Wall Street regathered some confidence as headlines broke of a ceasefire plan in Ukraine, having been roiled by the escalating trade war between the US and Canada.
The US is set to resume military aid and intelligence sharing with Ukraine after the European nation agreed to a proposal to an immediate 30-day ceasefire and the start of negotiations with Russia to end the war. The plan is contingent on Russia's acceptance.
Stock markets on Wall Street pared earlier losses over heightened trade tensions between the US and Canada, with US President Donald Trump doubling the incoming tariff on steel and aluminium products on his nation’s neighbour.
The US is set to introduce a 25% tariff on steel and aluminium imports as part of the White House’s America First drive to revive domestic manufacturing, and has doubled that to 50% on those products from Canada in response to the levy imposed by its northern neighbour on electricity from Ontario.
The Dow Jones Industrial Average was hardest hit on Wall Street, as industrial companies and financial firms declined, with the index down 1% at 7.30am in Auckland. The tech-heavy Nasdaq Composite edged up 0.1% after its sharp selloff on Monday, having been in red territory before news of the Ukraine ceasefire emerged.
“As is apt in a trade war, it has already escalated between the US and Canada,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “President Trump’s tariff agenda continues to dominate market price action, with a ratchetting up on pressure against Canada driving further weakness in US equities and a weaker Canadian dollar.”
The kiwi climbed to 82.61 Canadian cents at 7.30am in Auckland from 82.11 cents yesterday, and advanced to 57.21 US cents from 56.92 cents.
Where is my mind?
The on-again, off-again tariff policy has been roiling markets over the past week as investors second guess what path Trump will take and whether it will tip the US economy into recession.
That’s raised expectations the US Federal Reserve will cut its benchmark interest rate more aggressively, having earlier pared back their outlook on the prospect that tariffs will push up consumer prices.
The looming steel tariffs weighed on European markets, with Germany’s DAX 30 declining 1.3% and the UK’s FTSE 100 down 1.2%, while the heightened uncertainty encouraged investors to seek safe-haven assets with gold futures up 0.8% at US$2,923 an ounce.
Australian futures are pointing to a 0.7% decline on the S&P/ASX 200 today, having indicated a bigger drop before the Ukraine ceasefire plan was announced, with the nation unlikely to secure an exemption to US steel tariffs as it did in Trump’s first presidential term.
Local data today include government figures on credit and debit card spending in February. ANZ Bank New Zealand’s internal figures showed a 1% increase in spending on its network, buoying retailers Warehouse Group and Hallenstein Glasson Holdings on the NZX yesterday.
Reporting by Paul McBeth. Image from Elena Mozhvilo on Unsplash.