Markets had a shaky session recently, spurred by escalating trade tensions. President Trump announced he might impose 200% tariffs on European wines, significantly dampening investors’ risk appetite.
The S&P 500 took a tumble, slipping into correction territory. Meanwhile, gold is making a steady climb towards the $3,000 mark, and the dollar showed strength against most major currencies, except for the yen, which gained ground amid speculation of possible rate hikes from the Bank of Japan.
Here’s a rundown of key updates and movements you might have missed from the last trading sessions:
Headlines:
- The U.K.’s RICS House Price Balance for February came in at 11%, falling short of the 20% forecast and down from 22% previously.
- Bank of Japan Governor Ueda is optimistic about future consumption, predicting improvements as import costs drop and wages grow.
- Swiss Producer & Import Prices for February 2025 rose by 0.3% month-over-month, exceeding the forecast of 0.2% and up from a previous 0.1%.
- Euro area’s industrial production in January 2025 ticked up by 0.8% month-over-month, just shy of the 0.9% forecast, but went from a year-to-year fall to stable.
- Bundesbank President Joachim Nagel issued a warning that U.S. tariffs might tip Germany into a recession.
- Trump is threatening 200% tariffs on EU wines in retaliation for the EU’s tax on American whiskey.
- U.S. producer prices remained unchanged in February, with a Core PPI drop of -0.1%.
- Jobless claims in the U.S. ended March 8 at 220,000, slightly below expected figures.
- In Canada, building permits decreased by 3.2% in January 2025.
- The International Energy Agency forecasts a global oil surplus for 2025 as demand falls short of expectations.
Market Moves:
Global markets felt the pressure on Thursday, reacting to the heated trade atmosphere prompted by Trump’s tariff threats on European alcohol, following the EU’s decision to tax American whiskey. Add to this the EU’s $26 billion in duties and Canada’s $30 billion tariffs on the U.S., and you have a recipe for market jitters.
With these tensions, investors are worried about the impact on global growth despite cooling U.S. inflation shown by February’s flat U.S. PPI. Some market analysts are questioning whether ongoing unpredictability in policy might shake the dollar’s dominant status in international finance.
The S&P 500’s fall of 1.4% dragged it officially into correction territory, dropping 10.1% from its February heights. Across the pond, Germany’s DAX fell by 0.63%, amid fears that U.S. tariffs could trigger a recession.
In search of safety, investors flocked to U.S. Treasuries, bringing the 10-year yield down to 4.27%. Gold ticked up, reaching near $2,988 and inching closer still to that iconic $3,000 as recession worries grew. Oil prices in the U.S. fell to $66.55, a result of the IEA’s warning about trade pressures dampening demand. Bitcoin wasn’t spared either, declining to $80,255, a dip of about $3,300 on the day.
FX Market Dynamics:
In foreign exchange, the dollar strengthened against most major currencies, but not the yen. The yen was buoyed by comments from BoJ’s Ueda, who sounded hopeful about consumption trends thanks to stronger wage growth and declining import prices, hinting at possible rate increases.
During European trading, the reaction to Swiss PPI data was followed by the shockwaves from Trump’s proposed tariffs. The U.S. PPI report showing an unexpected stasis in producer prices created some dollar volatility, but the currency ultimately rose. By day’s end, the dollar climbed 0.34% over the euro and showed gains against the pound, Swiss franc, Australian dollar, and New Zealand dollar, while remaining stable against the yen.
Upcoming Economic Catalysts:
- Watch for Germany’s final CPI and wholesale price index early in the morning.
- U.K.’s GDP, trade balance, and production numbers are all due at your breakfast hour.
- France’s final CPI later, and Italy’s factory data, will round up the European session.
- Across the Atlantic, keep an eye on Canada’s manufacturing data.
- Finally, the U.S. University of Michigan sentiment and inflation expectations could offer late-day surprises.
Stay vigilant for British economic data that might shift the pound, and be on guard for any geopolitical developments that could stir up risk sentiment. And don’t overlook our new Forex Correlation Calculator—it might just be your new trading ally!
