Lagatar24 Desk
New Delhi: US President Donald Trump on Tuesday announced a 30-day pause on his tariff threats against Mexico and Canada, leading to significant market reactions worldwide. While US equity futures surged, the US dollar reversed gains against the Mexican peso and Canadian dollar.
US Markets Respond Positively
According to Reuters, the S&P 500 Futures rose 0.4% on Tuesday following Trump’s announcement. The euro, which initially dipped to $1.0125, rebounded strongly to $1.0320 within 24 hours.
Despite heightened tensions between the US and Canada, Trump claimed victory after multiple discussions with Canadian Prime Minister Justin Trudeau. On Truth Social, he wrote, “Canada has agreed to ensure we have a secure Northern Border and to finally end the deadly scourge of drugs like fentanyl.”
Hong Kong Market Jumps 2.5%
The Hang Seng Index in Hong Kong climbed 2.5%, driven by electric vehicle stocks and tech shares, despite China-facing a 10% tariff increase on certain exports.
• Li Auto emerged as the top gainer, soaring 8%.
• Semiconductor Manufacturing International Corporation (SMIC) surged 7%, reaching a record high.
Analysts suggested that Trump’s tariff threats remain a negotiation tactic, reducing fears of immediate economic damage.
“Trump is using the same strategy – launching threatening tariffs but leaving room for negotiation,” said Steven Leung, an institutional trader at UOB-Kay Hian in Hong Kong.
European and Australian Markets Show Cautious Optimism
• European equity futures increased 0.2%, reflecting cautious optimism.
• Australian shares advanced 0.4%, while Japanese stocks rose 1.7%, though smaller gains compared to Monday’s losses driven by trade-war concerns.
The Chinese markets remained closed for the Lunar New Year holiday, but the offshore yuan strengthened to 7.3112 per dollar after falling to 7.3765 on Monday.
Gold Nears Record High Amid Economic Uncertainty
Amid uncertainty, investors moved towards safe-haven assets, with gold prices holding near record levels:
• Spot gold increased 0.3% to $2,820.69 per ounce, following a record high of $2,830.49 in the previous session.
• Bitcoin, which had fallen to $91,000, rebounded to $102,000.
• Oil prices, which initially jumped, slipped back to $75.46 per barrel for Brent crude, nearing a one-month low.
Global Economic Outlook and Interest Rates
Market analysts predict a rollercoaster of negotiations around tariffs and trade policies in the coming months.
“We should get used to this kind of back-and-forth negotiation around tariffs and other economic policies,” said Ross Mayfield, an investment strategy analyst at Baird in Kentucky.
With global inflation concerns persisting, investors remain divided on whether the US Federal Reserve will introduce one or two interest rate cuts this year.
As Trump’s policies continue to shape financial markets, the next 30 days will be crucial in determining the trajectory of global trade relations and economic stability.
