Investors Encouraged by Possible Tariff Delay
US stock indices closed steadily higher on Wednesday, showing volatile dynamics throughout the day. Investor optimism was fueled by the news that tariffs on cars from Canada and Mexico may be delayed. After the publication of information that President Donald Trump was considering postponing the deadline by a month, shares began to rise. Later, the White House confirmed this possibility, which further strengthened the confidence of market participants.
Negative dynamics turned to growth
Before this news, trading took place in an environment of uncertainty: investors reacted cautiously to contradictory economic data and continuing concerns about trade disputes. However, the market was eventually able to reverse the negative trend.
Among the leaders of growth were shares of companies from the industrial goods (.SPLRCI), consumer market (.SPLRCD), materials (.SPLRCM) and communications services (.SPLRCL) sectors. At the same time, the energy sector (.SPNY) and utilities (.SPLRCU) showed the worst dynamics.
Trading results
- The Dow Jones Industrial Average (.DJI) added 485.60 points (+1.14%) and closed at 43,006.59;
- The S&P 500 (.SPX) rose 64.48 points (+1.12%) to 5,842.63;
- The tech-heavy Nasdaq Composite (.IXIC) rose 267.57 points (+1.46%) to 18,552.73.
Mixed economic data curbed optimism
The ISM report released earlier in the session unexpectedly showed an increase in business activity in the services sector in February. However, investors were wary of signals about a possible increase in commodity prices, which somewhat curbed the positive mood.
Nevertheless, the overall market dynamics indicate that investors continue to closely monitor the development of US trade policy and react to key economic indicators.
Investors await key employment data
The market froze in anticipation of Friday's labor market report, which may provide a clearer picture of the state of the US economy. ADP's preliminary data for February showed private sector job growth slowed to its slowest in seven months.
The signal has raised concerns among market participants that weak employment could signal a cooling economy. Investors have been cautious in recent weeks, worried that the Trump administration's trade policies will fuel inflation, slow economic growth and hurt corporate profits.
Automakers Show Strong Gains
Despite the general market uncertainty, automakers were among the biggest gainers. Ford (F.N) shares soared 5.8%, while General Motors (GM.N) shares rose 7.2%. Tesla (TSLA.O) also gained 2.6%. The moves came as the Trump administration temporarily exempted some automakers from tariffs, easing tensions in the industry.
Tech under pressure
Unlike the auto industry, not all sectors have managed to benefit from the current market situation. The largest chipmaker Intel (INTC.O) lost 2.4% in value after Trump said he might end a subsidy program for the semiconductor industry. This raised concerns among investors about the future prospects of the sector.
Another blow to the tech market was dealt by CrowdStrike (CRWD.O). The cybersecurity company lost 6.3% after it presented a revenue forecast for the first quarter, which was below analysts' expectations.
Gainers: Shipbuilding in Focus
Among the biggest winners of the day was Huntington Ingalls (HII.N), with shares of the shipbuilding company soaring by 12.3%. This growth occurred after Trump announced the creation of a special administration for shipbuilding in the White House and the possible introduction of tax breaks for the industry. Investors saw the initiative as a positive signal for the shipbuilding sector.
Asian Markets React Positively
Optimism about a possible easing of trade tensions has spread to global markets. Asian stocks rose strongly on Thursday, following Wall Street's lead. Investors welcomed Trump's decision to temporarily exempt some automakers from tariffs.
On the foreign exchange market, the euro remained strong ahead of the European Central Bank meeting, indicating investors are paying attention to monetary policy in the eurozone.
Markets Reel Amid Global Economic Turmoil
Financial markets are facing a fresh wave of instability triggered by major policy changes in the world's largest economies. Japanese government bonds fell sharply after a massive sell-off in German debt, the biggest in decades. The catalyst for this process was an agreement between parties leading coalition talks in Germany to review fiscal restrictions, which led to a sharp change in investor sentiment.
Escalating Trade Conflicts Are Making Things Worse
Market participants continue to focus on the escalation of the global trade war. The introduction of 25% tariffs on goods from Mexico and Canada, as well as a new round of trade restrictions against China, have raised serious concerns about the outlook for economic growth. Investors are concerned that tough US tariff policies could lead to a slowdown in the global economy and a tightening of conditions for international trade.
However, the situation changed slightly on Wednesday: the White House announced that it is ready to grant automakers a temporary exemption from new tariffs, provided that they comply with existing free trade rules. This news caused a sharp rise in US stock indices, which in turn had a positive impact on Asian markets.
Asian and European stock markets are moving higher
The reaction of stock markets was not long in coming. The MSCI Asia-Pacific share index, which tracks the dynamics of markets outside Japan, strengthened by 1.2%. In Japan, the Nikkei index added 0.9%, reflecting investor optimism about a possible easing of trade tensions.
European stock exchanges are also getting ready for a positive start. Futures on the pan-European STOXX 50 index rose 0.7%, while Germany's DAX added 0.3%, indicating confident expectations for growth at the start of trading.
China is betting on its domestic market
China was not left out either. On Thursday, Chinese and Hong Kong stock indexes showed confident growth after the Chinese authorities announced plans to stimulate the economy. Beijing set an ambitious growth target and promised increased support for domestic consumption and the technology sector, which is particularly affected by the trade dispute with the United States.
These measures signaled to markets that China is ready to take active steps to support the economy despite external challenges. Investors took the news positively, which led to growth in Chinese stock indexes.
Asian Markets Continue to Rise, Hang Seng Breaks Records
Asian stock markets are showing solid gains, confirming a trend of strengthening positions in the face of global economic uncertainty. The CSI 300 index of China's largest companies rose 1%, while Hong Kong's Hang Seng (.HIS) soared almost 3%, reaching its highest levels in three years.
The Hang Seng has already gained 20% since the start of the year, making it the best-performing stock index among the world's major markets. Investors continue to pour money into Chinese stocks amid Beijing's confident economic course aimed at stimulating domestic demand and technological development.
European Markets Await ECB Meeting
Market participants are also focusing on the upcoming meeting of the European Central Bank (ECB), scheduled for Thursday. The financial regulator is expected to decide again on cutting interest rates, which is associated with the need to support economic growth amid trade conflicts and instability in the region.
Adding to the pressure on European markets was news that Germany's leading parties, discussing a coalition government, have agreed to spend €500 billion (approximately $540.7 billion) on infrastructure. They are also planning to revise existing borrowing rules, which could impact the debt market.
Record rise in German bond yields
The bond market also reacted to the news. Futures on the 10-year German Bund fell 0.7%, signaling a likely decline in cash bond prices. On Wednesday, the yield on the 10-year German bond, considered the euro zone's benchmark, showed a sharp jump of more than 30 basis points. It was the biggest one-day increase in yields in 28 years.
The move suggests that investors are reconsidering their expectations for the future of European monetary policy and the possible easing of fiscal constraints in the region's largest economy, Germany.
The euro continues to climb
On the foreign exchange market, the European currency is gaining ground. The euro rose 0.25% to $1.0815, slightly below the four-month high hit early in the Asian session.
The euro has been growing steadily since the start of the week, up more than 4%, its biggest weekly gain since March 2009. This growth is due not only to events in Germany, but also to expectations of an easing of the ECB's monetary policy and easing fears of a recession in the eurozone.
Dollar under pressure: rate falls to four-month low
The US currency weakened amid changing market expectations regarding the future policy of the Federal Reserve System (FRS). The dollar index, which tracks its value against a basket of six leading world currencies, fell to 104.11, its lowest since early November.
The dollar's weakness is linked to expectations of a key US labor market report to be released on Friday. Investors are closely watching the employment data, as it could provide further signals about the Fed's further actions regarding interest rates.
Gold steady ahead of economic data
The precious metals market is showing stability as investors take a wait-and-see approach ahead of the US nonfarm payrolls report. Gold prices are holding steady at $2,921.39 an ounce, reflecting traders' caution as they weigh the implications for the Fed's monetary policy.
Traditionally seen as a safe haven asset, gold prices can move significantly based on economic data. If the labour market report shows weaker employment, this could increase expectations for monetary easing soon, which would support demand for precious metals.
Oil on the brink: Pressure from inventories and OPEC+ decisions
The oil market remains under pressure after a sharp decline in previous sessions. The main factors weighing on prices were a significant increase in US crude inventories, OPEC+ plans to increase production and new US trade restrictions on energy supplies.
Brent crude futures remain near a three-year low set on Wednesday. The slide in oil prices deepened after U.S. Energy Department data showed an unexpected jump in inventories, suggesting a slowdown in demand for the commodity.
Additional pressure on the market came from OPEC+, which signaled that member countries would revise their output upwards. This has caused concern among investors that additional supply could exacerbate the glut.
Markets await key signals
Financial markets are in a holding pattern, with investors closely monitoring upcoming economic data and key regulatory decisions. A weaker dollar, stable gold, and volatile oil prices all point to a high degree of uncertainty. Friday's employment report could be a decisive factor in determining how markets move in the coming weeks.
