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Investors weigh tariff outlook as they drop stocks and increase the dollar

Investors weigh tariff outlook as they drop stocks and increase the dollar

Investors waited for more information on U.S. president Donald Trump's anticipated tariffs as the April 2 deadline approaches.

The Dow and S&P 500 were both lower on Wall Street as the tech sector weighed early in trading. The benchmark S&P and Nasdaq indexes were both on course to end a three session streak of gains.

In recent days, stocks have begun to show signs of bottoming after being under pressure from the uncertainty surrounding the tariff outlook. These uncertainties could slow down the global economy or dent corporate profit. The three major U.S. indices are still on course for their first consecutive monthly declines since October 2023, when the two-month period ended.

The Dow Jones Industrial Average rose by 182.05 points or 0.43% to 42,769.55. The S&P 500 dropped 20.10 points or 0.34% to 5,756.79, and the Nasdaq Composite declined 212.27 or 1.16% to 18,059.58.

The U.S. Commerce Department reported that orders for durable goods rose 0.9%, compared to the economists' estimate for a 1.0% decline. This follows an increase of 3.3% upwardly-revised in January when businesses placed orders for primary metals as well as fabricated metal products before the expected tariffs.

Trump's most recent comment on tariffs was on Monday. He said that automobile tariffs will be coming soon, even though he hinted that some countries might get exemptions.

Steve Englander is the head of Standard Chartered Bank’s NY Branch’s global G10 FX Research and North America Macro Strategy.

They want to avoid the market's pressure before they make an announcement. "But I also think that there is a risk that the announced tariffs, when it comes down to it, will be more hawkish in comparison with the market pricing," he said.

The dollar index (which measures the greenback in relation to a basket) rose by 0.08%, reaching 104.30. The euro was down only 0.01%, at $1.079. The greenback, which had a dip on Tuesday is now on course for its fifth increase in six sessions.

The MSCI index of global stocks fell by 2.54 points or 0.30% to 850.95, while the pan-European STOXX 600 fell by 0.44%, as investors reacted cautiously due to the impending tariffs.

European stocks outperformed U.S. peers this year, in part on the hope that a German stimulus package would spur growth and counter levies. The STOXX 600 is poised to post its largest percentage gain since the 4th quarter of 2022. The dollar gained 0.39% against the Japanese yen to reach 150.48. Bank of Japan Governor Kazuo Ueda stated that the central bank would have to raise interest rates in order to combat inflation if food prices continue to rise.

Junko Koeda, a new member of the Bank of Japan's board of directors, said that the real interest rates in the country are "extremely" low as inflation is accelerating backed by a solid wage growth. She declined to comment about how soon the central banks should increase interest rates.

The British pound fell 0.36%, to $1.2896, after British Finance Minister Rachel Reeves slashed the government's spending plans on Wednesday in order to return to her fiscal goals. British inflation was lower than anticipated in February, according to earlier data. The yield on the benchmark 10-year U.S. notes increased by 4 basis points, to 4,348%. This is expected to be its first gain in a month since December.

U.S. crude climbed 1.26%, to $69.87 per barrel. Brent rose 1.15% to $73.86 a barrel.

(source: Reuters)