Equity Markets Surge on Tariff Relief
Equity markets finished higher on Wednesday, buoyed by tariff relief as the U.S. temporarily exempted autos from its newly imposed 25% tariffs on Canadian and Mexican imports. This lifted sentiment and drove the S&P 500 up 1.1% and the Nasdaq 1.5% higher.
In Europe, markets surged as Germany moved to exempt military and defense spending from strict fiscal rules and announced a €500 billion infrastructure fund, providing a significant boost to investor confidence.
While trade-policy uncertainty remains a key risk-with Canada and China retaliating against U.S. tariffs and Mexico expected to follow-fundamentals remain broadly supportive. Corporate earnings growth is strong, with S&P 500 earnings on track for an 18% rise in Q4, and estimates pointing to 12% growth in 2025.
Despite a softer-than-expected ADP payrolls report, labor-market conditions remain resilient, supporting household incomes and consumer spending. Investors are advised to stay focused on long-term fundamentals rather than reacting to short-term volatility as markets navigate trade tensions and economic data releases.
Latest Market and Economic Update
Asian Markets Rally on Tariff Exemptions and Stimulus Measures
Asian equity markets surged on Thursday, led by a 2.3% rise in Hong Kong’s Hang Seng index, as Trump’s temporary exemption of auto tariffs on Mexico and Canada eased trade tensions. Meanwhile, China’s new fiscal stimulus further boosted investor confidence.
- Shares rallied across the region, with gains in Japan, Indonesia, and South Korea.
- Australia’s ASX 200 bucked the trend, posting losses.
- China’s focus on AI and tech innovation drove strong performances in its equity markets.
US Equity Futures Hold Steady
US equity futures remained stable overnight, following a relief rally sparked by President Trump’s one-month auto tariff exemption for Mexico and Canada.
- Investors will focus on potential further concessions from the administration.
- Marvell Technology and MongoDB saw sharp declines in after-hours trading following disappointing earnings results.
European Equities Rebound on Defense Spending Boost
- STOXX 50 rose 1.9%, while the STOXX 600 gained 0.9%, driven by expectations of increased EU defense spending.
- Defense equities such as Thales, Safran, and Rheinmetall rose between 3% and 8%.
- Auto shares like BMW, Volkswagen, and Stellantis gained over 4%, amid reports of the U.S. easing tariffs on Mexico and Canada.
US Dollar Weakens, Euro Strengthens
- The US dollar weakened on Thursday, with the dollar index falling to 104, its lowest level in four months, as trade war concerns and a surging euro weighed on the currency.
- The euro strengthened to 1.0791 against the dollar, supported by Germany’s proposed €500 billion infrastructure fund and planned borrowing rule reforms.
- Weak US jobs data and uncertainty over Trump’s tariffs added further pressure on the greenback.
Oil Prices Rebound Amid Tariff Exemptions
- Oil prices rebounded this morning as U.S. tariff concessions lifted risk appetite.
- Concerns remain over increased tariffs on China, Canada, and Mexico, as well as rising OPEC+ production.
- Markets found some relief in potential exemptions for automakers and agricultural goods, while Mexico’s Pemex sought alternative buyers in Asia and Europe to counter the impact of U.S. trade measures.
Equities on the Move
Stocks That Gained or Declined Based on Analyst Ratings, Earnings, or Other News
- Alibaba (+7.3%) – Hong Kong shares surged after unveiling its open-source QwQ-32B AI model, which rivals DeepSeek R1 while using significantly less data.
- Marvell Technology (-17%) – Q4 earnings missed high expectations but still beat market consensus. Despite concerns over US-China trade tensions and AI monetization challenges, CFRA maintained a “Strong Buy” rating, citing continued momentum in data center revenue and a major custom chip deal with Amazon.
- Abercrombie & Fitch (-14%) – Forecast weak sales growth, citing softer demand for its A&F brand, higher freight costs, promotions, and U.S. tariffs.
- MongoDB (-15%) – Q4 results surpassed expectations, but full-year guidance for fiscal 2025 fell short, leading to concerns over future growth.
- Bayer (+4%) – Shares rose to a four-month high, after projecting a return to earnings growth from 2026, despite a challenging 2025 outlook.
- Adidas (-3%) – Lower-than-expected 2025 operating profit forecast, citing slower sales growth and volatility due to U.S. tariffs. The company expects an operating profit of 1.7 billion to 1.8 billion euros, below analysts’ expectations.
- Dassault Aviation (+5%) – Full-year sales rose, driven by increased defense spending amid global tensions.
Other Key Corporate Developments
- Tesla – Set to build a new Megafactory in Houston, Texas, focused on producing Megapack energy storage systems. The company is repurposing a 1-million-square-foot facility, backed by tax incentives from Waller County.
- Louis Vuitton – Entering the beauty products market, launching 55 lipsticks, 10 lip balms, and 8 eyeshadows, with British makeup artist Pat McGrath leading the creative direction.
- Palantir Technologies – Upgraded by William Blair to Market Perform, citing positive developments from the February 26 DOGE executive order.
- Reddit – Bank of America sees growth potential due to its AI-powered search tool, “Answers”, but maintained a Neutral rating due to valuation concerns.
- Arista Networks – Upgraded by UBS to “Buy”, with its price target raised to $115, citing strong data center capital expenditure growth.
- Deutsche Telekom – Downgraded by HSBC to “Hold” from “Buy”, citing limited upside for T-Mobile US and rising risks in the German broadband market.
- China Tech Stocks – Bernstein raised price targets for Tencent, Alibaba, and NetEase, citing AI-driven valuation gains.
Upcoming Data and Events
- Thursday: The US initial jobless claims report will be released, which could impact Federal Reserve policy decisions.
- Corporate Earnings: Major companies, including Costco, Broadcom, and Hewlett Packard Enterprise, will report their earnings, drawing investor attention.
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