Small chances for US recession, Markets in EU/Asia Mixed
US markets fell amid tariff uncertainty; S&P 500 down 0.9%, Nasdaq 1.1%. Gold rose 0.2% to $3,120; US 10-year Treasury yield at 4.14%
US Markets and Tariffs
US stock futures signaled a weaker open, with S&P 500 futures down 0.9%, Nasdaq 100 futures falling 1.1%, and Dow Jones Industrial Average futures declining 0.6%. The volatility stems from uncertainty surrounding President Donald Trump’s new tariffs, which are expected to impose a tiered tariff system on key US trading partners. The announcement is set for 4 p.m. Eastern Time, with potential immediate effects.
The bond market reflected investor caution, as 10-year Treasury yields slipped three basis points to 4.14%. The dollar index fell 0.1%, while gold continued its upward trend, rising 0.2% to $3,120.19 per ounce. Hiring data showed US companies added 155,000 jobs, surpassing expectations, but economic concerns persist as tariffs could lead to inflation and slow growth.
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European Markets and Retaliatory Measures
European markets mirrored US concerns, with the Stoxx Europe 600 falling 1.1%. France’s CAC 40 declined 0.7%, Germany’s DAX dropped 1.3%, and the UK’s FTSE 100 fell 0.6%. Healthcare stocks were hit hard due to concerns over US policy changes affecting pharmaceutical exports.
The European Commission vowed to retaliate against Trump’s tariff measures, warning of countermeasures that could impact transatlantic trade. Germany’s 10-year bond yield declined two basis points to 2.66%, while Britain’s 10-year yield dropped to 4.61%.
Asian Market Performance
Asian markets displayed mixed reactions. Japan’s Nikkei 225 edged up 0.3% to close at 35,725.87, while Hong Kong’s Hang Seng remained flat at 23,202.53. The Shanghai Composite saw a slight increase of 0.1% to 3,350.13. Australia’s S&P/ASX 200 inched up 0.1% to 7,934.50, while South Korea’s Kospi dipped 0.6% to 2,505.86.
China has responded to the US tariff threats by restricting local firms from investing in American businesses. With trade tensions escalating, analysts are assessing the potential impact on regional economies and supply chains, particularly in technology and manufacturing sectors.
Commodities and Currency Trends
Gold prices surged due to economic uncertainty, reaching $3,120.19 per ounce. Crude oil prices declined, with West Texas Intermediate (WTI) crude falling 0.5% to $70.87 per barrel. Rising trade tensions and demand concerns contributed to the decline in energy markets.
In currency markets, the euro rose 0.1% to $1.0804, the British pound climbed 0.2% to $1.2947, and the Japanese yen strengthened 0.2% to 149.27 per dollar. The Bloomberg Dollar Spot Index fell 0.1%, reflecting a weaker dollar as investors assessed the economic risks of trade policies.
Cryptocurrency and Bond Markets
Bitcoin fell 0.6% to $84,772.21, while Ether dropped 2.6% to $1,863.55, reflecting broader risk aversion in financial markets. The Federal Reserve’s potential rate cuts remain a key factor influencing digital asset prices.
In bond markets, Germany’s 10-year yield dropped to 2.66%, and US 10-year Treasury yields declined to 4.14%. Analysts suggest that persistent inflation concerns and trade policy uncertainty could impact future monetary policy decisions.
Economic Outlook and Key Data Releases
The ISM manufacturing index indicated that US factory activity slipped into contraction territory, with price expectations rising. Job openings fell in February, adding to concerns about labor market stability. Goldman Sachs and JPMorgan now estimate a 33%-40% chance of a US recession within the next 12 months.
The Federal Reserve is closely monitoring tariff-related inflation risks. Richmond Fed President Tom Barkin noted that tariffs could drive up consumer prices, while Chicago Fed President Austan Goolsbee warned that prolonged uncertainty might weaken consumer and business spending. Market participants are now pricing in three Fed rate cuts this year, with additional cuts possible by mid-2025.
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