Today's headlines are once again graced by Trump's characteristic unpredictability. Yesterday, markets took a nosedive as tariffs on Canada, Mexico, and China sparked fears of retaliation. Today, however, the plot thickens with whispers of potential tariff relief, initially sending futures on an upward trajectory. Reports suggest Trump might ease the 25% tariffs on Canadian and Mexican goods, particularly cars and auto parts that align with the U.S.-Mexico-Canada trade agreement. Commerce Secretary Howard Lutnick hinted at this possible détente, which could prevent a full-scale trade war.

However, futures returned closer to zero after the release of ADP's monthly private payrolls report, which showed a modest 77,000-job increase in February, falling short of the 140,000 expected by Bloomberg's consensus. This follows an upwardly revised 186,000 gain in January. Pay growth for job-changers slowed to 6.7% year-over-year, while job-stayers saw a steady 4.7% increase.

Across the pond, European and Asian markets are catching the optimism bug. Frankfurt's DAX 40 has surged 3.2%, thanks in part to Germany's proposal to revamp borrowing rules for infrastructure spending. Investors are shifting from a cautious stance to a more adventurous one. On the earnings front, companies like Brown Forman, Full Truck Alliance, and Campbell's are set to report. 

This morning contrasts with yesterday, which was another rough day for stock markets. The day began with a sharp decline on Wall Street. Yet, indices attempted a rebound that almost succeeded, before taking a nosedive as the session closed. The brief rally was sparked by a glimmer of hope from US Secretary of Commerce Howard Lutnick, who suggested in an interview that there might be a reduction in tariffs on Canada and Mexico. This flicker of optimism was short-lived, but the American stock market managed to limit the damage with a slight recovery in the technology sector. 

The Nasdaq 100 dipped a mere 0.4%, while the S&P 500 took a more significant hit, dropping 1.2%, weighed down by bleak consumer forecasts from Best Buy and Target, and a struggling financial sector. Major American banks lost ground, as the White House's risky policies stoked fears of a slowdown in US growth. In Europe, the German DAX took a nosedive, plummeting 3.5% due to the announcement of US tariffs. While Germany, a key US trading partner, was spared from these surcharges, the reprieve might be short-lived. Realists suspect that the EU, and Germany in particular, could be next in line for Washington's tariff barrage. In Frankfurt, the automotive sector bore the brunt of the impact, along with major exporters like Siemens AG and its subsidiaries. The DAX's decline also dragged down the Euro Stoxx 50 by 2.8%. 

Donald Trump delivered a lengthy speech yesterday to Congress, where he predictably lauded his own policies, criticized his opponents, and announced some shocking measures, such as scrapping the Biden administration's subsidies to the semiconductor sector. Trump argues that the sector should self-finance if it wants to ride the wave of the American economic boom. He also admitted that the US will face "some disruptions" due to customs, but assured that his administration is ready to take that risk, stating, "it's just beginning."

Meanwhile, in China, the National People's Congress has set an economic growth target of around 5% for 2025, mirroring the previous two years, despite the renewed trade war pressures. The market is buzzing with speculation that Beijing will introduce supportive measures to counter US trade policies and boost its still sluggish domestic consumption.

Defense issues are stealing the spotlight, while Ukrainian President Volodymyr Zelensky is trying to rekindle a dialogue with Donald Trump. The U.S. President didn't linger on Ukraine during his congressional address but did acknowledge Zelensky's overture for renewed talks. 

Across the Asia Pacific, cautious optimism is in the air, fueled by China's economic targets and Lutnick's recent comments. Japan's Topix and China's CSI 300 both posted a modest 0.4% rise, while the Hang Seng surged by 2.8%. Gains of over 1% were seen in India, Taiwan, and South Korea. However, Australia bucked the trend, with the ASX dipping 0.7%, dragged down by its heavyweight banking sector. European indices are bullish, with the Stoxx Europe 600 up 1.4%.

Today's economic highlights:

On today's agenda: Japan's Jibun Bank Services and Composite PMIs; China's Caixin Composite PMI; Switzerland's CPI and PPI; in France, industrial production and HCOB Composite and Services PMIs; in Germany, HCOB Composite and Services PMIs; for the eurozone, HCOB Composite and Services PMIs; in the United Kingdom, S&P Global Composite and Services PMIs; in South Africa, BER Business Confidence; in the United States, ADP Employment Change, S&P Global Composite and Services PMIs, durable goods and factory orders, ISM Services Index, and DOE crude oil inventories. See the full calendar here.

  • Dollar index: $104.8
  • Gold: $2,896
  • Crude Oil (BRENT): $69.77 WTI: 66.50
  • US 10-year: 4.20%
  • BITCOIN: $89,473

In corporate news:

  • Microsoft cleared by UK and US authorities for partnership with OpenAI, with no antitrust investigation needed by UK's CMA.
  • Google faces multiple antitrust investigations in the EU and pressures US DOJ to reconsider its breakup.
  • Walgreens Boots Alliance discussing a $10 billion acquisition.
  • Apple legally contests UK government order compromising its cloud storage security.
  • Walt Disney plans to eliminate approximately 200 positions at ABC News Group and Disney Entertainment Networks, and enters into a $5.25 billion credit agreement.
  • Tesla experiences significant sales decline in Germany and offers repeated insurance subsidy for Model 3 in China.
  • Goldman Sachs set to reduce workforce by 3% to 5% as part of annual performance review.
  • Ford Motor Company involved in a recall amidst tariff discussions impacting vehicle prices.
  • Arm Holdings receives $250 million investment from Malaysia for local chip production over 10 years.
  • Smith & Nephew considering a breakup.
  • Deutsche Bank faces a hefty fine from Germany's financial watchdog.
  • Adidas anticipates high-single-digit sales growth and increased operating profits in 2025, completes Yeezy line liquidation.
  • Bayer anticipates lower earnings in 2025 but forecasts improved performance starting 2026.
  • Dassault Aviation expects to reduce U.S. operations due to potential tariffs, projects revenue rise to 6.5 billion euros in 2025.
  • Scor reports Q4 2024 net income of 233 million euros, surpassing market expectations.
  • Commonwealth Bank of Australia exits Vietnam International Commercial Joint Stock Bank by selling remaining 4.4% stake for A$170 million.
  • KKR finalizes sale of Seiyu supermarket chain to Trial Holdings for approximately $2.5 billion, invests $140 million in Darwinbox.
  • ByteDance valuation rises in recent share buyback.
  • Saudi Aramco reportedly considering acquiring BP's Castrol lubricants business.
  • ASML reports weakened customer demand and cautious capital expenditure in 2024 due to macroeconomic uncertainty and export controls.

Analyst Recommendations:

  • American International Group, Inc.: HSBC upgrades to buy from hold with a target price raised from USD 80 to USD 93.
  • Applovin Corporation: Arete Research downgrades to sell from neutral with a target price raised from USD 180 to USD 200.
  • Chubb Limited: HSBC upgrades to buy from hold with a target price raised from USD 298 to USD 323.
  • Palantir Technologies Inc.: William Blair upgrades to market perform from underperform.
  • T-Mobile Us, Inc.: HSBC downgrades to hold from buy with a price target raised from USD 260 to USD 270.
  • The Mosaic Company: Barclays upgrades to equalweight from underweight with a target price of USD 27.
  • Tko Group Holdings, Inc.: Seaport Global upgrades to buy from neutral with a target price of USD 164.
  • Truist Financial Corporation: Baird upgrades to outperform from neutral with a target price raised from USD 48 to USD 52.
  • Unum Group: Raymond James upgrades to strong buy from market perform with a target price of USD 108.
  • Acadia Healthcare Company, Inc.: TD Cowen maintains its buy recommendation with a price target reduced from 66 to USD 44.
  • Constellation Brands, Inc.: Bernstein maintains its outperform recommendation and reduces the target price from USD 300 to USD 230.
  • Kenvue Inc.: Canaccord Genuity maintains its buy recommendation and raises the target price from USD 24 to USD 29.
  • Pbf Energy Inc.: BMO Capital Markets maintains its market perform recommendation and reduces the target price from 30 to USD 23.
  • Unity Software Inc.: Arete Research maintains its buy recommendation and raises the target price from USD 20 to USD 29.
  • Viatris Inc.: Piper Sandler & Co maintains a neutral recommendation with a price target reduced from USD 14 to USD 10.