Once again, Trump launches a new attack on Canada over tariffs. The apprentice sorcerer casts a spell on financial markets, which may one day grow weary of his media experiments and assess the economic impact of the American president’s enchantments.
As you can read, tensions are rising between Canada—through its new minister—and the U.S. president, who repeats his usual refrain via his network:
“Ontario, Canada, having imposed a 25% tariff on ‘electricity’ entering the United States, I have instructed my Secretary of Commerce to add an additional 25% tariff, bringing it to 50%, on all steel and aluminum entering the U.S. from Canada—one of the highest tariffed nations in the world.
This measure will take effect TOMORROW, March 12.
Furthermore, Canada must immediately drop its outrageous agricultural tariff of 250% to 390% on various American dairy products, which has long been considered scandalous. I will soon declare a national emergency regarding electricity in the threatened area. This will allow the U.S. to take swift action to counter Canada’s abusive threat.
If Canada does not drop other glaring and long-standing tariffs, I will significantly increase, on April 2, tariffs on cars entering the U.S., which will effectively shut down the Canadian auto industry for good.”
And, for fun, he adds:
“Additionally, Canada pays very little for national security and relies on the United States for military protection.
We subsidize Canada by more than $200 billion a year. WHY? This can’t continue.
The only thing that makes sense is for Canada to become our beloved 51st state.
In that case, all tariffs, and everything else, would disappear completely.
Canadians’ taxes would be significantly reduced, they would be safer—militarily and otherwise—than ever before, there would be no more northern border issue, and the world’s greatest and most powerful nation would become even greater, better, and stronger—with Canada as an integral part of it.
The artificial dividing line drawn many years ago would finally disappear, and we would have the safest and most beautiful nation in the world—and your brilliant anthem, ‘O Canada,’ would still play, but now representing a GREAT AND POWERFUL STATE within the greatest nation the world has ever known.”
And what about financial markets, which, for Trump, were once a measure of success? Well, he no longer talks about them since they are dropping.
It’s a Mess in Europe…
In Switzerland, the SMI closed down 2.47%. Novartis (-5.6%, excluding a dividend of 3.50 francs) ended as the worst performer, behind Roche (-3.6%), while the third heavyweight, Nestlé (-2.1%), did slightly better than the index. Elsewhere in Europe, red dominates. The CAC 40 lost 1.31%, the DAX fell 1.34%, and in London, the FTSE 100 dropped 1.21%. Travel and leisure stocks suffered Tuesday (-3.6%) after disappointing outlooks from U.S. airline Delta. In Paris, Air France-KLM plunged 9.2%, and Lufthansa lost 5.2%. Unsurprisingly, the auto sector fell 2.1%, hit by fears over U.S. tariffs. The yield on the German 10-year Bund climbed nearly 5 basis points to 2.872%.
And in the U.S. as Well
The Dow Jones fell 1.14%, the Nasdaq declined 0.18%, and the broader S&P 500 dropped 0.76%. On the data front, Wall Street barely reacted to the U.S. Labor Department’s JOLTS report, which showed a slightly higher-than-expected increase in job openings for January. Though, to be fair, the figures have never been very reliable. More important is today’s release of February’s CPI.
Just like in Europe, airline and travel sector stocks plunged—Airbnb (-5.08%), Expedia (-7.28%), and Booking (-2.19%) were among the hardest hit.
And Trump buys a Tesla… red like his tie. “I’m going to buy one” because it’s “a very good product” and because Elon Musk has been “treated very unfairly,” said the president. Tesla shares jumped 3.79%—hopefully, the American president bought some call options before his announcement.
In the bond market, the yield on 10-year U.S. Treasury bonds rose to 4.28%, up from 4.21% on Monday.
A Modest Rebound for Most Commodities
Three-month copper on the London Metal Exchange (LME) rose 0.03%, aluminum climbed 0.22%, lead gained 0.19%, while tin fell 0.05%, zinc lost 0.02%, and nickel dropped 0.15%.
Chicago soybean futures rose Wednesday for the first time in four sessions, with bargain buying supporting prices, though gains were limited by abundant South American supply and uncertainty over the trade war’s impact on U.S. sales. Wheat and corn prices also rose, recovering some of Tuesday’s losses.
Oil prices saw a modest recovery, with Brent crude rising 0.39% to $69.83 per barrel, and WTI climbing 0.44% to $66.54 per barrel.
Ukraine Favors a One-Month Ceasefire
This was the big overnight news, and Asian markets are showing some resilience. The MSCI Asia-Pacific ex-Japan index was up 0.2%, while markets in Hong Kong and China remained broadly stable, as did Japan’s Nikkei. Since the start of the year, the Nikkei has lost 7.8%.
But the real winner was the euro. It reached its highest level since October in New York at $1.0947 and remained stable in Asia at $1.0913. The Russian ruble also hit a seven-month high overnight. However, the Canadian dollar fell to a one-week low before rebounding to $1.443 CAD per USD.
Gold remained steady at $2,916.69 per ounce, silver lost 0.5% to $32.76 per ounce, platinum rose 0.4% to $978.60, while palladium slipped 0.6% to $940.53.
Now, all that’s left is to convince the Russians so that the markets can pretend to celebrate.
