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Stocks Climb as Easing Tariff Worries Spark Risk-On in Asset Markets

Stocks Climb as Easing Tariff Worries Spark Risk-On in Asset Markets

  • 24.03.2025 15:50
  • theglobeandmail.com
  • Keywords: High Tariffs, Geopolitical Risks

Stocks rose as easing tariff concerns lifted markets. President Trump's targeted reciprocal tariffs calmed fears, boosting indices and M&A activity.

SMCI ServicesJHXsentiment_satisfiedDNBsentiment_satisfied

Estimated market influence

James Hardie Industries

James Hardie Industries

Positivesentiment_satisfied
Analyst rating: Buy

Acquired Azek Co for $8.75 billion in cash and stock.

Clearlake Capital Group

Positivesentiment_satisfied
Analyst rating: N/A

Agreed to acquire Dun & Bradstreet Holdings for about $4.1 billion.

Dun & Bradstreet Holdings

Dun & Bradstreet Holdings

Positivesentiment_satisfied
Analyst rating: N/A

To be acquired by Clearlake Capital Group for about $4.1 billion.

Context

Business Insights and Market Implications

Key Market Performance

  • S&P 500 Index: Up +1.58%
  • Dow Jones Industrials Index: Up +1.23%
  • Nasdaq 100 Index: Up +1.96%

Tariff Developments and Market Impact

  • US Tariffs Update: President Trump's "Liberation Day" announcement on April 2 will focus on targeted reciprocal tariffs, easing market fears about global trade impacts.
  • Stock Rally Drivers: Reports of narrower tariff scope and non-cumulative steel/metal tariffs have boosted investor confidence.

M&A Activity

  • James Hardie Industries: Acquired Azek Co for $8.75 billion in cash and stock.
  • Clearlake Capital Group: Agreed to acquire Dun & Bradstreet Holdings for about $4.1 billion.

Economic Indicators

  • Feb Chicago Fed National Activity Index: Rose +0.26 to 0.18 (vs. expectation of -0.17).
  • Mar S&P Global Manufacturing PMI: Fell -2.9 to 49.8 (vs. expectation of 51.7).
  • Mar S&P Global Services PMI: Rose +3.3 to 54.3 (vs. expectation of no change at 51.0).

Geopolitical Risks

  • Middle East Tensions: Israel-Hamas conflict and US strikes in Yemen weigh on market sentiment.

Interest Rates and Inflation

  • 10-year T-note yield: Up +7.3 bp to 4.319%.
  • 10-year breakeven inflation rate: Rose to a 2-1/2 week high of 2.355%.

European Bond Yields

  • 10-year German Bund Yield: Up +2.1 bp to 2.786%.
  • 10-year UK Gilt Yield: Down -0.1 bp to 4.712%.

Eurozone and UK PMI Data

  • Eurozone Mar S&P Manufacturing PMI: Rose +1.1 to a 2-year high of 48.7.
  • UK Mar S&P Manufacturing PMI: Fell -1.7 to 44.6 (steepest contraction in 1.5 years).

Central Bank Sentiment

  • ECB Executive Board Member Cipollone: Suggested stronger case for rate cuts.
  • Swap Markets: 65% chance of a -25 bp ECB rate cut by April 17.

US Stock Movers

  • Magnificent Seven Stocks: Tesla (+8%), Nvidia (+3%), Amazon (+3%), Meta (+3%), Alphabet (+1%), Apple (+0.74%), Microsoft (+0.22%).
  • Chip Stocks: Advanced Micro Devices (+5%), ARM Holdings Plc (+5%), ON Semiconductor (+4%), Microchip Technology (+4%), NXP Semiconductors NV (+4%), Analog Devices (+4%), KLA Corp (+3%), Lam Research (+3%), Texas Instruments (+3%).
  • Cryptocurrency-Exposed Stocks: Coinbase Global, MicroStrategy, MARA Holdings, Riot Platforms (+4%).

Defensive Sectors Under Pressure

  • Food and Beverage Producers: Hormel Foods, Ball Corp, Kraft Heinz, Brown-Forman (-1%).

Earnings Reports (March 24, 2025)

  • Aerovate Therapeutics Inc (AVTE), AMMO Inc (POWW), Enerpac Tool Group Corp (EPAC), Intuitive Machines Inc (LUNR), KB Home (KBH).

Summary of Market Implications

  • Risk-On Sentiment: Easing tariff concerns and targeted trade policies have sparked a rally in risk assets.
  • M&A Activity: Increased deal activity supports market optimism.
  • Geopolitical Risks: Ongoing conflicts in the Middle East pose downside risks to global growth.
  • Inflation Expectations: Rising breakeven inflation rates indicate heightened inflation concerns despite easing tariff worries.