The euro surged to a five-month high on Wednesday after Ukraine agreed to a month-long ceasefire, paving the way for restored U.S. military aid and intelligence sharing. Investors reacted positively to signs of de-escalation, pushing European equity futures up 1.1% and FTSE futures 0.5%. Meanwhile, the Russian rouble also strengthened, hitting a seven-month high.
Markets react to tariff uncertainty
While hopes of a ceasefire boosted sentiment, uncertainty around U.S. tariffs on steel and aluminium kept markets on edge. The 25% tariffs took effect Wednesday, triggering counter-tariffs from Europe. The reaction was mixed—Asian steel stocks remained steady, but Wall Street struggled, with the S&P 500 closing 0.8% lower after a volatile session. President Trump initially threatened to double tariffs on Canada before backing down, adding to investor unease.
U.S. growth fears weigh on sentiment
Concerns over U.S. economic growth are growing, with J.P. Morgan estimating a 40% recession risk for the year. Stocks have suffered their heaviest selling in months, and traders are increasingly cautious. Weak financial results from retailers and travel companies added to the pressure—Delta Airlines slashed its profit forecast, while Kohl’s stock plunged 24% after reporting a decline in sales.
What’s next?
Later today, markets will be watching U.S. inflation data and a Canadian central bank meeting for further policy signals. The Canadian dollar briefly hit a one-week low before recovering, while the yen retreated from a five-month high. With global trade tensions and recession fears dominating market sentiment, volatility is likely to remain high in the coming days.
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