Global markets mixed as US tariffs come into effect

ISTANBUL

Global markets were mixed on Monday, while US President Donald Trump’s 25% tariffs on Canada and Mexico and 10% tariff on China became effective on Tuesday.

Trump stated in a recent Truth Social post, addressing farmers in the US, that their agricultural products will be sold in the US, noting that “tariffs will go on external product on April 2nd. Have fun!”

Meanwhile, reports showed that Trump temporarily suspended the US military aid to Ukraine after hosting Ukrainian President Volodymyr Zelenskyy in the Oval Office on Friday.

Analysts say that the US tariffs increased concerns over trade wars and made price estimates difficult.

Canadian Prime Minister Justin Trudeau said he would impose a 25% tariff on US imports as of Tuesday, in response to Trump’s tariffs.

At the same time, the Institute for Supply Management’s manufacturing Purchasing Managers’ Index (PMI) came in below market expectations at 50.3 in February, as of Monday’s data, despite signaling expansion in the sector.

The S&P Global’s final manufacturing PMI came above forecasts at 52.7 in February, its highest level in 32 months.

The Fed is certain to make its first rate cut of the year in June by cutting its policy rate 25 basis points, according to market estimations.

While economic uncertainties give rise to the demand for safe-haven assets, the US 10-year futures continued to decline to 4.15% and the US dollar index fell 0.1% to 106.6.

Gold closed Monday at $2,891, a 1.1% rise, and it is currently trading at $2,890 on a flat course on Tuesday.

Brent crude oil started Tuesday at $71 per barrel, below 0.4% its previous close.

The S&P 500 fell 1.76%, the Nasdaq 2.64%, and the Dow Jones 1.48% on Monday, though American futures started Tuesday on a positive course.

Meanwhile, the EU’s decision to increase defense spending was influential in European stock markets.

EU Commission President Ursula von der Leyen stated on Monday that Europe needs a significant rise to its defense spending and that she will soon relay the commission’s rearmament plan for Europe.

“We want lasting peace, but lasting peace can only be built on strength, and strength begins with strengthening ourselves,” she said, noting that work is underway to present the plan in Brussels on Thursday at an extraordinary summit on Ukraine and defense.

Following these reports, German defense contractor Hensoldt’s shares gained 22.3%, Italian aerospace firm Leonardo SpA over 16%, French Dassault Aviation 14.8%, Sweden’s Saab 11.6%, France’s Thales 16%, UK-based BAE Systems 14.6%, and German arms maker Rheinmetall 13.7% on Monday.

The FTSE 100 rose 0.70%, the DAC 40 2.64%, the CAC 40 1.09%, and the FTSE MIB 30 1.07%. While the DAX 40 and the FTSE 100 broke records at close on Monday, European futures started Tuesday on a mixed course.

The US tariffs have also affected Asia, as a negative course came to the fore and the rising trade war concerns continue to be one of the main influencers in the region. China has responded to the 10% US tariff, with 10-15% tit-for-tat tariffs on Washington's agricultural products to be effective from March 10.

Meanwhile, Japan’s unemployment rate came in above expectations at 2.5%.

The Nikkei 225 lost 1.9%, the Shanghai Composite Index 0.1%, and the Hang Seng Index 0.5%, while the Kospi Index remained flat.

As for Türkiye, the BIST 100 rose 2.61% while the country’s Consumer Price Index climbed 2.27% month-on-month in February, below forecasts, falling 39.05% on an annual basis.

The US dollar/Turkish lira exchange rate closed Monday at 36.4394, down 0.1%, while trading just below the previous close at 36.4310 on Tuesday.