At the end of Wednesday, the Dow Jones (US30) fell by 0.20%. The S&P 500 Index (US500) was up 0.49%. The Nasdaq Technology Index (US100) added 1.13%. Stock indices mostly rose on Wednesday, although the Dow Jones Industrials Index fell to a 6-month low. Stocks found support on Wednesday amid easing price pressures after the February US Consumer Price Index rose less than expected. The February US CPI rose by 0.2% m/m and 2.8% y/y, which was weaker than expectations of 0.3% m/m and 2.9% y/y. February CPI excluding food and energy rose by 0.2% m/m and 3.1% y/y, weaker than expectations of 0.3% m/m and 3.2% y/y. Stock gains were limited by escalating trade tensions. On Wednesday, the European Union imposed tariffs on up to $28.3 billion worth of goods from the US, including soybeans, beef, and poultry, in response to US tariffs on steel and aluminum imports.

The Canadian dollar is holding near 1.44 per dollar, near a one-month low of 1.45 hit on March 3, as Canada imposed retaliatory tariffs of 25 percent on $21 billion worth of US goods after Trump’s duties on steel and aluminum took effect. The move raises costs for US manufacturers and increases trade uncertainty. Meanwhile, the Bank of Canada cut rates by 25 bps to 2.75%, marking a 225 bps easing from June 2024 to counter an expected slowdown in the economy. The Bank of Canada warned that the change in US tariff policy is eroding confidence in the economy and dampening domestic demand, and companies are already struggling to borrow as a weaker loonie drives up the cost of imports. Markets are predicting another rate cut before the end of the year.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 1.56%, France’s CAC 40 (FR40) closed higher by 0.59%, Spain’s IBEX 35 (ES35) fell by 0.57%, and the UK’s FTSE 100 (UK100) closed positive 0.53%. The US imposed 25% tariffs on European steel and aluminum, prompting the EU to announce retaliatory tariffs on US goods, resulting in the EU announcing retaliatory duties on €26 billion worth of US goods in April. Market sentiment improved on optimism about a possible ceasefire in Ukraine after Kyiv said it was willing to accept a US-brokered proposal, and after Washington restored military aid and resumed intelligence sharing with Ukraine.

WTI crude oil prices rose more than 2% to above $67.7 a barrel on Wednesday, extending gains for a second session as US data showing strong domestic demand and easing inflation boosted market sentiment. US consumer prices rose at the slowest pace in four months, raising hopes for a more patient Federal Reserve. Crude oil inventories rose by a smaller-than-expected 1.5 million barrels, according to government data.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 0.07%, China’s FTSE China A50 (CHA50) gained 0.25%, Hong Kong’s Hang Seng (HK50) fell by 0.76% and Australia’s ASX 200 (AU200) was negative 1.32%.

Caution prevailed in China after the end of the ‘two sessions’, with economists warning that the 5% growth target would be difficult to achieve due to intensifying domestic and external factors, as well as Beijing’s modest pledges to boost consumption and reduce overcapacity.

Australia’s Prime Minister said Australia will not impose retaliatory tariffs against the US. Instead, the government will continue to seek an exemption, warning that retaliatory measures could increase consumer spending and lead to higher inflation. Meanwhile, Australia’s consumer inflation expectations for the next 12 months fell to 3.6% in March from 4.6% in February, indicating that price pressures in the economy are easing.