The euro surged to a five-month high on Wednesday following Ukraine’s agreement to a 30-day ceasefire proposal brokered by the United States.
Meanwhile, global markets experienced volatility, as newly imposed US tariffs on steel and aluminum triggered countermeasures from Europe, adding pressure on stocks.
The euro reached $1.0947 on Tuesday, its highest level since October, before stabilizing at $1.0913 in Asian trading. The Russian rouble also climbed to a seven-month high, as market sentiment improved following Ukraine’s acceptance of the ceasefire.
European stock futures reacted positively, with FTSE futures rising 0.5% and European equity futures up 1.1%. The gains were further supported by reports that the US will restore military aid and intelligence-sharing with Ukraine.
However, Russian Foreign Minister Sergei Lavrov cautioned that Moscow would not make compromises that could endanger Russian citizens.
While European stocks rebounded, other global markets remained fragile amid concerns over trade tariffs.
- S&P 500: Briefly flirted with a market correction, closing 0.8% lower after a volatile session.
- Nikkei 225: Stabilized after hitting a six-month low earlier this week.
- Asian Markets: Hong Kong and China saw steady performances, while South Korea and Taiwan posted gains.
- Australia: The benchmark index closed 9.6% below February’s record high.
Meanwhile, in European trading, the Stoxx Europe 600 Index rose 0.6%, led by banking and healthcare stocks. However, retailers struggled, with Inditex SA (owner of Zara) dropping 7.5% due to slower sales.
The US implemented 25% tariffs on steel and aluminum imports on Wednesday, prompting European countermeasures against $26 billion worth of American goods. The tariffs had a limited impact on Asian steel producers but heightened concerns over potential economic disruptions.
Market analysts remain cautious about the effects of tariffs on US economic growth. J.P. Morgan’s chief global economist Bruce Kasman highlighted an increased 40% recession risk for the US due to policy uncertainty and trade tensions.
Investor concerns about economic uncertainty were reflected in weak retail and travel stocks:
- Dick’s Sporting Goods dropped 5.7% following a downbeat outlook.
- Kohl’s Corp plummeted 24% after reporting declining sales.
- Delta Air Lines slashed its profit forecast by half, while United Airlines and American Airlines warned of reduced government bookings and weaker demand.
Later in the day, markets will focus on:
- U.S. inflation data for February, though any tariff impact may not yet be visible.
- Bank of Canada’s policy meeting, where analysts are closely watching for a possible seventh consecutive interest rate cut.
The Canadian dollar hit a one-week low before recovering to C$1.445 per dollar. Meanwhile, the yen slipped slightly, and Brent crude oil remained just below $70 per barrel.
