More tariff pauses — but Nasdaq enters correction

U.S. President Donald Trump expanded his tariff pause to goods coming in from Canada and Mexico, so long as they satisfy terms of the United States-Mexico-Canada Agreement, a trade deal between all countries.

Unlike Trump’s Wednesday reprieve to automakers, which bumped up stocks, investors weren’t relieved this time. All major U.S. benchmarks sank, with the Nasdaq Composite limping into correction territory and losing its post-election Trump bump.

That might be because the Trump administration seems to be doubling down on tariffs, even as it acknowledges — and dismisses — the repercussions of such levies.

Trump brushed off the idea that he’s watching the markets, causing dismay in investors who were banking on the “Trump put,” the idea that the current president would prevent a steep drop in the stocks. Meanwhile, U.S. Treasury Secretary Scott Bessent waved away the idea of “cheap goods” as integral to the “American dream.”

Tariff pause on some goods
Goods imported into the U.S. from Canada and Mexico, and which are compliant with the North American trade agreement known as the USMCA, will be temporarily excluded from U.S. President Donald Trump’s 25% tariffs on both countries, a White House official told reporters Thursday. That covers around 38% of Canadian imports and 50% of Mexican ones, according to another official. The reprieve will last until April 2.

Exports growth in China slows
China’s exports in the January to February period rose 2.3% in U.S. dollar terms from a year earlier, significantly undershooting expectations of a 5% increase in a Reuters poll. It’s also much lower than the growth of 10.7% in December. Separately, China’s Minister of Foreign Affairs Wang Yi said the U.S. should not impose “arbitrary tariffs” or return goodwill with hostility, and he emphasized that the two countries would both be part of the world for a long time, requiring “peaceful coexistence.”

U.S. creates Strategic Bitcoin Reserve
Trump signed an executive order on Thursday creating a Strategic Bitcoin Reserve. White House crypto and AI czar David Sacks wrote in a post on X that the reserve will be funded exclusively with bitcoin seized in criminal and civil forfeiture cases. Additionally, the order establishes a U.S. Digital Asset Stockpile, managed by the Treasury Department, to hold other confiscated cryptocurrencies. Bitcoin prices fell to as low as $84,688.13 on the news, as investors were disappointed by the U.S. not having plans to purchase the currency.

‘Not even looking at the market’: Trump
When asked on Thursday whether the decision to pause tariffs on many products from Canada and Mexico for one month was because of the stock market, Trump said it had he’s “not even looking at the market.” He added that in the long term “the United States will be very strong with what is happening here.” Trump also blamed “globalist countries and companies that won’t be doing well” for recent losses in equities.

U.S. Treasury Secretary dismisses ‘cheap goods’
U.S. Treasury Secretary Scott Bessent on Thursday said during a speech to the Economic Club of New York that “access to cheap goods is not the essence of the American dream.” He added that Trump considers tariffs to have three benefits: as a revenue source for the government, as a way to protect industries and workers from unfair practices around the world, and as “the third leg to the stool” as Trump “uses it for negotiating.”

More layoffs than during pandemic era
U.S. employers announced 172,017 layoffs for February, up 245% from the previous month and the highest monthly count since July 2020 during the Covid pandemic, outplacement firm Challenger, Gray & Christmas reported Thursday. More than one-third of the total came from billionaire Elon Musk’s efforts, with Trump’s blessing, to slash the federal headcount. Challenger put the total of announced federal job cuts at 62,242.

Markets grow tired of tariff changes
U.S. stocks tumbled Thursday on tariff flip-flop fatigue. The S&P 500 fell 1.78% and the Dow Jones Industrial Average lost 0.99%. The Nasdaq Composite slumped 2.61% to enter correction territory, meaning it has fallen 10% from a recent high. The tech-heavy index has also wiped out all its post-election gains. On Friday, Asia-Pacific markets tracked Wall Street lower. Japan’s Nikkei 225 dropped 2.25% as yields on long-term Japan government bonds rose to their highest level since 2008.

European Central Bank cuts rates
The European Central Bank on Thursday cut interest rates by 25 basis points and updated the language in its decision to say monetary policy was becoming “meaningfully less restrictive.” The cut brings the ECB’s deposit facility rate, its key rate, to 2.5% — a move that markets had widely priced in before the announcement. ECB President Christine Lagarde said no Governing Council members opposed the cut, but one central bank governor abstained.

[PRO] Semi ETF forms dreaded pattern
The early part of 2025 has not been kind to semiconductor stocks. An ETF tracking a basket of semiconductor companies is down double digits in the past month, in contrast to its 38.5% jump in 2024. The semiconductor ETF’s latest movement has formed a dreaded chart pattern — the first time it’s done so in more than two years — which could signal more trouble ahead.

Global bonds sell off as investors react to Trump’s tariffs and a German ‘paradigm shift’

Government borrowing costs rose across the globe on Thursday. Yields on German government bonds skyrocketed on Wednesday, with the yield on the 10-year debt instruments adding around 30 basis points. The 10-year bund yield, seen as a benchmark for the wider euro zone, rose at the start of Thursday’s trading session before trending lower.  

Deutsche Bank research strategist Jim Reid said in a note to clients on Thursday morning that Germany’s political gear shift had helped fuel a greater appetite for riskier assets in Europe.  “There’s no doubt that markets are pricing in a once-in-a-generation policy regime shift, which has brought about a huge risk-on move for European assets,” he said.