impact of U.S. tariffs on global economic growth and oil demand. OPEC+ has been cutting output by 5.85 million barrels per day since 2022 to support the market, but the group has now decided to move forward with the planned production increase.
🤝 The U.S. is also drawing up a plan to potentially provide Russia with sanctions relief as Trump seeks to restore ties with Moscow and stop the war in Ukraine. Negotiations are ongoing between Ukraine and Russia for a potential ceasefire and peace talks, but U.S. President Trump has suggested his patience is running out.
🎙️ However, Zelensky declared that the war with Russia is ‘very, very far from over’. The Telegraph newspaper also published a video of a conference where Zelensky said, responding to a question posed by Ian Pannell, chief foreign correspondent for ABC News, on U.S. support to Ukraine, that ‘the US will have to send their sons and daughters to war, exactly as we are doing, and they will have to fight because it is NATO we are talking about, and they will die’.
📹 Then another video of Trump went viral, during a press conference, where he said: ‘If someone does not want to reach a (peace) agreement, I think that person will not last long’. Suggesting the possibility that Zelensky could be replaced by another Ukrainian leader to facilitate the negotiation process. However, in a recent interview, Zelensky said he would only leave if Ukraine finally joined NATO. However, this is the main reason for the hostilities with Russia, the presence and deployment of NATO weapons on the Russian border.
🚨 Last night Bloomberg reported that Donald Trump has suspended all military aid to Ukraine following the tense confrontation with Zelenski in the White House. The measure will remain in place until Kiev demonstrates a real commitment to peace, according to Pentagon sources.
💰 The US president has claimed that Europe’s gas and oil purchases from Russia will exceed the aid they have sent to Ukraine. And before any fact checker tells us that Trump is lying, we have verified that the information is true. According to The Guardian, the EU purchased €21.9 billion worth of Russian oil and gas in the third year of the war, surpassing the €18.7 billion it allocated to Ukraine in financial aid in 2024, according to CREA and IfW Kiel studies. With up to half of Russia’s tax revenues tied to oil and gas, the Kremlin circumvents sanctions through shadow fleets of aging tankers.
💾 Trump also declared on Monday that Taiwan Semiconductor Manufacturing would invest $100 billion in the United States to construct five new fabrication facilities in Arizona, describing the purchase as a “tremendous move by the most powerful company in the world.” With the additional funding, TSMC now has $165 billion invested in the US. Trump has accused Taiwan on numerous occasions of stealing the U.S. chip manufacturing industry.
📉 Market View:
📉 US stock markets are falling again. Mini S&P 500 futures are falling again, failing to consolidate above 6,000 points, currently trading at 5,865 points. Similarly, the Nasdaq is currently down to 20,505 points. Trump’s threats of tariffs have materialised, creating uncertainty in the markets.
📈 Bonds, on the other hand, are positioned as the main beneficiaries. Demand for US bonds is increasing, causing their yields to fall. The 2-year bond is down 4% in yield, reflecting a significant inflow of capital.
💵 The dollar index weakened again, falling to 106.55 points, bringing the dollar closer to the 1.05 level for the third time this year, currently trading at 1.0490.
📊 In Europe, the war has boosted the stock market indices, taking the DAX 40 to a new high of 23,350 points, while the Euro Stoxx 50 rose to 5,575 points.
🛢️ As for raw materials, crude oil recorded losses: the price of a barrel of Brent fell below 71 dollars, and the West Texas Index (WTI) fell back to 68 dollars.
🪙 Gold has rebounded, reaching over 2,900 per ounce.
₿ Finally, Bitcoin, as we anticipated in yesterday’s report, continues its downward trend, falling again to below 83,500.
