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What’s happening: US stocks settled higher for a second session in a row on Monday despite ongoing economic uncertainty.
What happened: The Nasdaq and S&P500 had recorded losses for four straight weeks on fears of a trade war being triggered by US President Donald Trump’s tariff announcements.
US stocks climbed on Monday as the latest economic reports allayed worries of a recession.
Why it matters: US stocks had shed a staggering $5 trillion over just three weeks on worries of the Trump administration’s tariffs hitting corporate profits, causing inflation, and triggering a series of retaliatory tariffs by some of the county’s closest allies.
On Friday, investors bought stocks that had been left significant undervalued after the 3-week downturn as well as stocks that are expected to benefit from Trump’s policies.
Markets breathed easier due to some quiet on the tariff front. Some data releases supported market sentiment on Monday. US retail sales grew 0.2% in February, following a 1.2% decline in January. Although the figure missed analyst estimates of 0.6% growth, markets cheered the reversal from decline to growth.
Excluding the sales at automobile and auto-parts dealers, US retail sales grew in-line with market expectations. This was considered a sign that the US economy may stutter but is not heading into a recession.
Enphase Energy’s stock shot up 9.75% after the company said it had started shipments of its latest EV charger, the IQ EV Charger 2, in 14 European nations.
Intel’s stock climbed 6.82% after incoming CEO Lip-Bu Tan said he was considering significant changes to the company’s chip manufacturing techniques and AI strategies. Investors are optimistic that the new CEO will restructure Intel’s operations to ensure it can compete better with rivals like Advanced Micro Devices, Nvidia, and TSMC.
Quantum computing stocks jumped on Monday, with shares of D-Wave Quantum and Quantum Corp rising over 10% and 40%, respectively.
Of the 11 major sectors in the S&P index, real estate and energy stocks were the top performers, while consumer discretionary was the sole decliner.
The Dow Jones index gained 353.44 points, or 0.85%, to close at 41,841.63 on Monday, while the S&P 500 added 0.64% to 5,675.12 and the Nasdaq 100 surged 0.55% to settle at 19,812.24.
What to watch: Investors await data on export prices (1630 UAE Time), import prices (1630 UAE Time), housing starts (1630 UAE Time) and industrial production (1715 UAE Time) from the US today. US export prices, which rose by 1.3% in January, are expected to decline by 0.2% in February, while import prices are likely to decline by 0.1%. Analysts expect industrial production to grow by 0.2% in February, following a 0.5% gain in January.
The Federal Reserve is scheduled to meet on Wednesday, amid expectations of the benchmark interest rates being held unchanged. The focus will be on what Chairman Jerome Powell has to say about the rest of the year. Speculations are still high for the Fed to cut its interest rate two or three times this year.
Context: The CAD/USD forex pair fell this morning as investors assessed the latest trade talks between Canada and the US.
Details: Markets were relieved by tangible progress being made in the US-Canada trade talks, with both sides reaching preliminary deals on reducing retaliatory tariffs to stabilize trade flows.
Data released on Monday showed foreign investment in Canadian financial assets fell to C$7.9 billion in January, from C$13.9 billion in the previous month. The figure came in significantly below market estimates of C$17.4 billion.
Strength in the US dollar exerted pressure on the CAD/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.2% to 103.54.
However, a rise in the price of crude oil, one of Canada’s major exports, lent some support to the loonie this morning. WTI crude oil prices gained around 0.3% to $67.75 a barrel.
The CAD/USD pair fell 0.1% to 1.4303, while the S&P/TSX Composite Index gained 0.94% to close at 24,785.11 on Monday.
What to watch: Investors await the release of economic data on Canada’s inflation rate (1630 UAE Time) today. The annual inflation rate, which accelerated to 1.9% in January from 1.8% in the previous month, is expected to increase further to 2.1% in February.
Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.56%, 0.73%, 0.57% and 0.79%, respectively.
Russian President Vladimir Putin is scheduled to hold talks with US President Donald Trump today on ending the Ukraine conflict. The RUB/USD forex pair has been under pressure ahead of the meeting.
Sri Lanka’s services PMI declined to 58.5 in February, from 58.5 in the previous month. However, services activity remaining in the expansion zone lent support to the LKR/USD forex pair.
Poland reported a trade deficit of €1.51 billion in January, following a €1.27 billion surplus in the year-ago period. Exports declining by 0.7% to €27.24 billion sent the PLN/USD pair lower in forex trading this morning.
Brazil’s IBC-Br Index of Economic Activity grew 0.9% in January, following a 0.6% decline in December, which lent support to the BRL/USD forex pair.
Morocco’s manufacturing production grew by 5% year-over-year in the final quarter of 2024, after a 9.2% gain in the previous quarter, sending the MAD/USD pair lower in forex trading this morning.
Italy’s balance of trade (1300 UAE Time), Eurozone’s balance of trade (1400 UAE Time), ZEW economic sentiment index (1400 UAE Time), Germany’s ZEW economic sentiment index (1400 UAE Time), ZEW current conditions (1400 UAE Time), US building permits (1630 UAE Time), Redbook index (1655 UAE Time) and capacity utilization (1715 UAE Time), Brazil’s business confidence (1800 UAE Time), as well as Russia’s PPI (2000 UAE Time).
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