On Monday, the Dow Jones (US30) rose by 1.00%. The S&P 500 Index (US500) gained 1.55%. The Nasdaq Technology Index (US100) was down 0.02%. Investors remain on edge, facing growing concerns about economic growth amid escalating trade tensions. Uncertainty over trade policy impacted sentiment after Trump announced broader tariffs than previously expected, including a 25% tax on all non-US manufactured vehicles that will take effect on April 2. The market anxiety caused traders to turn their attention to defensive assets.

The Canadian dollar weakened to 1.44 per US dollar, retreating from a one-month high of 1.426 reached on March 26, amid rising trade tensions and the looming threat of US tariffs. This aggressive US stance risks undermining Canada’s trade surplus as it potentially negates the benefits of the 2018 trade agreement. In anticipation of further complications, including possible retaliatory measures from the Canadian government, and amid weak GDP data and narrowing yield differentials driven by expectations of a looser Bank of Canada policy, market participants recalibrated risk in an environment where the trade conflict shows no signs of immediate de-escalation.

Equity markets in Europe were mostly down yesterday. Germany’s DAX (DE40) fell by 1.33%, France’s CAC 40 (FR40) closed down 1.58%, Spain’s IBEX 35 (ES35) lost 1.31%, and the UK’s FTSE 100 (UK100) closed down 0.88%. Uncertainty over the scale and scope of tariffs contributed to the negative sentiment. Meanwhile, a preliminary estimate of German consumer price inflation fell to 2.2% in March 2025, the lowest since November 2024, in line with market expectations. On the corporate front, stocks of automakers, banks, and technology companies saw the biggest declines.

WTI crude oil prices rose to around $71.6 a barrel on Tuesday, extending gains for the second straight session and near the highest level in more than a month, amid concerns over possible supply disruptions following US President Donald Trump’s latest threats against Russia and Iran. Trump has vowed to impose secondary tariffs of 25-50% on buyers of Russian oil if he believes Moscow is hindering his efforts to end the war in Ukraine by putting pressure on key importers such as India and China. He also threatened Iran with secondary tariffs and bombing until it signs an agreement to give up nuclear weapons.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) sharply fell by 4.05%, China’s FTSE China A50 (CHA50) was down 0.56%, Hong Kong’s Hang Seng (HK50) decreased by 1.31% and Australia’s ASX 200 (AU200) was negative 1.74%.

The Reserve Bank of Australia (RBA) kept the monetary rate unchanged at 4.1% at its April meeting, leaving borrowing costs unchanged after a 25 basis point cut at its February meeting, in line with market expectations. The board noted that monetary policy is well-placed to respond to international developments should they have a material impact on Australian activity and inflation.

China’s Caixin manufacturing PMI rose to 51.2 in March 2025 from February’s 50.8 and beat expectations of 51.1, the highest reading since last November, with output growth accelerating thanks to a steady increase in new orders amid improving demand conditions.

The Bank of Japan Tankan Index, which measures sentiment among large manufacturers, fell to 12 points in the first quarter of 2025 from 14 in the previous quarter, the lowest in a year, as concerns over US tariffs dampened sentiment. The decline adds uncertainty to the outlook for future interest rate hikes by the Bank of Japan, which could affect the timing of further policy adjustments.