Recent news about a possible ceasefire between Ukraine and Russia had investors feeling hopeful, but Wall Street struggled to recover from losses. Ukraine announced they would consider a 30-day ceasefire proposed by the U.S., which initially made stocks rise, especially the tech-heavy Nasdaq. However, President Trump’s decision to double tariffs on steel and aluminum from Canada to 50% cast a heavy shadow over the markets, causing stocks to drop significantly.
Key Market Updates:
– All major stock indexes on Wall Street closed at new lows not seen in five months. The S&P 500 is now down over 10% from its peak and the Nasdaq is down 15%.
– The U.S. dollar fell to a five-month low against other currencies, despite some gains in Treasury yields.
– The euro rose above $1.09, its highest since October, and could climb further.
– Bitcoin hit a four-month low but ended the day up 5%, breaking a five-day losing streak.
– Britain sold inflation-linked bonds at record-high yields, showing rising borrowing costs in parts of the developed world.
While the potential ceasefire is a glimmer of hope for investors, the uncertainty created by the trade tensions and tariffs continues to worry everyone. About $5 trillion has been lost in U.S. stock values since the market peak, and the dollar is slipping, creating higher volatility in markets.
Trump seems determined to push his tariff agenda despite its negative effects on market confidence. This situation complicates things for the Federal Reserve, which may need to think about cutting interest rates due to fears of economic slowdown, even as inflation forecasts rise.
One worrying trend is the rapid decline in open interest in Treasury futures, signaling less investor commitment. Open interest measures how much money is on the line in these contracts, and a sharp drop can lead to problems in market stability.
As major funds adjust their positions, there are concerns about market liquidity and how much buying or selling can affect prices. The downward trend in open interest may be a sign of increased caution among investors.
What to Watch Tomorrow:
– Japan’s wholesale inflation (February)
– India’s CPI inflation (February)
– U.S. 10-year Treasury note auction
– Bank of Canada’s interest rate decision
– U.S. CPI inflation (February)
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