Written by Linh Tran, Market Analyst at XS.com 3mw1j
The Dow Jones closed yesterday’s trading session with a 0.94% decline, marking a total loss of nearly 8% since its peak in early February. This downturn is driven by President Donald Trump’s inconsistent tariff policies, which have fueled concerns over a potential economic recession.
Trade tensions have taken another complicated turn. While the ongoing economic standoff between the U.S. and China remains unresolved, President Donald Trump announced yesterday that he would increase import tariffs on steel and aluminum products from Canada to 50%, starting on March 12. This decision follows Ontario’s recent move to impose a 25% tariff on electricity exports to the U.S., impacting electricity prices for approximately 1.5 million Americans.
Trump also demanded Canada immediately remove tariffs “against American farmers”, threatening to “significantly increase” auto import tariffs on April 2 if Canada does not lift other trade restrictions that he deems unfair.
This latest move marks an escalation in trade tensions between the U.S. and Canada, raising concerns about the potential negative impact on both economies. As recession fears intensify, investors have become more cautious toward risk assets, adding further pressure to the Dow Jones, extending its previous decline.
Alongside trade risks, geopolitical uncertainty remains a major concern for the market. President Trump’s envoy is expected to travel to Moscow this week to meet with Russian President Vladimir Putin. This meeting follows a high-level discussion between U.S. and Ukrainian officials in Saudi Arabia, signaling active efforts to find a resolution to the ongoing Russia-Ukraine conflict.
However, unlike the optimistic sentiment ahead of President Biden’s previous meeting with Ukraine’s president at the White House, investors remain cautious this time, waiting for tangible outcomes before making significant moves in the market.
The global nuclear weapons threat is another key issue to watch in the coming weeks.
In the economic sector, the U.S. JOLTS Job Openings (Jan) report released yesterday showed significant growth. However, a red flag emerged as the increase was largely driven by part-time workers and those holding multiple jobs. This data is not strong enough to alter the Federal Reserve’s policy trajectory in the near term.
Instead, market focus will now shift to today’s inflation data release. Any deviation from expectations could significantly impact the Fed’s decisions, which in turn will influence the Dow Jones’ direction and overall stock market movements.