European stock markets opened mostly lower, while U.S. futures declined by over 1% on Thursday, following a positive close in most Asian markets, reports AP.
Selling pressure emerged after Wall Street’s rally, which was driven by President Donald Trump’s decision to grant U.S. automakers a one-month exemption from his 25% tariffs on imports from Mexico and Canada. This raised hopes that he might avoid triggering a severe trade war that could weaken economies and drive inflation higher.
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Germany’s DAX increased by 0.5% to 23,194.03, whereas France’s CAC 40 fell by 0.5% to 8,135.30. Meanwhile, Britain’s FTSE 100 dropped by 1% to 8,670.99.
Futures for the S&P 500 declined by 1.2%, while those for the Dow Jones Industrial Average fell by 1%.
In Asia, Tokyo’s Nikkei 225 climbed 0.8% to 37,704.93. Shares of Japanese automakers surged in U.S. trading, although Toyota Motor Corp.’s stock later slipped by 1% in Tokyo. Honda Motor Corp. advanced by 2%, while Nissan Motor Co. rose by 1.1%.
Hong Kong’s Hang Seng index surged by 3.3% to 24,369.71 after reports presented at China’s annual legislative session indicated stronger efforts by Beijing to boost consumer spending and overall domestic demand.
The Shanghai Composite index gained 1.2% to reach 3,381.10.
South Korea’s Kospi increased by 0.7% to 2,576.16, while Australia’s S&P/ASX 200 slipped by 0.6% to 8,094.70.
Taiwan’s Taiex dropped by 0.7%, whereas Bangkok’s SET index declined by 1.4%.
On Wednesday, Ford Motor and General Motors stocks contributed to Wall Street’s gains.
The S&P 500 rose by 1.1%, the Dow climbed 1.3%, and the Nasdaq composite advanced 1.6%.
Trump announced the one-month exemption for U.S. automakers after discussions with Ford, General Motors, and Stellantis, the parent company of Chrysler. The decision provided relief on Wall Street, with both Ford and General Motors seeing their stock prices jump by over 5%, contributing to a broad market rally.
However, Trump did not revoke all the tariffs he had imposed on the United States’ largest trading partners, including China. Speaking before Congress on Tuesday night, he confirmed that additional tariffs would still take effect on April 2.
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His move has heightened uncertainty in financial markets, which were already shaken after he declared on Monday that negotiations had reached an impasse. The increased tariffs took effect on Tuesday, leading to a sharp drop in U.S. stocks.
Regardless of the final outcome, the mere possibility of tariffs has already impacted U.S. households and businesses. Consumer confidence has significantly declined due to concerns that these tariffs will accelerate inflation. Amid policy shifts from Washington, U.S. manufacturers report that their growth is nearing stagnation, with fears over tariffs playing a major role.
A recent series of weaker-than-expected U.S. economic reports has raised concerns about a potential worst-case scenario: “stagflation.” This rare condition occurs when the economy stagnates while inflation remains high.
Despite the U.S. economy ending the previous year on a solid footing, any slowdown could prompt the Federal Reserve to lower its benchmark interest rate to encourage borrowing and stimulate growth. However, reducing interest rates can also drive inflation higher. If tariffs cause prices of essentials like eggs and other household goods to soar, the Fed could find itself in a difficult position.
In early Thursday trading, U.S. benchmark crude oil edged up by 2 cents to $66.33 per barrel, while Brent crude, the global benchmark, also rose by 2 cents to $69.32 per barrel.
Meanwhile, the U.S. dollar weakened to 147.90 Japanese yen from 148.89 yen, while the euro dipped slightly to $1.0789 from $1.0790.