Stocks Declined As Donald Trump Insists On Steel and Aluminum Tariffs

Market Reviews

Donald Trump is planning to impose 25% import tariffs on steel and 10% tariffs on aluminum. The market reacted negatively as such steel and aluminum companies like Boeing and Ford Motors felt a serious threat. The move is expected to hurt even other sectors and ruin trade relationship with US closest partners. DOW fell -420 points (-1.68%) to 24608.98. S&P 500 declined -36.16 points (-1.33%) to. NASDAQ, was down -92.45 points (-1.27%) to 7180.56. 10 year yield reduced -0.064 to 2.80. TNX formed a top under 3% handle. Nikkei lowered more than -500 points (-2.3%). Hong Kong HSI dropped -430 points (-1.4%). Meanwhile, the greenback has seen a trend reversal. The dollar index reached 90.93 maximum. But, then lowered to 90.32. Overall, the bearishness is subdued.

The second round of Jerome Powell’s testimony before the Banking Committee lived all the expectations. The Fed Chair claimed: "There is no evidence the economy is overheating. And, while the unemployment rate at 4.1% is at or near or even below the figure of full employment, there is no evidence of a decisive move up in wages. Nothing in that suggests to me that wage inflation is at a point of acceleration." Powell made very clear that : “The thing we don't want to have happen is to get behind the curve." That’s why, Fed should stick to its moderate rate hikes framework. When asked about Donald Trump’s decision to impose steel and aluminum tariffs, Fed Chair said it wasn’t the best approach.

Meanwhile, economists project that Eurozone Gross Domestic Product will be around 2.3% in 2018 and 2.0% in 2019. Inflation should indicate some 1.5% in 2018 and 1.6% in 2019, still under ECB objective. Ending of the asset purchase program is expected to be announced at or before June and no rate hikes will be executed for a long time after the announcement.

As of Brexit, Theresa May is going to speak on UK-EU relationship today. The Prime Minister will unveil 5 points for the deal with European Union, which are: 1) Any deal must respect the referendum result; 2) Any deal must not break down; 3) Any deal must protect jobs and security; 4) Any deal must be "consistent with the kind of country we want to be" - modern, outward-looking and tolerant; 5) Any agreement must bring the country together.

New Zealand building permits were up 0.2% mom in January. Japanese unemployment rate fell to 2.4%. Monetary base increased 9.4% yoy, Tokyo Consumer Price Index lifted to 0.9% yoy. Today, Germany will release retail sales and import price, Eurozone will announce Purchasing Price Index, Britain will feature construction PMI and Canada will present Gross Domestic Product.