4:10pm: Tariff fears prompt selloff
US stocks took a beating on Thursday afternoon as president Trump reiterated his plans to introduce 25% tariffs on Canada and Mexico next week and to double tariffs on China to 20%.
Nvidia led the declines as investors were disappointed in its latest earnings report, with the index falling 2.8% to 18,544 points. Nvidia closed down 8.5% at about $120.
The S&P 500 was down 1.6% at 5,861 points and the Dow Jones was down 0.5% at 43,239 points.
2:45pm: Canada, Mexico tariffs coming next week
US president Donald Trump has confirmed he will introduce a 25% tariff on most Canadian and Mexican goods as of March 4.
Canadian energy products will be subject to a 10% tariff.
Trump also confirmed he will add another 10% levy on China, on top of the 10% tariff that took effect earlier this month.
In a post on his social media platform Truth Social, Trump said the tariffs were in response to a response to "unacceptable levels" of drugs entering the US via Canada and Mexico.
“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” the president wrote. “China will likewise be charged an additional 10% Tariff on that date.”
The tariffs are expected to lead to higher prices for consumers, particularly affecting the automotive and food industries.
Trump has also threatened potential tariffs on EU products, though no specific timeline has been announced.
Another day of tariff news has caused volatility in US markets but Wall Street has demonstrated its resilience, IG chief market analyst Chris Beauchamp said.
The S&P 500 and Dow Jones traded higher as a pullback in Nvidia following its earnings report weighed on the tech-laden Nasdaq.
“The timetable published still leaves room for negotiation, providing some hope that further hits to global trade can be avoided,” Beauchamp said. “But Trump is likely to drive a hard bargain.”
1:25pm: Nasdaq pressured by tech losses
The Nasdaq was the sole laggard by early afternoon trading on Thursday.
The Dow was up 0.7%, reflecting strength in defensive stocks and positive reactions to new tariff announcements.
The S&P 500 edged up 0.2%, remaining stable despite trade policy concerns, while the Nasdaq Composite fell 0.4%, pressured by tech losses, particularly Nvidia, which declined despite strong earnings.
Market sentiment was shaped by President Trump’s new tariffs on Mexico, Canada, and China, along with higher-than-expected jobless claims, contributing to overall volatility.
12:10pm: Canadian dollar under pressure
The Canadian dollar extended its losses against the US dollar as weak domestic data and a strong US economy added pressure.
Canada's trade deficit widened to C$5 billion in Q4 2024, marking the 10th consecutive quarter of deficit. While goods exports rose by 4.6%, imports increased by 3%, widening the goods trade deficit.
For 2024, the current account deficit narrowed to C$15.6 billion, helped by higher investment income, but persistent structural challenges remain. Despite a C$91.6 billion surplus with the US, trade tensions and potential tariff disputes pose risks.
Meanwhile, strong US GDP growth of 2.3% and better-than-expected durable goods orders have strengthened the US dollar, delaying expectations of Fed rate cuts until June. With trade uncertainty and a resilient US economy, the Canadian dollar is likely to remain under pressure.
"Canada's relationship with the US remains crucial," said David Eng, investment advisor at Harbourfront Wealth - Sonora Wealth Group.
"In 2024, Canada had a surplus of C$91.6 billion with the US, yet if trade relations with the US deteriorate due to ongoing tariff disputes, the Canadian economy could face significant risks, leading to a bearish outlook for the currency."
11:10am: Tariff talk 'devastating'
Trump's renewed tariff talk is coming "at precisely the worst possible moment," warns deVere Group chief Nigel Green.
Trump said Thursday that a 25% tariff on Mexican and Canadian goods will take effect on March 4, while also warning of an additional 10% tariff on Chinese imports starting the same day.
“Just as the US economy shows signs of slowing, he is pushing forward with fresh tariffs. The consequences could be devastating," deVere's Green commented.
“The timing is reckless. Inflation, which remains stubbornly high, will almost certainly spike as higher tariffs drive up prices for businesses and consumers.
“Mexico, Canada, and China are America’s top trading partners, meaning these sweeping duties will ripple through every sector. Higher costs on essential goods, from food to electronics to cars, will further squeeze household budgets already under pressure.”
9:50am: Wall Street opens higher
Wall Street stocks opened higher on Thursday despite worries about the effects of US tariffs on the domestic and global economy.
The Nasdaq Composite was the initial front-runner, up 0.7% at the open, before it dropped into the red momentarily as investors seemed to search for direction in early trades.
Nvidia, on the back of its earnings last night, is up 1%, while Apple is down 0.5%.
The S&P 500 up 0.3% and Dow Jones 0.5%.
Salesforce is down 3.3% after its earnings overnight.
8.15am: Calculating the economic damage of tariffs
The economies of both the European Union and US would contract as a result of Donald Trump's proposed 25% tariffs on European goods, Germany's Kiel Institute for the World Economy has calculated, with a sharper effect if Europe retaliates with its own tariffs.
The European economy would shrink by an average of 0.4% in real GDP terms within the first year, "a significant impact for a short-run scenario," the institute said in a note today.
"The US itself would not be spared, experiencing a contraction of 0.17%."
If the EU retaliates with its own 25% tariffs, the economic damage to the US "would double", it added, with prices in the US likely to increase by up to 1.5%.
7.35am: Nasdaq tipped to lead Wall Street gains as tariffs in focus again
US stocks were tipped to start higher on Thursday, helped by a positive premarket pivot from Nvidia Corp (NASDAQ:NVDA) as investors continued to chew over its overnight earnings release.
As a result of the chipmaker's 2.5% premarket gain, futures were indicating the Nasdaq 100 would rise 0.8%, with S&P 500 futures up 0.7% and those for the Dow Jones up 0.3%.
Overnight, Wall Street produced a mixed session, ending with the S&P 500 flat, the Dow Jones down 0.4% and the Nasdaq Composite closing up 0.3%.
Bitcoin has managed to rally 2.6% so far on Thursday to $86,338, up from below $83K in the past 24 hours but down 10% so far this week.
In commodities, oil is rallying, with WTI up 1% to $69.3 after falling to its lowest since 10 December the day before as US inventories saw an unexpectedly large build.
Some are pointing to Donald Trump cancelling a Chevron license to operate in Venezuela as a cause for the lift.
Looking at general market sentiment, analyst David Morrison at TradeNation said there is "growing concern" over the US President’s tariff threats.
At his first cabinet meeting of his new administration yesterday, Trump said that the postponed 25% levies on US imports from Canada and Mexico would kick in next week, with 25% tariffs on Europe to follow.
"We have made a decision and we’ll be announcing it very soon. It’ll be 25%,” Trump said, threatening that that levies will be applied “generally”.
Economic data on Thursday includes weekly unemployment claims, with the week's remaining big focus being tomorrow’s PCE inflation update.
Nvidia
Nvidia smashed expectations for its fourth-quarter earnings, with a 78% revenue surge to $39 billion and profits beat analyst projections, largely thanks to the massive demand for its new Blackwell AI chips, which contributed $11 billion in sales.
Looking ahead, the company is forecasting $42 billion in revenue for the next quarter, keeping its growth momentum strong.
"But there is an issue – the powerful new Blackwell chips are more expensive to produce, and that’s putting pressure on Nvidia’s profit margins," said AvaTrade market analyst Kate Leaman.
"While revenue is soaring, analysts are keeping a close eye on whether this margin squeeze could impact the company’s long-term profitability."
The market reaction to Nvidia’s fourth-quarter earnings has been "tepid and below average" compared to the last eight quarters, said Kathleen Brooks, research director at XTB, with the pre-market gain of 2.5% half the average move in the stock after its earnings report in the last two years.
This suggests something is holding back the stock, Brooks said, with the stock down 3% in the year to date.
"The reason why Nvidia may not be rallying like it used to could be a problem for the entire Magnificent 7," she said, with the group of US tech giants having peaked in December around the same time as USD reached a peak against the Japanese yen, which has since rebounded 5% against the USD so far this year.
This is "a sign that money is moving from West to East, which is weighing on US stocks and boosting Asian indices, in particular tech stocks. DeepSeek’s arrival signifies that China is a force to be reckoned with when it comes to AI capabilities, and this is also knocking sentiment for US tech stocks, it could also limit the upside for Nvidia’s stock price after this solid earnings report."