European Markets Slip Amid U.S. Tariff Threats
European share markets declined on Thursday after U.S. President Donald Trump threatened to impose 25% tariffs on imports from the European Union. The broader global stock markets, however, remained relatively steady as Nvidia’s earnings report met expectations without any major surprises.
Trump’s stance on trade policy remains uncertain, particularly regarding duties on Canada and Mexico. Initially, he signaled an extension until April 2, but a White House official later clarified that the March 4 deadline remained in effect, adding to the uncertainty in global markets.
The potential tariffs on European cars and other goods weighed on European stocks, with the STOXX 600 index falling 0.6%. Meanwhile, the euro shed 0.1% but remained within its weekly trading range.
Michael Brown, senior research strategist at Pepperstone, commented: “There is so much news that traders are almost paralyzed, unsure whether Trump’s moves are negotiating tactics or serious policy proposals.”
U.S. Markets and Treasury Yields
Despite trade uncertainty, U.S. stock futures showed resilience, with Nasdaq futures rising 0.6% and S&P 500 futures climbing 0.5%. Treasury yields also saw an uptick, reflecting investor reassessments of trade policies and economic outlook under the Trump administration.
The two-year U.S. Treasury yield increased to 4.1% after dipping to a low of 4.065% on Wednesday. Similarly, the 10-year yield rose to 4.2924% from 4.245% the previous day.
U.S. Growth Concerns
The U.S. dollar has faced pressure recently, alongside declining Treasury yields, due to weaker economic indicators and concerns over Trump’s tariff plans affecting growth. Traders have now increased bets on Federal Reserve rate cuts, pricing in two quarter-point reductions this year, with the first expected in July.
Key economic indicators such as U.S. GDP and durable goods orders, set for release on Thursday, will be closely watched for signs of a slowdown. Additionally, the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditure (PCE) index, is due on Friday, which could further influence market expectations on rate policy.
Shoki Omori, chief global desk strategist at Mizuho Securities, stated: “Markets are starting to feel less confident about U.S. growth.”
Currency and Equities Market Reaction
The U.S. dollar index, which measures the currency against six major rivals, rose 0.17% to 106.64, extending its climb from a 2.5-month low hit earlier in the week.
In equities, Nvidia shares were down 1.1% in pre-market trading after slipping 1.5% post-earnings on Wednesday.
Conclusion
While global markets remain steady, uncertainty over U.S. trade policy and economic growth prospects continues to weigh on investor sentiment. European stocks have declined on tariff fears, and U.S. Treasury yields reflect market caution. The upcoming economic data releases and Fed policy expectations will be crucial in determining market direction in the near term.
