Markets decline, Trade war escalates 03/02/2025

                                                                  HOT stories for today


Markets Slide as Trump Escalates Trade War
 

• Investor confidence wavered last week as President Trump ramped up tariff threats, overshadowing strong corporate earnings. The S&P 500 dipped 0.5%, the Dow lost 0.8%, and the Nasdaq 100 edged down 0.1%, as markets braced for broader trade disruptions. On Sunday, Trump confirmed 25% tariffs on Canadian and Mexican imports, set to take effect Tuesday unless a last-minute deal emerges. Both countries vowed swift retaliation, with Mexico’s President Claudia Sheinbaum preparing countermeasures and Trudeau pledging tariffs on $106 billion in U.S. goods.
• Trump also warned the EU that tariffs were imminent, citing trade imbalances, sending the euro lower while the dollar climbed. Global markets reacted swiftly—U.S. futures and Asian equities fell, the peso hit a three-year low, and the Canadian dollar sank to its weakest since 2003. While the U.K. avoided immediate penalties, Trump said it was still “out of line.” Meanwhile, he ordered a freeze on U.S. aid to South Africa, rattling emerging markets and pushing the rand down nearly 2%.

 
Stocks on the move:       

• Chevron ($CVX -5%) declined as both revenue and earnings fell short of analyst expectations. Its refining (downstream) segment reported a deficit for the first time since the pandemic, impacted by weaker pricing and a 3% dip in U.S. sales volumes.
• Exxon Mobil ($XOM -2%) slipped after its fourth-quarter revenue of $83.42 billion failed to meet projections. Oil and gas output increased by 20,000 barrels per day to 4.6 million, marking the highest annual production level in a decade.
• Walgreens Boots Alliance ($WBA -10%) halted its cash dividend while reassessing its capital allocation strategy as part of a broader restructuring initiative.
• Intel ($INTC -3%) saw mixed sentiment despite surpassing revenue and earnings forecasts, as its first-quarter 2025 revenue outlook disappointed investors.
• Visa ($V -0.45%) reported earnings and revenue above expectations, fueled by strong consumer spending during the holiday season.

 
Today’s action

• Asia-Pacific markets declined on Monday after U.S. President Donald Trump imposed tariffs on Canada, Mexico, and China over the weekend, heightening concerns over global trade tensions. Australia’s S&P/ASX 200 dropped 1.61 percent, while Japan’s Nikkei 225 fell 1.99 percent and the Topix lost 1.87 percent. South Korea’s Kospi tumbled 2.52 percent, with the small-cap Kosdaq down 2.79 percent. European markets are also set for a sharp decline as investors react to the tariff threats.
• Stock futures plunged early Monday, signaling a rough start to the new trading month. Dow Jones Industrial Average futures slid 666 points, or 1.49 percent. S&P 500 futures dropped 1.92 percent, while Nasdaq-100 futures lost 2.44 percent. Oil and gasoline futures rose following the tariff announcement, and the U.S. dollar strengthened. Investors are closely monitoring the busiest week of the fourth-quarter earnings season, with major technology firms such as Alphabet, Amazon, and Palantir set to report results. Consumer giants, including Walt Disney and Mondelez, are also scheduled to release their earnings. In addition to corporate earnings, markets are awaiting the January nonfarm payrolls report, set for release on Friday. Economists polled by Dow Jones expect 175,000 jobs to have been added last month, with the unemployment rate projected to remain unchanged at 4.1 percent.

Wahtclist: AAPL, CVX, COIN, XOM, NVDA, PLTR, TSN

Bitcoin

• Cryptocurrencies plunged Sunday as investors moved to risk-off mode after President Donald Trump imposed tariffs on Canada, Mexico, and China. Bitcoin fell 7 percent to $93,768.66, according to Coin Metrics, while the CoinDesk 20 index dropped 19 percent. Ether slid 20 percent to its lowest since November. The sell-off began Saturday night after Trump signed an order imposing 25 percent tariffs on Mexico and Canada and a 10 percent duty on China, set to take effect Tuesday.
• Jeff Park of Bitwise Asset Management said a prolonged tariff war could ultimately benefit bitcoin by weakening the U.S. dollar and lowering rates. Although bitcoin is seen as a long-term hedge against inflation, it currently trades like a risk asset and reacts negatively to uncertainty. Traders are watching the $90,000 support level, with a potential drop to $80,000 if it breaks below.
  Watchlist: Bitcoin: 89 000-108 000, Ethereum: 2200-3000, Solana: 180-276

Forex

• The EUR/USD pair remains under pressure, trading around 1.0230 during Monday’s Asian session as it continues its downward trajectory within a descending channel pattern. The 14-day RSI hovers near 30, signaling persistent selling pressure. Key support is seen at 1.0177, the 27-month low reached on January 14, suggesting further downside risk if bearish momentum persists.
• Meanwhile, the Japanese yen weakened against the US dollar amid concerns over Trump’s trade tariffs but found some support from expectations of further Bank of Japan rate hikes. The USD/JPY pair pulled back below the mid-155.00s during early European trading as the BoJ’s Summary of Opinions indicated policymakers are considering additional interest rate increases. A sharp rise in Tokyo’s core inflation, marking its fastest annual pace in nearly a year, also reinforced prospects for tighter monetary policy, helping limit yen losses. The narrowing US-Japan rate differential further caps the upside for USD/JPY. USD/JPY slipped 0.76% in early North American trading, dipping below 154.00 as traders reacted to signs of weaker US economic growth.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 153.6-158.80

Basic Materials

• Gold prices retreat from record highs as a stronger US dollar weighs on the metal, though concerns over Trump’s new trade tariffs provide some support. Expectations of further Federal Reserve policy easing also help limit losses. Gold (XAU/USD) recovered from an intraday dip to $2,772 but remains below Friday’s all-time high. The US dollar surged near a two-year peak after President Trump imposed tariffs on Canada, Mexico, and China. Additionally, speculation that the Federal Reserve may delay interest rate cuts due to rising prices and strong consumer spending is diverting flows away from the non-yielding metal.
• Meanwhile, West Texas Intermediate (WTI) crude oil hovers near $73 per barrel during Monday’s Asian session. Potential supply disruptions from Canada and Mexico—two major US suppliers—offer support, as Canadian energy products face a 10 percent tariff and Mexican imports are hit with a 25 percent duty. However, expectations of weaker fuel demand cap gains. OPEC+ is unlikely to alter its gradual output increase plan when it meets on Monday.
  Watchlist: GOLD 2600-2800, US Oil: 70.00-79.00

Key Economic Events Today:

EST time

05:00 am: EUR Core CPI
09:45 am: USD Final Manufacturing PMI
10:00 am: USD ISM Manufacturing PMI, Prices
12:30 am: USD FOMC Member Bostic Speaks

Earnings:

BMO (Before the US Market opens)

IDXX      IDEXX Laboratories
TSN        Tyson Foods Inc. 
AMC (After the US Market closes): PLTR, NXPI, EQR, CLX

The TEFS Analyst team wishes you a successful day!