US Markets Smashed as Tariffs Hit – Nasdaq Down 2.6%
US stocks took a substantial hit in trading yesterday after President Trump confirmed that tariffs will go ahead on imports from Mexico and Canada. The Dow dropped 1.48%, the S&P 500 fell 1.76%—its biggest daily loss since December 18—and the Nasdaq was hit hardest, finishing the day down 2.64%.
US Treasury yields continued to fall as manufacturing data came in weaker than expected, with the 2-year yield finishing down 4 basis points at 3.949% and the 10-year dropping 5.3 basis points to 4.155%. The dollar played a bit of “catch-up” with Treasury yields, with the DXY falling by over 1% on the day to close at 106.55, down from a high of 107.66 the day before.
Oil prices also took a hit following the tariff news and reports that OPEC+ will increase output levels in April. Brent crude fell 1.80% to $71.50, while WTI dropped 1.99% to $68.37. Meanwhile, gold pushed higher in line with a weaker dollar and tariff concerns, closing the day at $2,891.72, up 1.28%.
Oil Prices Looking Vulnerable
Oil prices declined further last night as President Trump announced that tariffs on Canada and Mexico would take effect today. Additionally, reports confirmed that OPEC+ will proceed with plans to increase output in April. Both major contracts, Brent and WTI, closed at their lowest levels since early December.
Talk of a potential truce in the war between Ukraine and Russia, which could lead to a lifting of sanctions on Russia, may also push oil prices lower in the coming days. WTI hit a low just above $65 a barrel in 2024, and a technical breakdown of current support levels could see this price being tested relatively soon. A long-term break below that annual low could open the door for a much larger market correction in the months ahead.
Quiet Calendar Day Ahead for Traders
It is likely to be the quietest day of the week for traders in terms of macroeconomic updates, though many expect plenty of volatility following the significant market moves overnight.
The Asian session does feature some potentially market-moving events, with Bank of Japan Governor Kazuo Ueda set to speak early in the day in Tokyo. Focus will then shift to Australian markets for the Reserve Bank of Australia’s latest Monetary Policy Meeting Minutes and Retail Sales data.
There is little scheduled for either the London session or the New York trading day today. However, as always, traders will be keeping a close eye on newswires for any geopolitical developments.
