Global equities extend selloff on tariff uncertainty

General market commentary

Equity markets fell on Tuesday but closed above session lows, with the Dow dropping over 1%, the S&P 500 losing three-quarters of a percent, and the Nasdaq down about two-tenths of a percent. Market volatility was driven by President Trump’s decision to raise tariffs on Canadian steel and aluminium imports to 50% in response to Ontario’s new electricity surcharge, which was later temporarily suspended following renewed trade talks. Bond yields rose slightly, with the 10-year Treasury yield near 4.28%, while the two-year yield hit its lowest level since October 2024, reflecting expectations of two or three Federal Reserve interest-rate cuts this year. The U.S. dollar extended its decline against major currencies, while WTI crude oil traded higher. Elsewhere, markets also struggled, as Asia declined after Japan failed to secure exemptions from U.S. tariffs, and European equities fell, led by losses in travel, leisure, and healthcare sectors.

Investors remained cautious as conflicting tariff updates fuelled recession fears, with the S&P 500 briefly entering correction territory, now down nearly 3.5% over two sessions—the steepest drop since August. Market uncertainty has grown due to the administration’s focus on long-term trade restructuring rather than short-term economic stimulus, which has contributed to consumer and business hesitation. Citigroup downgraded its outlook on U.S. equities to "neutral," adding to bearish sentiment. Among major share movers, Kohl’s shares plunged over 24% following a bleak sales forecast, while Dick’s Sporting Goods fell more than 5.5% on weak annual guidance. Airline shares also tumbled, with American Airlines down over 8% and Delta dropping more than 7% after disappointing first-quarter forecasts.

Latest market and economic update

Asian markets were mixed on Wednesday, with equities in Australia and Malaysia leading losses amid ongoing trade tensions following President Trump's fluctuating tariff policies, while South Korean shares rebounded, supported by gains in tech companies. Most other Asian markets, including China and the Philippines, saw declines, with Australia's S&P/ASX 200 briefly entering correction territory.

US equity futures edged higher as investors awaited key economic data, including the upcoming consumer price inflation report, which could impact the Federal Reserve's interest rate decision, amid ongoing uncertainty over President Trump's fluctuating tariff policies. European markets are set to open sharply higher, driven by hopes of a ceasefire in Ukraine to pause the ongoing war.

European shares extended their decline on Tuesday, with the STOXX 50 falling 1.7% and the STOXX 600 losing 1.8%, as escalating US trade tensions deepened market concerns. Major losers included BNP Paribas, UniCredit, BASF, and Air Liquide, all dropping 3%, while automakers like Stellantis, Mercedes Benz, and Volkswagen were also hit, with Stellantis sinking 5% following a sharp decline in profits linked to US tariffs.

The US dollar index remained around 103.5 on Wednesday, close to its lowest levels in five months, as the euro strengthened, trading at 1.0902 against the greenback. This pressure on the dollar was driven by optimism over a potential ceasefire in Ukraine, uncertainties surrounding US President Trump's tariff policies, and concerns over inflation and recession.

Oil prices rose slightly this morning, recovering from three-year lows amid ongoing concerns over U.S. trade tariffs and slowing economic growth, with traders awaiting OPEC’s monthly report for insights on supply and demand. Market focus also shifted to potential supply disruptions from Russia and Canada’s threats to curb oil exports to the U.S., while expectations for a rise in U.S. inventories and inflation data added to the uncertainty.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Verizon Communications warned of "soft" wireless subscriber growth in the first quarter due to off-season promotions by rivals, causing its shares to drop over 7% and triggering a selloff in the telecom sector. AT&T and T-Mobile also saw their shares decline, while both Verizon and AT&T downplayed concerns over tighter U.S. immigration policies and competition from satellite internet providers.

American Airlines shares fell over 8% on Tuesday after the company cut its first-quarter 2025 revenue outlook and projected a larger-than-expected loss, citing weakness in the domestic leisure segment. The airline now expects an adjusted loss of $0.60 to $0.80 per share, worse than its previous estimate, highlighting a more challenging demand environment.

Dick’s Sporting Goods reported strong fourth-quarter results, beating earnings and revenue estimates, with comparable store sales rising 6.4% year-on-year. Despite this, shares fell 5.7% as the company provided a cautious outlook for FY2025, while announcing plans for store expansions, a dividend increase, and a new $3 billion share buyback programme.

TSMC has proposed a joint venture with chipmakers Nvidia, AMD, Broadcom, and Qualcomm to operate Intel's U.S. foundries, with TSMC holding no more than 50% of the venture. The move comes amid Intel's struggles with weak sales and a loss-making foundry division, and would align with TSMC’s commitment to investing more in U.S. chipmaking facilities.

Elon Musk announced plans to double Tesla's vehicle production in the U.S. over the next two years, following President Trump's public purchase of a Tesla and his decision to classify violence against Tesla dealerships as domestic terrorism. This move comes amid ongoing challenges for the company, including declining sales, protests, and a falling stock price, with Musk confirming his continued advisory role to Trump.

Microsoft continues to see strong AI demand, particularly within its Azure cloud platform, despite slowing capital expenditure growth as data centre capacity catches up with demand. The company remains confident in its position, with Microsoft 365 Copilot adoption expanding and Azure expected to drive future growth, while its relationship with OpenAI remains strong.

Boeing reported a significant increase in aircraft deliveries for February, with 44 planes delivered, up from 27 in the same month last year, driven by the 737 MAX and 787 models. However, the company recorded only five net orders in February, with cancellations impacting its total, bringing its year-to-date net orders to 41, compared to Airbus’s 65.

Unilever CEO Fernando Fernandez aims to accelerate the company’s turnaround by offloading underperforming food brands, including €1 billion worth in Europe and €500 million in smaller markets. This strategy aligns with Unilever’s focus on expanding its most profitable brands.

Uber has terminated its agreement to acquire Delivery Hero’s Foodpanda business in Taiwan and will pay a $250 million termination fee. The deal was blocked in February over concerns that the $950 million purchase would be anti-competitive.

Reddit's shares have fallen 50% in the past month, but Loop Capital views the decline as a buying opportunity, maintaining a Buy rating and a $210 price target. The firm highlighted Reddit’s strong growth projections, including 36% revenue growth and 87% EBITDA growth, and sees significant potential in increasing average revenue per user through improved ad tools and a larger ad load.

Goldman Sachs has lowered its 2025-end target for the S&P 500 Index to 6,200, citing heightened policy uncertainty, particularly over tariffs, and concerns about economic growth. The revision comes after a significant market drop, driven by a 14% decline in the "Magnificent 7" stocks, leading to a sharp decline in the index's price-to-earnings ratio.

Upcoming data and events

The U.S. Consumer Price Index (CPI) for February is expected to ease to 2.9% annualised from 3.0%, while Core CPI is forecast to decline to 3.2% from 3.3% in January. Other key economic releases include EIA Crude Oil Inventories, alongside earnings from Adobe, Dollar Tree, Inditex, and Porsche which could shape market sentiment.

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