Euro Gains on Ukraine Ceasefire Proposal, While U.S. Tariffs Pressure Stocks

The euro surged to a near five-month high, reaching $1.0947, as Ukraine signaled its readiness to accept a month-long ceasefire following a proposal from the U.S. This development came as the U.S. restored military aid and intelligence sharing with Ukraine, which buoyed European equity futures, including a 1.1% jump in European markets. Meanwhile, Russia’s foreign minister emphasized that Moscow would not make compromises jeopardizing people’s lives in peace talks.

Despite the optimism surrounding the ceasefire, stocks faced turbulence as U.S. tariffs on steel and aluminium imports took effect. Asian steel mills showed little market reaction, but Europe retaliated with counter-tariffs. The MSCI index of Asia-Pacific shares was flat, with markets in Hong Kong and China steady, while Japan’s Nikkei stabilized after falling to a six-month low. The S&P 500 experienced a volatile session, dropping 0.8%, further escalating fears of U.S. economic uncertainty.

Concerns about the U.S. economy intensified as traders anticipated the negative impacts of tariffs on growth, with a heightened risk of recession. J.P. Morgan’s chief global economist projected a 40% chance of a U.S. recession this year, which could have significant ripple effects on the global economy, especially through financial channels. Negative earnings reports from major U.S. retailers such as Dick’s Sporting Goods and Kohl’s, along with profit warnings from airlines, contributed to growing investor anxiety.

Meanwhile, global commodity markets showed signs of weakness, with the Canadian dollar weakening before recovering, while oil prices hovered just below $70 per barrel. Investors remain cautious ahead of U.S. inflation data and a key central bank meeting in Canada, where expectations of a rate cut are mounting due to ongoing trade tensions. As the market waits for further data, the situation remains fragile.

SOURCE: REUTERS