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Stocks rise, U.S. Treasury Yields Climb on Tariff Hopes

Stocks rise, U.S. Treasury Yields Climb on Tariff Hopes

After reports that the Trump administration might take a more targeted tariff approach than was previously thought, global stocks rose on Monday. This boosted risk appetite. The Wall Street Journal, Bloomberg and other media outlets reported that Trump's administration will likely exclude a number of sector-specific levies but apply reciprocal levies to April 2. Peter Andersen of Andersen Capital Management, Boston, said that investors are concerned about the changes proposed by the Trump administration. "Whether or not tariffs are imposed, if they're repealed, or if they're delayed, it causes extreme volatility in markets," he added. In recent weeks, the market has been impacted by the uncertainty surrounding potential tariffs. These could have a negative impact on both the global economy and corporate profits. As tariff fears grew, a number of economic indicators also indicated a cooling in consumer sentiment. S&P Global’s flash U.S. Composite pmI Output index, which tracks manufacturing and service sectors, rose to 53.5 from 51.6 this month, according to data released on Monday. A reading over 50 indicates growth. The survey's business-confidence measure fell to its second lowest level since 2022, however, due to concerns over tariffs and sharp cuts to government spending. The Dow Jones Industrial Average rose by 526.18, or 1.26% to 42,515.62, while the S&P 500 gained 87.01, or 1.55% to 5,755.38, and the Nasdaq Composite climbed by 353.95, or 1.99% to 18,139.45. MSCI's global stock index rose 9.24 points or 1.10% to 851.23, after reaching a two-week peak of 851.46. The MSCI index fell nearly 8% between its mid-February high and its closing low on March 13, before ending a four week decline last week.

The pan-European STOXX 600 Index rose by 0.11 points, as HCOB's composite preliminary euro zone Purchasing Managers' Index compiled by S&P Global rose to 50.4, its highest level since August, from 50.2 in February. The private sector in Germany grew at its fastest pace in ten month to 50.9, which boosted the DAX index of that country by 0.3%. Trump is still planning to impose reciprocal tariffs on next week. However, questions remain regarding the size of these duties and the countries that will be targeted.

Trump announced on Monday that countries that purchase oil or natural gas from Venezuela would be charged a 25 percent duty on any trades with the United States. The prospect of targeted tariffs has boosted U.S. Treasury yields. After registering a small increase last week to end a 4-week decline, the yield on U.S. benchmark 10-year notes is now up 7.1 basis point to 4.323.

The dollar index (which measures the greenback versus a basket including the yen, the euro and others) rose by 0.15%, while the euro fell 0.01% to $1.0812. The dollar last traded at 37.989 versus the Turkish Lira. This was after a Turkish Court jailed Istanbul mayor Ekrem Immamoglu, the main political opponent of President Tayyip Erdogan, pending a trial on corruption allegations. The dollar gained 0.64% against the Japanese yen to 150.27, while the pound rose 0.19% to 1.2941. U.S. crude climbed 0.69% to $68.75 per barrel while Brent increased to $72.60 a barrel, an increase of 0.6% for the day, as investors weighed up the impact of new U.S. Sanctions on Iranian Exports with talks to end Ukraine's war, which may increase the supply of Russian crude on global markets.

(source: Reuters)