 "Wall Street joins global stock slide, pares losses with Mexico tariff pause")
US stocks joined a worldwide sell-off on Monday as fears that US President Donald Trump's tariffs on Canada, Mexico and China could ignite a global trade war, but their losses eased after tariffs on Mexican imports were paused.
All three major US stock indexes veered sharply lower after the opening bell, but partially recovered after it was announced tariffs on Mexican imports would be paused for a month as Mexico's president, Claudia Sheinbaum, agreed to reinforce its northern border.
Meanwhile, short-dated Treasury yields rose, indicating increased near term inflation risks.
"It's an example of the uncertainty that investors have to deal with, because it's unknown what kind of retribution there could be from other trading partners and how long it is likely to last," said Sam Stovall, chief investment strategist of CFRA Research in New York.
"Trump knows that a trade war could develop into a very deep rat hole," Stovall added. "And as a result, I think he will look to accept pretty much any offer that allows him to save face so I think this turmoil will likely end up being sharp but short."
On the economic front, factory data showed US manufacturing activity expanded for the first time since October 2022, and spending on residential construction projects rebounded.
"(These reports) could be taken negatively because they imply that the Fed has another reason not to be lowering rates anytime soon," Stovall said. "Because if the economy is strengthening, that means that more stimulus would be inflationary."
Europe tariffs
The Dow Jones Industrial Average fell 147.56 points, or 0.34 per cent, to 44,393.56, the S&P 500 fell 48.48 points, or 0.80 per cent, to 5,992.05 and the Nasdaq Composite fell 244.58 points, or 1.25 per cent, to 19,381.21.
European shares fell on fears that Trump's opening tariff salvo could ignite a broader trade war. The US president also warned Europe would be subject to higher tariffs, but offered little clarity on the matter.
MSCI's gauge of stocks across the globe fell 10.35 points, or 1.19 per cent, to 858.69.
The STOXX 600 index fell 0.93 per cent, while Europe's broad FTSEurofirst 300 index fell 17.47 points, or 0.81 per cent.
Emerging market stocks fell 19.04 points, or 1.74 per cent, to 1,074.33. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 2.08 per cent, to 564.64, while Japan's Nikkei fell 1,052.40 points, or 2.66 per cent, to 38,520.09.
The US Treasury yield curve flattened as short-dated yields rose amid tariff-related inflation fears.
The yield on benchmark US 10-year notes fell 4.2 basis points to 4.525 per cent, from 4.567 per cent late on Friday.
The 30-year bond yield fell 5.6 basis points to 4.7561 per cent from 4.812 per cent late on Friday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.3 basis points to 4.241 per cent, from 4.238 per cent late on Friday.
The dollar reversed its earlier gain against a basket of world currencies.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.45 per cent to 109.02, with the euro down 0.81 per cent at $1.0281.
Against the Japanese yen, the dollar weakened 0.3 per cent to 154.71.
Bitcoin slid to a three-week low in tandem with global equities.
In cryptocurrencies, bitcoin fell 3.29 per cent to $98,787.61. Ethereum plunged 17.99 per cent to $2,720.68.
Oil prices pulled back from an earlier surge after tariffs on Mexican imports were paused.
US crude fell 0.11 per cent to $72.45 a barrel and Brent fell to $75.49 per barrel, down 0.24 per cent on the day.
Gold touched a record high as tariff jitters prompted safe-haven spending.
Spot gold rose 0.43 per cent to $2,813.21 an ounce. US gold futures rose 0.89 per cent to $2,837.50 an ounce.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)