US stock market hit as Donald Trump says ‘no room left to avert’ Canada, Mexico tariffs
US economic data also weighed on stocks as it showed manufacturing was steady in February, prices at the factory gate jumped to a nearly three-year high.
Stock markets in the US Monday closed in the red after President Donald Trump reiterated that 25 per cent tariffs on Canada and Mexico will go into effect on Tuesday.
The S&P 500 posted its biggest daily percentage drop since December 18, while the Canadian dollar and Mexican peso both hit one-month lows after the tariff news. The euro, however, strengthened after European leaders agreed to draw up a Ukraine peace plan.
The Dow Jones Industrial Average fell 649.67 points, or 1.48 per cent, to 43,191.24. The S&P 500 fell 104.78 points, or 1.76 per cent, to 5,849.72.
The Nasdaq Composite fell 497.09 points, or 2.64 per cent, to 18,350.19.
US economic data also weighed on stocks in Monday's session. It showed manufacturing was steady in February, but a measure of prices at the factory gate jumped to a nearly three-year high, and materials deliveries were taking longer, suggesting that tariffs on imports could soon hamper production.
Shares of automakers in the US declined, with General Motors down 3.6 per cent.
Longer-dated US Treasury yields fell after the latest reading on the manufacturing sector.
Donald Trump says ‘no room left’ for a deal to avert tariffs on Canada, Mexico
Donald Trump said on Monday that there was "no room left" for a deal that would avert the tariffs on Canada and Mexico scheduled to start on Tuesday.
Trump also said reciprocal tariffs will start on April 2, as scheduled.
“No room left for Mexico or for Canada. They’re all set. They go into effect tomorrow,” Trump told reporters when asked if the US’s North American neighbors could reach a deal to put off the duties, as they did a month ago.
Euro up after Ukraine deal in works
The weekend saw European leaders agree to draft a peace plan to present to the United States, following Ukrainian President Volodymyr Zelenskiy's clash with Trump in the Oval Office.
On the other hand, Reuters reported that parties in talks to form Germany's new government are considering setting up a defense fund.
The pan-European STOXX 600 index ended up 1.07 per cent, with shares of European arms makers surging.
The euro was up 1.07 per cent at $1.0486, while the dollar index, which measures the greenback against a basket of currencies, fell 0.72 per cent to 106.54.
A recent spate of softer economic data has boosted expectations that the Federal Reserve may be more active in lowering interest rates.
Markets are pricing in 67 bps of cuts by the US Federal Reserve this year after earlier views saw the Fed reducing rates by less than 50 basis points.
The European Central Bank is widely expected to cut rates when it meets on Thursday. However, given geopolitical factors, there is less conviction over what it might signal about the monetary policy outlook.
Oil prices fell about 2 per cent to a 12-week low on reports that OPEC will proceed with a planned oil output increase in April and amid concern that US tariffs could hurt global growth.
Brent futures fell $1.19, or 1.6 per cent, to settle at $71.62 a barrel, while US West Texas Intermediate (WTI) crude fell $1.39, or 2.0 per cent, to settle at $68.37.
Spot gold gained 1.1 per cent to $2,890.57 an ounce.
