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 16:44
  • theglobeandmail.com
  • Keywords: High Tariffs, Geopolitical Risks

Stocks rose sharply as easing tariff concerns boosted risk sentiment. The S&P 500, Dow Jones, and Nasdaq hit two-week highs after reports of more targeted US tariffs, reducing fears over global trade impacts.

SMCI ServicesJHXsentiment_satisfied
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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, leading to a market rally.

Clearlake Capital Group

Positivesentiment_satisfied
Analyst rating: N/A

Agreed to acquire Dun & Bradstreet Holdings for about $4.1 billion, contributing to positive sentiment.

Context

Business Insights and Market Implications Analysis

Market Performance

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

Key Drivers of Market Movement

  • Easing Tariff Concerns:

    • President Trump's announcement on April 2 will focus on targeted reciprocal tariffs, calming market fears about global trade impacts.
    • Initial tariffs imposed on March 4 (25% on Canadian/Mexican goods and 20% on Chinese goods) had caused market pressure over the past three weeks.

  • M&A Activity:

    • 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, supporting stock gains.

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 (weaker than expected 51.7).
  • Mar S&P Global Services PMI: Rose +3.3 to 54.3 (stronger than expected no change at 51.0).

Geopolitical Risks

  • Middle East Tensions:
    • Israel-Hamas conflict and US strikes in Yemen increased geopolitical risks, negatively impacting stocks.

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: Mixed, with German bund yield up +2.1 bp and UK gilt yield down -0.1 bp.

Stock Movers

Gainers

  • Magnificent Seven Stocks: Tesla (+8%), Nvidia (+3%), Amazon (+3%), Meta (+3%), Alphabet (+1%).
  • Chip Stocks: Advanced Micro Devices (+5%), ARM Holdings Plc (+5%), ON Semiconductor (+4%).
  • Cryptocurrency-Exposed Stocks: Coinbase Global (+4%), MicroStrategy (+4%).

Losers

  • Defensive Stocks: Hormel Foods (-1%), Ball Corp (-1%), Kraft Heinz (-1%), Brown-Forman (-1%).
  • Super Micro Computer: Down -1% after Goldman Sachs downgrade.

Upcoming Key Reports (This Week)

  • Feb New Home Sales: Expected +3.5% m/m to 680,000.
  • Mar Consumer Confidence Index: Expected -4.7 to 93.6.
  • Q4 GDP: Expected unrevised at +2.3% q/q annualized.
  • Feb Personal Spending & Income: Both expected +0.5% and +0.4% m/m, respectively.

Market Sentiment

  • Rate Cuts Discounted:
    • 16% chance of a -25 bp rate cut by the FOMC in May.
    • ECB swaps discount 65% chance of a -25 bp rate cut in April.

Strategic Considerations

  • The market rally reflects optimism over targeted tariffs and M&A activity, but geopolitical risks and mixed economic data suggest cautious optimism.
  • Central bank policy expectations remain critical, with inflation concerns influencing bond yields and interest rates.