Stock Selloff Declines as Trump Remarks Improve Attitude

Following President Donald Trump’s attempt to reassure a business roundtable over the economic prospects and the measures he is taking to encourage growth, stocks in Asia and futures for the European and US markets both saw slight increases.

As Trump’s tariffs on steel and aluminum went into force without exception, Australia’s benchmark S&P/ASX 200 index hovered close to a correction. At the same time, a measure of regional equities fluctuated in a narrow range. Ahead of a consumer inflation report later Wednesday, treasuries increased, and the dollar grew stronger versus all of its Group-of-10 counterparts.

After Trump downplayed Wall Street’s concerns about his trade war and stated he doesn’t envision a US recession, futures for the S&P 500 and the Nasdaq 100 rose. After Ukraine agreed to a US plan for a 30-day truce with Russia, contracts for Europe increased by as much as 1%.

This year, the markets have been impacted by Trump’s tariff policies, geopolitical realignments over Ukraine, sticky inflation, and the uncertain pace of Federal Reserve interest-rate decreases, putting US equities on the cusp of a correction. As market players continue to be concerned about US economic growth, the VIX measure of stock volatility is close to reaching its highest level since August, while a corresponding metric for Treasuries is at levels not seen since November.

Ken Wong, an Asian equities portfolio expert at Eastspring Investments, stated, “Markets are benefiting from any respite from all that geopolitical noise at the moment.” According to him, news of a truce in Ukraine and a reduction in the tensions over tariffs between the US and Canada are beneficial. “Much has changed in the last eight hours.”

According to a person familiar with the conversation, Trump told senior CEOs attending a Business Roundtable conference that he is prioritizing quick approvals, especially regarding environmental rules, and will soon announce a significant electrical project. He also restated that if a business produced its goods in the United States, its taxes may be lowered.

Amid growing worries about the expansion of the most excellent economy in the world and the falls in the “Magnificent 7” stocks, Goldman Sachs Group Inc. strategists cut their goal for the US equity benchmark.

Subscribe to the Markets Daily newsletter to find out what’s happening with stocks, bonds, currencies, and commodities. Trump attempted to allay fears that the US economy will enter a recession.

“I don’t even see it. At the White House, he declared, “I believe this country is going to flourish.” Markets “are going to go up, and they’re going down,” he continued. However, the fact remains that we must reconstruct our nation.

In geopolitics, the US president pushed Russia to accede to a ceasefire deal negotiated with Ukrainian President Volodymyr Zelenskiy’s advisors, less than two weeks after Trump criticized Zelenskiy in an altercation in the Oval Office.

The agreement that US and Ukrainian negotiators made in Saudi Arabia for a 30-day ceasefire in the war, which started three years ago when Russia launched a full-scale invasion, now depends on Russian President Vladimir Putin.

In a hazardous attempt to resurrect an industrial base that had shifted to foreign competitors over decades, Trump’s most recent tariffs on steel and aluminum imports went into effect on Wednesday, expanding his trade conflicts to more of the US’s main trading partners. Last month, the president intended to put 25% levies on the metals.

In response to the recent US steel and aluminum tariffs, the European Union announced intentions to levy charges on US exports totaling €26 billion ($28.3 billion). In a statement, the EU’s executive branch, the European Commission, said it will proceed with “swift and proportionate” steps.

Cathay Pacific Airways Ltd., a carrier based in Hong Kong, recorded a profit above forecasts in Asian corporate news. The airline warned about the uncertain future of its cargo segment due to international trade disputes.

Economists predict that the US consumer inflation rate, which was released later Wednesday, remained high last month following a significant spike in January, further supporting the notion that efforts to control prices have stopped. Following a 0.5% gain at the beginning of the year, the consumer price index is expected to increase by 0.3% in February.

Markets “will be wary of further signs of sticky prices,” according to Melbourne-based senior economist Kyle Rodda of Capital.com. Suppose Trump’s economic plans create a sharp slowdown in economic growth. In that case, more evidence of inflation remaining at present levels will heighten fears that the Fed won’t have the flexibility to lower rates.

Oil continued to rise in commodities as the US lowered its prediction of a worldwide glut. Due to the demand for safe havens, gold maintained its ascent. In 2025, will tariffs impact US stock markets more than the Fed? Take part in the most recent MLIV Pulse poll by sharing your thoughts.

Key events this week:

• Canada’s rate decision on Wednesday
• Wednesday’s US CPI
• Industrial output in the Eurozone, Thursday
• Initial jobless claims, US PPI, Thursday
• Consumer attitude at US University of Michigan, Friday

Some of the main moves in markets:

Stocks:

• As of 2:29 p.m., S&P 500 futures were up 0.2%. S&P/ASX 200 futures lost 1.3% at Tokyo time.
• Topix in Japan increased 1.1%.
• The Hang Seng in Hong Kong dropped 0.3%.
• The Shanghai Composite increased by 0.1%.
• Futures for the Euro Stoxx 50 increased 1.1%.

Currencies:

• By 0.2%, the Bloomberg Dollar Spot Index increased.
• The euro dropped to $1.0896, down 0.2%.
• The value of the Japanese yen dropped 0.3% to 148.24 USD.
• The offshore yuan dropped to 7.2392 per dollar, down 0.2%.

Cryptocurrencies:

• Bitcoin fell 1.2% to $81,781.4
• Ether fell 3.4% to $1,869.91

Bonds

• The yield on 10-year declined two basis points to 4.26%
• Australia’s 10-year yield advanced six basis points to 4.44%

Commodities

• West Texas Intermediate crude increased 0.6% to $66.67 a barrel.
• Spot gold dropped 0.1% to $2,912.93 per ounce.