Ongoing Tariff Threats May Lead To Initial Pullback On Wall Street

Ongoing Tariff Threats May Lead To Initial Pullback On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Thursday, with stocks likely to move back to the downside after ending the previous session mostly higher.

Ongoing concerns about President Donald Trump's trade policies may weigh on Wall Street after he suggested the U.S. would respond to the European Union's countermeasures with even more tariffs.

With the EU saying it would impose tariffs on approximately $28 billion worth of U.S. goods in response to U.S. tariffs on steel and aluminum imports, Trump indicated the U.S. would react with reciprocal tariffs

"Whatever they charge us with, we're charging them," Trump told reporters on Wednesday. "Nobody can complain about that."

Trump later threatened in a post on Truth Social to impose a 200 percent tariff on all wines, champagnes and alcoholic products coming out of the EU in response to a "nasty" 50 percent tariff on whisky.

The futures climbed off their worst levels following the release of a Labor Department report showing producer prices in the U.S. were unexpectedly flat in the month of February.

The Labor Department said its producer price index for final demand was unchanged in February after climbing by an upwardly revised 0.6 percent in January.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent growth originally reported for the previous month.

The report also said the annual rate of growth by producer prices slowed to 3.2 percent in February from an upwardly revised 3.7 percent in January.

The annual rate of producer price growth was expected to dip to 3.3 percent from the 3.5 percent originally reported for the previous month.

A separate report released by the Labor Department on Thursday unexpectedly showed a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 8th.

After seeing considerable volatility early in the session, stocks moved mostly higher over the course of the trading day on Wednesday. With the upward move, the Nasdaq and the S&P 500 regained ground after ending Tuesday's trading at their lowest closing levels in six months.

The tech-heavy Nasdaq led the way higher, jumping 212.35 points or 1.2 percent to 17,648.45. The S&P 500 also climbed 27.23 points or 0.5 percent to 5,599.30, although the narrower Dow bucked the uptrend and dipped 82.55 points or 0.2 percent to 41,350.93.

The strength on Wall Street came following the release of a closely watched Labor Department report showing consumer prices in the U.S. increased by slightly less than expected in the month of February.

The Labor Department said its consumer price index crept up by 0.2 percent in February after climbing by 0.5 percent in January. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, the core consumer price index also rose by 0.2 percent in February following a 0.4 percent increase in January. Core prices were also expected to climb by 0.3 percent.

The report also said the annual rate of consumer price growth slowed to 2.8 percent in February from 3.0 percent in January. Economists had expected the pace of price growth to edge down to 2.9 percent.

The annual rate of core consumer price growth also slowed to 3.1 percent in February from 3.3 percent in January. Core price growth was expected to dip to 3.2 percent.

The tamer-than-expected inflation data led to some optimism about the Federal Reserve resuming interest rate cuts in the near future.

"With a lower-than-expected inflation number (both month-over-month and year-over-year), at least the Fed still has the flexibility to step in to support a weaker economy, and that would be good news for markets," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

Buying interest was somewhat subdued, however, as concerns about the impact of new trade policies continue to weigh on the markets.

With new U.S. steel and aluminum imports taking effect today, the European Union said it would impose counter tariffs on 26 billion euros ($28 billion) worth of U.S. goods beginning next month.

Canada has also announced it will impose 25 percent tariffs on more than $20 billion worth of U.S. goods in retaliation for the steel and aluminum duties.

Semiconductor stocks saw substantial strength amid a surge by shares of Nvidia (NVDA), with the Philadelphia Semiconductor Index jumping by 2.5 percent after ending the previous session at a nearly eleven-month closing low.

Significant strength was also visible among software stocks, as reflected by the 1.5 percent gain posted by the Dow Jones U.S. Software Index.

Banking and networking stocks also saw some strength on the day, while airline, telecom and pharmaceutical stocks showed notable moves to the downside.

Commodity, Currency Markets

Crude oil futures are falling $0.31 to $67.37 a barrel after surging $1.43 to $67.68 a barrel on Wednesday. Meanwhile, after jumping $25.90 to $2,946.80 an ounce in the previous session, gold futures are inching up $7.10 to $2,953.90 an ounce.

On the currency front, the U.S. dollar is trading at 148.16 yen versus the 148.25 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0841 compared to yesterday's $1.0888.

Asia

Asian stocks ended lower on Thursday despite softer U.S. inflation data bolstering the case for more Federal Reserve interest rate cuts this year.

Tariff worries kept investors on the edge after Canada and the EU swiftly retaliated against U.S. steel and aluminum tariffs and President Trump vowed to respond to the countermeasures.

Gold moved higher near its record peak as the dollar dipped and U.S. Treasury yields turned lower on concerns over a potential recession in the United States.

Oil prices eased after a surge in the previous session on data showing a larger-than-expected draw in U.S. gasoline stocks.

China's Shanghai Composite Index dropped 0.4 percent to 3,358.73 on trade worries and signs of deepening deflationary pressures in the country. Hong Kong's Hang Seng Index fell 0.6 percent to 23,462.65.

China's Commerce Ministry reportedly held talks with Walmart after reports emerged that it asked suppliers to bear rising costs incurred by increased U.S. tariffs.

Japanese markets ended little changed, while the yen strengthened as comments from Bank of Japan chief bolstered rate hike expectations.

The Nikkei 225 Index finished marginally lower at 36,790.03, while the broader Topix Index settled 0.1 percent higher at 2,698.36.

Seoul stocks ended on a flat note, with the Kospi finishing marginally lower at 2,573.64 following strong gains in the previous session.

The Bank of Korea said in a monetary policy report that Trump's escalating trade war could drag on longer than expected and increase the risk of capital outflows while also raising volatility in the dollar-won exchange rate.

LG Energy Solution, Samsung Biologics and LG Chem fell 2-3 percent, while defense equipment manufacturer Hanwha Aerospace jumped 6.3 percent and shipbuilding giant Hanwha Ocean rallied 3.5 percent.

Australian markets ended lower, giving up early gains as Morgan Stanley cut its rating for Australian equities and said it expects Australian companies to underperform compared to global markets.

The benchmark S&P/ASX 200 Index dropped 0.5 percent to 7,749.10, with financials and mining stocks leading losses. The broader All Ordinaries Index settled 0.5 percent lower at 7,966.60.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index slipped 0.3 percent to close at 12,209.05.

Europe

European stocks have moved mostly lower on Thursday as concerns persist about U.S. President Donald Trump's trade war and its potential impact on global growth.

The German DAX Index is down by 0.9 percent as the outgoing parliament convenes in a special session to discuss reforming the country's debt brake. The French CAC 40 Index is down by 0.4 percent and the U.K.'s FTSE 100 Index is down by 0.2 percent.

Hugo Boss has slumped. The German fashion group said subdued consumer sentiment and muted store traffic have hurt its performance in the year so far.

British meal delivery company Deliveroo has also moved sharply lower after the company signaled a more extended timeline for achieving its key profitability targets.

Meanwhile, Telefonica shares have advanced as the Spanish telecommunications company announced its decision to sell its business in Colombia to Millicom Spain in a deal valued at $400 million.

Hannover has also moved to the upside after delivering a significant improvement in profitability within its P&C reinsurance portfolio.

Wind farm operator Energiekontor AG has also jumped after raising its core earnings guidance for 2024 above market expectations.

IG Group Holdings has also rallied. The electronics trading major reported a 12 percent year-on-year rise in fiscal third quarter revenue.

U.S. Economic News

With an increase in prices for goods offset by a decrease in prices for services, the Labor Department released a report on Thursday showing producer prices in the U.S. were unexpectedly flat in the month of February.

The Labor Department said its producer price index for final demand was unchanged in February after climbing by an upwardly revised 0.6 percent in January.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.4 percent growth originally reported for the previous month.

The report also said the annual rate of growth by producer prices slowed to 3.2 percent in February from an upwardly revised 3.7 percent in January.

The annual rate of producer price growth was expected to dip to 3.3 percent from the 3.5 percent originally reported for the previous month.

A separate report released by the Labor Department on Thursday unexpectedly showed a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 8th.

The Labor Department said initial jobless claims edged down to 220,000, a decrease of 2,000 from the previous week's revised level of 222,000.

The dip surprised economists, who had expected jobless claims to inch up to 225,000 from the 221,000 originally reported for the previous week.

Meanwhile, the report said the less volatile four-week moving average crept up to 226,000, an increase of 1,500 from the previous week's revised average of 224,500.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month's auction of twenty-year bonds.

The Treasury Department is also due to announce the results of this month's auction of $22 billion worth of thirty-year bonds at 1 pm ET.

For comments and feedback contact: editorial@rttnews.com