Trade war escelates, rattles markets 04/03/2025

HOT stories for today

US market wrap:
 

• Stocks tumbled as macroeconomic factors gave bears more reasons to push markets lower. Major indexes remained under pressure, with big tech stocks lacking a clear catalyst for a rebound. Safe-haven sectors offered some stability, but overall market sentiment remained negative. U.S. equities took another sharp hit on Monday after what one trader called a tariff “tape bomb” from President Donald Trump sent the S&P 500 to its biggest daily drop in months.
• After a volatile February that saw the Nasdaq Composite slide from its January highs, selling pressure intensified as March began. The S&P 500 heatmap showed only four of 11 sectors closing in positive territory, with real estate leading at +0.86%, while energy lagged with a -3.49% decline. Monday marked the second-worst first trading day of March in history for the S&P 500, according to Ryan Detrick, chief market strategist at Carson Group. The only worse start to March came in 2009.

Trade war escalates, rattles markets
 

• Canada will impose 25% tariffs on C$155 billion ($107 billion) worth of U.S. goods starting Tuesday if President Donald Trump moves forward with his planned tariffs on Canadian imports, Prime Minister Justin Trudeau announced Monday. An initial C$30 billion in tariffs will take effect immediately, with the remaining C$125 billion rolling out over the next 21 days. Trudeau stated that these measures will remain in place until the U.S. withdraws its trade actions and hinted at additional non-tariff measures being considered.
• Meanwhile, China announced it will impose up to 15% tariffs on certain U.S. goods starting March 10 and will restrict exports to 15 U.S. companies. This comes as new U.S. tariffs on Chinese goods took effect. In response to earlier U.S. tariff hikes in February, China had already raised duties on select U.S. energy imports and placed two U.S. firms on an unreliable entities list, limiting their operations in China.

 
Stocks on the move:       

• Nvidia (NVDA) — The AI chipmaker’s stock tumbled 8.7%, reversing its nearly 4% gain from Friday. The decline followed a Wall Street Journal report late Sunday that Chinese buyers are bypassing U.S. export controls to purchase Nvidia’s Blackwell chips.
• Intel (INTC) — Shares fell 4.2% after gaining more than 2% earlier in the day. Reuters, citing sources, reported that Nvidia and Broadcom are conducting manufacturing tests with Intel, suggesting both companies are moving closer to committing significant production contracts worth hundreds of millions of dollars.
• AppLovin (APP) — The mobile advertising company’s stock jumped 3.6% after a regulatory filing revealed that $500 million in shares are now available for immediate repurchase.
• Chipotle Mexican Grill (CMG) — Shares edged up 0.7% after Morgan Stanley upgraded the restaurant stock from equal weight to overweight, signaling increased confidence in its growth potential.

Today’s action

• Japanese stocks led declines in Asia-Pacific markets, dropping nearly 2% after U.S. President Donald Trump confirmed that tariffs on Mexico and Canada would proceed as planned.The Nikkei 225 tumbled 1.71%, while the Topix index fell 1.03%. Japan’s January unemployment rate came in at 2.5%, slightly above Reuters’ estimate of 2.4%. Chinese AI-related stocks also declined, with Alibaba and Kingsoft Cloud losing 2.23% and 8.46%, respectively.
• U.S. stock futures edged higher Monday night following a sharp selloff across major indexes. Investors are bracing for the tariffs on Canada and Mexico, set to take effect Tuesday. Dow Jones futures rose 72 points (0.2%), while S&P 500 and Nasdaq 100 futures added 0.2% and 0.3%, respectively. On the economic front, New York Fed President John Williams is scheduled to speak Tuesday afternoon. Earnings season continues to wind down with reports expected from Best Buy, AutoZone, Target, and CrowdStrike.

Wahtclist: SMCI, NVDA, COIN, CRWD, BBY, TGT, MSTR

Bitcoin

• Bitcoin and other major cryptocurrencies saw wild swings, surging on Sunday before tumbling on Monday. Bitcoin jumped 10% to nearly $95,000 before dropping 9% to $85,850. Ether gained 13.6% before falling 15.7%, while Solana spiked 24.5% before losing 19.3%. Cardano skyrocketed 72% on Sunday but dropped 23% the next day, and XRP climbed 34% before slipping 17%.
• Despite initial excitement over President Donald Trump’s announcement of a U.S. strategic crypto reserve, the inclusion of smaller, riskier tokens triggered backlash, erasing much of the rally. Some industry experts argue that adding unproven assets alongside Bitcoin undermines its value. “It feels like you made a gold reserve, but then you added three of your favorite companies into the reserve,” one industry participant commented. Alexander Blume, CEO of crypto investment firm Two Prime, noted that the move "muddles the value of Bitcoin" by associating it with less-established cryptocurrencies, leading to uncertainty in the market.
  Watchlist: Bitcoin: 80 000-100 000, Ethereum:2000-2600, Solana: 120-176

Forex

• The Japanese yen edged closer to a multi-month high against the US dollar on Tuesday, supported by Bank of Japan rate hike expectations and a risk-off market sentiment. Despite weaker domestic data, including a rise in unemployment and a drop in corporate capital expenditure for the first time in three years, the yen remained firm. Meanwhile, a modest uptick in the US dollar helped USD/JPY hold steady above 149.00.
• EUR/USD extended its gains for a second session, trading around 1.0490 during Asian hours, buoyed by hopes for a Ukraine peace deal. European leaders, alongside Ukrainian President Volodymyr Zelenskyy and UK Prime Minister Keir Starmer, have agreed to draft a structured peace plan to present to the United States. However, fears of a global tariff war and the US halting military aid to Ukraine under Trump’s orders could weigh on the euro’s momentum.
  Watchlist: EUR/USD: 1.0200-1.0550, USD/JPY: 149-158.80

Basic Materials

• Gold prices edged lower on Tuesday as expectations that the Federal Reserve may keep interest rates elevated for longer pressured the non-yielding metal. A slight uptick in the US dollar also added to the weakness, though trade war concerns and tariff jitters provided some support. Gold remains below $2,900 as investors weigh the impact of Trump’s trade tariffs, which could fuel inflation and force the Fed to maintain a restrictive policy stance.
• WTI crude oil continued to slide, trading around $67.70 in early European hours, hovering near a 12-week low. Oil prices remain under pressure after OPEC+ confirmed plans to increase production starting in April. Meanwhile, US tariff threats and Russia-Ukraine peace talks have added to market uncertainty, further weighing on crude prices.
  Watchlist: GOLD 2600-2945, US Oil: 67.50-79.00

Key Economic Events Today:

EST time
02:20 pm: USD FOMC Member Williams speaks
Tentative: RCM/TIPP Economic Optimism

Earnings

BMO (Before the US Market opens)
SE            Sea Limited
AZI           AutoZone Inc
TGT         Target Corp.
BBY         Best Buy Co.
AMC (After the US Market closes): CRWD, FLUT, ROST

The TEFS Analyst team wishes you a successful day!