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 16:14
  • theglobeandmail.com
  • Keywords: High Tariffs, Geopolitical Risks

Stocks rose sharply as easing tariff worries boosted risk sentiment, with major US indexes hitting highs amid reports of more targeted tariffs and increased M&A activity.

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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.

Azek Co

Positivesentiment_satisfied
Analyst rating: N/A

Acquired by James Hardie Industries 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 Analysis

Market Performance

  • S&P 500 Index: +1.58%
  • Dow Jones Industrials Index: +1.23%
  • Nasdaq 100 Index: +1.96%
  • June E-mini S&P futures: +1.62%
  • June E-mini Nasdaq futures: +1.95%

Key Drivers of Market Movement

  • Tariff Concerns Easing: Stocks rallied on reports that US tariffs will be more targeted, with some countries exempt and existing tariffs not cumulative. This reduced fears about global trade and growth impacts.
  • M&A Activity Surge:
    • James Hardie Industries agreed to acquire 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: Unexpectedly rose +0.26 to 0.18, stronger than expected (-0.17).
  • Mar S&P Global manufacturing PMI: Fell -2.9 to 49.8 (weaker than expected 51.7).
  • Mar S&P Global services PMI: Rose +3.3 to 54.3 (stronger than expected 51.0).

Interest Rates and Bond Markets

  • 10-year T-note yield: Up +7.3 bp to 4.319%.
  • Inflation Expectations: Risen due to higher breakeven inflation rate (2.355%).
  • European bond yields: Mixed, with German bund yield up +2.1 bp to 2.786% and UK gilt yield down -0.1 bp to 4.712%.

Geopolitical Risks

  • Middle East Tensions: Heightened risks due to Israeli airstrikes in Gaza and US strikes on Yemen's Houthi rebels.
  • Market Impact: Negative sentiment affecting global stocks.

Sector Performance

  • Magnificent Seven Stocks: Leading gains, with Tesla (+8%), Amazon.com (+3%), Meta Platforms (+3%), and others driving market momentum.
  • Chip Stocks: Rallying, with Advanced Micro Devices (+5%) and ARM Holdings Plc (+5%) leading the sector.
  • Cryptocurrency-Exposed Stocks: Climbing as Bitcoin rose +4%.

Defensive Sectors Under Pressure

  • Food and Beverage Producers: Declining due to broader market rally, with Hormel Foods (-1%), Ball Corp (-1%), Kraft Heinz (-1%), and Brown-Forman (-1%) underperforming.

Earnings Reports (March 24, 2025)

  • Companies scheduled to report include Aerovate Therapeutics Inc, AMMO Inc, Enerpac Tool Group Corp, Intuitive Machines Inc, and KB Home.

Long-Term Effects and Regulatory Impacts

  • Tariff Policy: More targeted approach may reduce global trade frictions but could still impact specific industries.
  • Geopolitical Risks: Ongoing tensions in the Middle East may lead to long-term market volatility.
  • Interest Rate Expectations: Markets are pricing in potential rate cuts by central banks, with swaps discounting a 16% chance of an FOMC rate cut and a 65% chance of an ECB rate cut.

Strategic Considerations

  • Investor Sentiment: Risk-on sentiment driven by easing tariff fears and strong M&A activity.
  • Market Risks: Geopolitical instability and inflation concerns remain key risks for asset markets.