• Trump announced a one-month delay on auto tariffs, triggering a relief rally. Automakers surged, tech stocks bounced back, while energy and utilities lagged
• Despite the rally, stock futures declined as investors awaited clarity on trade policy. Weak private payrolls data added to concerns about economic uncertainty.
• Jobless Claims fell, indicating a strengthening labor market. ECB cut rates by 25 bps, signaling concerns about sluggish growth.
• Macy’s reported mixed results and issued a weaker forecast. Marvell Technology dropped despite better-than-expected results, due to mixed guidance. Alibaba surged on a new AI reasoning model.
• European markets declined as investors monitored earnings and Trump’s tariff exemption.
• Government borrowing costs rose globally, with German and Japanese yields surging. US Treasury Yields also Increased, reflecting relief about tariff exemptions and anticipation of jobs data.
• Gold Prices declined as investors took profits and focused on jobs data. Oil Prices rose slightly, recovering from multi-year lows. Bitcoin rose, continuing its rebound on speculation about Trump’s crypto reserve.
• Escalating trade tensions rattled financial markets. The semiconductor industry hit hard by global supply chain issues and competition. Investors are bracing for potential earnings downgrades. The upcoming employment report is crucial for market direction.

Market Overview:

In a significant policy shift, U.S. President Donald Trump announced a one-month delay on tariffs for automakers complying with the United States-Mexico-Canada Agreement (USMCA). This temporary reprieve injected a wave of optimism into markets, triggering a relief rally on Wall Street. The White House also indicated Trump is “open” to further tariff exemptions, offering a glimmer of hope to investors navigating a turbulent landscape.

Despite this brief surge, market sentiment remains cautious. Stock futures remained under pressure Thursday, with the Dow Jones Industrial Average sliding over 400 points as investors awaited more clarity on trade policy and its potential repercussions. Wall Street has already begun pricing in lower corporate earnings, anticipating headwinds from the ongoing trade tensions.

Adding to the uncertainty, private payrolls data for February showed companies added just 77,000 new jobs — far below expectations — suggesting corporate America may be tightening its belt in response to growing economic uncertainty.

Market Previous Day:

Markets staged a sharp rebound on Wednesday, snapping a two-day losing streak after President Trump hinted at potential exemptions and delays to his sweeping tariffs. The S&P 500 rose 1.12% to 5,842.63, the Dow Jones Industrial Average climbed 1.14%, adding 485.60 points to close at 43,006.59, and the Nasdaq Composite jumped 1.46% to 18,552.73. In Europe, the Stoxx 600 gained 0.91%, while Germany’s DAX soared 3.38% on optimism around increased fiscal spending from a potential coalition government.

(Source: TradingView.com)

The market turned decisively higher after the White House announced a one-month delay for tariffs on automakers complying with the United States-Mexico-Canada Agreement. Automakers surged, with Stellantis jumping over 9%, while Ford and GM climbed 5% and 7%, respectively. Tech stocks, including Microsoft and Tesla, bounced back after leading the recent market downturn. However, energy and utility sectors lagged despite broader market strength. The small-cap Russell 2000 rose around 1%, and nearly 75% of S&P 500 components finished in positive territory, reflecting renewed investor optimism as hopes for tariff relief spread through markets.

US Futures in Red:

• Dow Jones Industrial Average futures was down with decline of 0.87%
• S&P 500 futures showed losses of 1.14%
• Nasdaq Composite futures lead the pack with losses of 0.48%.

Key Premarket Movers:

• Macy’s stock slid 3.5% after issuing annual sales and profit guidance below expectations, citing cautious consumer spending amid economic uncertainty.
• Marvell tumbled 17% as its quarterly results failed to meet investors’ hopes for robust AI-driven growth.
• MongoDB dropped 18% after projecting fiscal 2026 revenue and margins well below Wall Street estimates.
• Burlington surged 12% following better-than-expected fourth-quarter income, even as it flagged an “uncertain” 2025 outlook.
• Zscaler jumped 3.6% after raising its fiscal 2025 revenue forecast, reflecting strong demand for cloud-based cybersecurity.
• com climbed 5.3% after exceeding revenue expectations, while Alibaba ADRs rose 1.9% on news that its new AI reasoning model rivals global leaders like DeepSeek.
• Tesla, however, slipped 2.8% after Baird designated the EV maker as a “bearish fresh pick,” citing production and demand concerns.
• Wendy’s managed a 1% gain after reaffirming its full-year EPS outlook and unveiling long-term growth targets through 2028.

Key Economic Data/News:

Labor Market Strength: Initial Jobless Claims fell to 221K, beating the 234K forecast and showing a sharp drop from the previous 242K reading. This suggests a strengthening U.S. labor market, which is typically bullish for the dollar and could signal resilience despite broader economic uncertainties. However, ADP’s private payrolls missed badly (77K vs. 148K expected), and job cuts hit their highest level in nearly five years. The contrast between falling jobless claims and weak hiring data paints a mixed picture: fewer layoffs but cautious hiring, potentially tied to tariff-related uncertainty.

ECB Rate Cut: The European Central Bank cut rates by 25 bps, lowering the deposit rate to 2.5%. This marks the sixth cut in nine months, signaling ongoing concerns about sluggish growth in the eurozone. With inflation easing to 2.4%, the ECB’s pivot to a more accommodative stance could weigh on the euro, especially as tariffs on EU imports to the U.S. remain a looming risk.

Germany’s Fiscal Shift: Germany’s plan to reform its debt brake for increased defense and infrastructure spending — including a massive €500B special fund — could be a game-changer. Higher fiscal spending might boost growth and lift investor sentiment, potentially driving German stocks and the DAX higher.

Tariff War Update

• Temporary Auto Tariff Relief: The one-month delay for automakers under USMCA is a small win for the sector, giving companies like Ford, GM, and Stellantis a brief reprieve. But the looming April 2 deadline — with no exemptions for reciprocal tariffs — keeps uncertainty high.
• Tit-for-Tat Retaliation: Canada, China, and soon Mexico are firing back with countermeasures. This cycle of retaliatory tariffs could hit supply chains, squeeze profit margins, and stoke inflationary pressures globally.
• China’s Defiant Stance: China’s “fight any type of war” rhetoric signals prolonged tensions. If negotiations fail, we could see deeper economic fractures — especially for sectors reliant on Chinese manufacturing or consumer markets.
• U.S.-Canada Frictions: Trump’s fentanyl comments to Trudeau show that the dispute extends beyond trade. Political tensions could complicate efforts to ease tariff impacts on key industries.

Earnings Season/Company News:

Macy’s reported mixed results for the fourth quarter, surpassing earnings expectations but falling short on revenue as the retailer continues its turnaround efforts. The company’s “First 50” locations — stores receiving additional resources as part of the turnaround strategy — outperformed the broader business, signaling some early progress. However, Macy’s issued a weaker-than-expected forecast for fiscal 2025 and now faces pressure from another activist investor pushing for privatization. The market is watching closely as other retailers, including Costco and Gap, are set to release their earnings after the bell, which could provide broader context for the retail sector’s trajectory.

Meanwhile, shares of Marvell Technology dropped more than 16%, despite the company reporting better-than-expected fourth-quarter results. The chipmaker posted earnings of 60 cents per share on $1.82 billion in revenue, slightly beating Wall Street estimates. However, mixed guidance for the upcoming quarter — with projected earnings of 61 cents per share, plus or minus 5 cents — left investors uncertain about near-term growth, especially as the semiconductor industry navigates fluctuating AI demand and supply chain pressures.

On a brighter note, Alibaba shares surged after the company unveiled a new AI reasoning model, QwQ-32B, which it claims rivals the global hit DeepSeek-R1. The announcement sent Hong Kong-listed shares up 8.39%, hitting a 52-week high, while U.S.-traded shares climbed around 2.5% in premarket trading. Alibaba’s stock has soared nearly 71% year-to-date in Hong Kong, reflecting investor optimism about the company’s pivot toward advanced technology and AI innovation. If QwQ-32B delivers on its promises, Alibaba could solidify its position as a global tech powerhouse, extending its influence well beyond e-commerce.

Global Market Trends:

On Thursday morning, European stock markets experienced declines as investors kept an eye on additional earnings reports and U.S. President Donald Trump’s auto tariff exemption. The regional Stoxx 600 index lost its early gains, trading approximately 0.84% lower. Germany’s DAX remained steady after achieving its best session since November 2022 on Wednesday, reaching a record high. This performance in Germany has been driven by investor confidence in stronger growth prospects and substantially increased spending on infrastructure and defense in Europe’s largest economy. Across Europe, expectations of higher defense spending have fueled a 34.4% increase in the Stoxx Aerospace and Defense index so far this year.

Debt Market:

(Source: TradingView.com)

On Thursday, government borrowing costs rose globally, with German bonds continuing their sell-off, triggering the largest daily surge in yields since the country’s reunification 35 years ago. German government bond yields, known as bunds, soared on Wednesday, with the 10-year debt instruments’ yield increasing by around 30 basis points. This sell-off followed an agreement among lawmakers from the parties expected to form Germany’s next coalition government to reform historic debt policy rules, allowing for higher national defense spending.

Japanese government bond yields also surged on Thursday, with the 10-year JGB yield reaching its highest level since June 2009. Experts attributed this rise to pressure from a global bond sell-off. The 10-year JGB yield rose nearly 8 basis points, surpassing 1.5% for the first time since 2009, while the 30-year bond yield climbed 13 basis points, exceeding 2.5% for the first time since 2008.

In the U.S., Treasury yields increased on Thursday as investors felt relieved about potential tariff exemptions and awaited crucial jobs data. The benchmark 10-year Treasury yield rose by 1.9 basis points to 4.28%, while the 2-year Treasury yield declined by 2.9 basis points to 3.957%.

Commodities and Other Assets:

On Thursday, gold prices declined as investors took profits following a three-day rally, with markets focusing on U.S. jobs data for insights into the Federal Reserve’s rate path amid rising global trade tensions. Spot gold has gained over 10% year-to-date and reached a record high of $2,956.15 on February 24. Analysts suggest that without a new catalyst, the current bearish trend may push gold prices lower. If prices fall below $2,900, it could indicate further downside.

Oil prices rose on Thursday, recovering slightly from a multi-year low, although Brent remained below $70 due to pressure from trade tariffs between the United States, Canada, Mexico, and China, as well as OPEC+ plans to increase output. These factors, along with a larger-than-expected build in U.S. crude inventories, had driven Brent down to $68.33 on Wednesday, its lowest since December 2021. Brent dropped 6.5% over the previous four sessions, reaching its lowest point since December 2021 on Wednesday, while West Texas Intermediate crude oil fell 5.8% over the same period to its lowest since May 2023. Prices had declined after the U.S. imposed tariffs on Canadian and Mexican goods, including energy imports, while major producers decided to raise output quotas for the first time since 2022. Oil prices recovered and stabilized somewhat after the U.S. announced it would exempt automakers from the 25% tariffs.

Bitcoin rose on Thursday, continuing its rebound from recent losses amid increased speculation over U.S. President Donald Trump’s plans for a crypto reserve ahead of a White House summit this week. Risk appetite was also boosted by Trump making some tariff concessions. Bitcoin was trading well above the sub-$80,000 lows hit last week, when risk appetite was dampened by concerns over slowing U.S. growth and a brewing global trade war. Trump’s earlier mentions of a crypto reserve had also led to only brief gains in prices.

Market Sentiment:

The Dow and S&P 500 have each fallen 1.9% week to date, while the Nasdaq Composite has slid 1.6%, as escalating trade tensions rattled financial markets. U.S. tariffs on Canadian, Mexican, and Chinese imports took effect this week, prompting Canada and China to impose retaliatory levies, with Mexico planning countermeasures over the weekend. Markets swung sharply between gains and losses on Wednesday, reflecting heightened volatility as investors tracked ongoing tariff policy developments. A temporary delay for automakers provided brief relief, but uncertainty remains high.

The semiconductor industry has been hit particularly hard, given its globally integrated supply chains. Even chips assembled in the U.S. often rely on components manufactured abroad, leaving companies exposed to tariffs. Worries over U.S. tech sector overcapacity and fierce competition from China’s cheaper DeepSeek AI models have further weighed on sentiment, with the Nasdaq now down about 9% from its December record high.

Investors are bracing for potential earnings downgrades, with market expectations factoring in everything from tariffs and inflation to the DOGE initiative and federal budget issues. The focus now turns to Friday’s employment report, which will offer crucial insights into the health of the U.S. economy and could influence the Federal Reserve’s next steps on interest rates.