By Tom Westbrook
SINGAPORE (Reuters) – The euro reached a five-month high on Wednesday as Ukraine signaled its willingness to accept a month-long ceasefire. Meanwhile, stock markets were volatile due to conflicting U.S. tariff plans and concerns about a potential economic slowdown.
European equity futures surged by 0.8% and FTSE futures rose by 0.3% following the announcement that the U.S. would reinstate military aid and intelligence sharing with Ukraine after Kyiv agreed to a ceasefire proposal. Russia has not yet responded to the proposal.
The euro hit its highest level since October in New York trading at $1.0947, and maintained stability at $1.0913 during the Asia session. The Russian rouble also rose to a seven-month high overnight.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan increased by 0.2%, with markets in Hong Kong and China remaining relatively steady. Japan’s Nikkei also held its ground after experiencing a significant drop to a near six-month low the previous day.
On Wall Street, the S&P 500 struggled to avoid a 10% decline from its record high in February, closing about 0.8% lower after a volatile session. President Donald Trump initially threatened to double steel and aluminium tariffs on Canada to 50%, but later backed down following Ontario’s decision to halt plans for an electricity surcharge.
The dollar weakened, Treasuries rallied, and stocks faced heavy selling as traders expressed concerns that tariffs and policy uncertainties could dampen U.S. economic growth. Catriona Burns, lead portfolio manager of a global fund at Wilson Asset Management in Australia, remarked on the challenges posed by this dynamic environment.
Travel stocks were negatively impacted after Delta Air Lines slashed its profit forecast in half, while competitors United and American Airlines warned of declining results, reduced government bookings, and uncertainty affecting demand. Retailers also faced investor backlash over disappointing financial results, with Dick’s Sporting Goods and Kohl’s Corp experiencing significant drops in their stock prices.
The implementation of steel and aluminium tariffs was set to take effect later in the day, while U.S. inflation data for February was scheduled to be released—although its reflection of tariff impacts may be limited. Market watchers awaited a central bank meeting in Canada, where policymakers were expected to address the implications of Trump’s trade policies.
The Canadian dollar initially hit a one-week low before recovering, while U.S. equity futures remained relatively stable. The yen slightly declined from a five-month high against the dollar, while the Australian dollar and Brent crude futures maintained their positions just below key levels.
[Editing by Shri Navaratnam]
