US stocks tumbled on Monday as investors reacted to President Donald Trump’s confirmation that tariffs on Canada and Mexico would take effect, reigniting concerns over trade tensions. The market had opened on a positive note but reversed sharply in the afternoon after Trump reiterated his stance, dashing hopes of a last-minute deal. Technology stocks saw heavy selling, dragging the Nasdaq lower, while the S&P 500 suffered its worst day in months. Weak manufacturing data and rising input costs added to the uncertainty, pushing bond yields lower as investors sought safety.

Key Takeaways:

  • Dow Falls Over 600 Points as Tariff Fears Intensify: The Dow Jones Industrial Average dropped 649.67 points, or 1.48%, to close at 43,191.24, marking another sharp decline after President Trump confirmed tariffs on Canada and Mexico will take effect on Tuesday. The index had traded higher earlier in the session before reversing in the afternoon as risk-off sentiment gripped markets.
  • S&P 500 Suffers Worst Day Since December: The S&P 500 fell 1.76% to 5,849.72, its biggest single-day drop since December, turning negative for 2025 with a year-to-date loss of 0.5%. Losses were broad-based, with all eleven S&P 500 sectors closing in the red. The small-cap Russell 2000 plunged nearly 3%.
  • Nasdaq Plunges as Tech Stocks Lead Losses: The Nasdaq Composite tumbled 2.64% to 18,350.19, dragged lower by heavy selling in technology stocks. Nvidia dropped 8.7% after reports that Chinese buyers are bypassing US export restrictions to acquire its chips. AI-related stocks, including Broadcom and Super Micro Computer, also saw steep declines.
  • US Manufacturing Data Signals Warning Signs: The ISM Manufacturing PMI for February came in at 50.6, slightly below expectations. However, new orders slumped to 48.6 from 55.1 in January, indicating weaker demand, while input prices surged to 62.4, their highest since June 2022. Supply chain constraints also reappeared, with delivery times increasing.
  • European Markets Rally as Defence Stocks Surge, PMIs Strengthen: European markets closed higher, driven by a strong rally in defence stocks after discussions on increased military spending. The Stoxx 600 index gained 1.1%, with the Stoxx Europe aerospace and defence index jumping 8%, its best session in five years. The DAX surged 2.64%, France’s CAC 40 rose 1.33%, the FTSE 100 climbed 0.70%, and Italy’s FTSE MIB advanced 1.07%, gaining 414 points. Among the biggest movers were Germany’s Hensoldt (+22.3%), Italy’s Leonardo (+16%), and Dassault Aviation (+15%). Meanwhile, economic data showed resilience, with the Eurozone Manufacturing PMI rising to 47.6 (above expectations of 47.3), while Eurozone CPI came in at 2.4% year-over-year, stronger than the 2.3% forecast. Core CPI stood at 2.6%, also above expectations.
  • Asia-Pacific Markets Mixed as Investors Await Tariff Clarity: Asian markets posted mixed results as investors monitored Trump’s tariff plans and their potential impact on trade. Japan’s Nikkei 225 advanced 1.7% to 37,785.47, while the broader Topix index gained 1.77% to 2,729.56. In Hong Kong, the Hang Seng index edged up 0.44%, but China’s CSI 300 dipped 0.04% to 3,888.47. Taiwan’s Taiex index fell 1.29% to 22,756.25, its lowest level since early February. Meanwhile, Australia’s S&P/ASX 200 rose 0.9% to 8,245.7. South Korea’s markets were closed for a public holiday.
  • US Treasury Yields Fall as Investors Seek Safety: The 10-year Treasury yield slid over 6 basis points to 4.163%, while the 2-year yield fell 4 basis points to 3.96%. Investors moved into bonds as trade uncertainty grew, increasing speculation that tariffs could weigh on growth and influence future Federal Reserve policy.
  • Oil Prices Drop as OPEC+ Confirms April Output Increase: Crude oil prices fell sharply after reports that OPEC+ will move forward with its planned production increase in April, adding to concerns over weaker demand stemming from new trade tariffs. Brent crude futures lost $1.40, or 1.92%, to settle at $71.41 per barrel, while West Texas Intermediate (WTI) crude dropped $1.41, or 2.02%, to $68.35 per barrel. WTI has now fallen about 10% over the past six weeks as speculation over slowing global growth and increased supply pressures prices lower.

FX Today:

  • Euro Rallies as Dollar Weakens, Breaking 1.0500 Barrier: The euro surged past the key 1.0500 level on Monday, climbing 1.03% to close at 1.0481. After opening at 1.0402 and dipping to a session low of 1.0388, EUR/USD saw strong buying momentum that pushed it to a high of 1.0503. The break above the 50-day SMA at 1.0389 suggests improved sentiment, though the pair remains below the 100-day SMA at 1.0521 and the 200-day SMA at 1.0722. If the euro holds above 1.0500, the next test will be at 1.0521, while any failure to maintain gains could see a pullback to 1.0450 or even 1.0380.
  • Pound Strengthens as US Treasury Yields Decline: GBP/USD rose 0.94% on Monday, ending the session at 1.2697 after bouncing from a session low of 1.2574. The pair opened at 1.2587 and briefly touched a high of 1.2723 before retracing slightly. Sterling found support above 1.2650, but remains just below the 200-day SMA at 1.2787, a key resistance level. If GBP/USD can sustain its move higher, the next upside target is 1.2850. However, if momentum fades, the pair could retreat toward 1.2630, with stronger support at 1.2464.
  • Aussie Gains but Struggles Below Key Resistance: AUD/USD edged up 0.27% on Monday, closing at 0.6219 after bouncing from a session low of 0.6203. The pair attempted to extend gains but struggled to break above resistance at 0.6254. While the recovery signals some demand, the broader trend remains bearish, with the 50-day SMA at 0.6267 acting as a barrier. Immediate support lies at 0.6200, and a break below this level could accelerate losses toward 0.6150. A move above 0.6267 would be needed to shift sentiment toward bullish.
  • Canadian Dollar Weakens as USD/CAD Pushes Above 1.4500: USD/CAD extended its gains on Monday, rising 0.30% to close at 1.4502 after reaching a session high of 1.4541. The pair opened at 1.4437 and briefly dipped to 1.4367 before resuming its uptrend. With the breakout above 1.4500, the next upside target is 1.4600, and further gains could see a move toward 1.4700. However, if the pair fails to hold above 1.4500, a pullback toward the 50-day SMA at 1.4347 could follow.
  • Gold Rises as Safe-Haven Demand Increases: Gold prices climbed 1.19% on Monday, closing at $2,890 after bouncing from a session low of $2,855. The metal briefly touched a session high of $2,893 as demand for safe-haven assets increased following President Trump’s confirmation of new tariffs on Canada and Mexico. Gold remains in an uptrend, with the 50-day SMA at $2,775 providing key support. If the rally continues, resistance at $2,900 could be tested, followed by a potential push toward $2,950. A break below $2,870 could trigger a pullback, with further support at $2,850.

Market Movers:

  • Nvidia Tumbles as AI Stocks Slide: Nvidia shares plunged 8.7%, reversing Friday’s gains, after reports that Chinese buyers are bypassing US export restrictions to acquire its Blackwell chips. Broadcom and Super Micro Computer also declined sharply, weighing on the tech sector.
  • Intel Falls Despite Chipmaker Partnership Reports: Intel dropped 4.2%, erasing earlier gains of over 2%, after Reuters reported that Nvidia and Broadcom are testing its manufacturing capabilities. The stock had rallied on speculation of potential major contracts.
  • Chinese EV Makers Slump on Weak Deliveries: Xpeng fell 5.8%, Nio dropped 8.6%, and Li Auto tumbled 10.9% as investors reacted negatively to their latest delivery reports, raising concerns about slowing growth in China’s electric vehicle sector.
  • Allegro MicroSystems Soars on Takeover Speculation: Shares of Allegro MicroSystems surged 14.9% after reports that ON Semiconductor is considering a buyout. ON Semiconductor fell 4.6% following the news.
  • SanDisk Gains as Analysts Turn Bullish: SanDisk jumped 7.4% after Morgan Stanley initiated coverage with an overweight rating, predicting strong upside despite near-term challenges in the memory chip market.
  • Capri Holdings Rallies on Versace Deal Talks: Capri Holdings climbed 3.9% as Bloomberg reported that Prada is close to finalizing a €1.5 billion ($1.6 billion) deal to acquire Versace, potentially closing by the end of March.
  • Chipotle Edges Higher After Upgrade: Chipotle Mexican Grill rose 0.7% after Morgan Stanley upgraded the stock to overweight, citing strong fundamentals despite recent demand softness.

As the trading session ended, Wall Street closed sharply lower, with the Dow Jones tumbling 649.67 points, the S&P 500 suffering its worst decline since December, and the Nasdaq sinking 2.64% as technology stocks faced heavy selling. Investor sentiment deteriorated after President Trump confirmed that 25% tariffs on Canada and Mexico would take effect on Tuesday, dashing hopes of a last-minute deal. Meanwhile, bond yields declined as traders sought safety, and oil prices fell more than 1% amid reports that OPEC+ will proceed with an April output increase. European markets bucked the trend, rallying on strong defence stocks and better-than-expected PMI data, while gold gained 1.19% as safe-haven demand increased. With trade tensions escalating and economic data showing signs of strain, all eyes will be on the Federal Reserve’s next policy steps and the upcoming February jobs report on Friday, which could further shape market expectations in the days ahead.