Market News 11 MAR
Negative Start to the Week for the U.S. Stock Market
Futures on key U.S. indices opened with significant declines. S&P 500 futures lost 70 points, Nasdaq 100 fell by 282 points, and Dow Jones Industrial Average dropped by 450 points. This reflects investor concerns ahead of the new trading week, especially following Friday’s market rally.
Another pressure factor was the decline in Treasury yields. The 10-year Treasury yield fell by 8 basis points to 4.24%, while the 2-year yield dropped by 5 basis points to 3.95%. This indicates increased demand for safe-haven assets following statements by former U.S. President Donald Trump about a possible recession in the country.
Impact of Tariffs and U.S. Trade Policy
Stock indices continue to decline amid growing concerns over U.S. economic policies. Previously imposed tariffs on imported goods from Canada, Mexico, and China have created uncertainty among investors. In particular, the 25% tariffs on Canadian and Mexican goods, as well as an increase in Chinese tariffs from 10% to 20%, have heightened fears of a potential trade war.
Despite temporary concessions, such as a one-month exemption from tariffs, Trump reaffirmed that additional trade restrictions could be introduced as early as April. This has further pressured the stock market and led to a decline in the valuations of major companies.
Global Macroeconomic Factors
Amid increased global economic uncertainty, weak macroeconomic data from China has also pressured stock markets. China’s Consumer Price Index (CPI) fell by -0.7% year-over-year in February, below expectations of -0.4%. This is the largest drop in 13 months. Weak inflation in China raises concerns about declining domestic demand and slowing growth in the world’s second-largest economy.
Sharp Decline in Bitcoin and Tech Stocks
The cryptocurrency market also faced high volatility. Bitcoin’s price dropped by more than 8%, reaching a four-month low. This came after the signing of a presidential order to create a strategic cryptocurrency reserve, which will be funded through confiscated crypto assets rather than direct market purchases. The decision disappointed investors and triggered a massive sell-off.
Amid the overall market decline, tech giants in the "Magnificent Seven" group suffered the most. Tesla lost more than 15% due to declining demand for electric vehicles, while Nvidia fell by 5%, impacting the Dow Jones index. Apple, Alphabet, and Meta each lost more than 4%.
Corporate News and Mergers
Significant developments occurred in the corporate sector:
Rocket Cos. agreed to acquire Redfin for $1.75 billion. Redfin shares surged 81%, while Rocket shares dropped 8.4%.
ServiceNow is nearing the acquisition of AI company Moveworks for $3 billion, potentially strengthening its artificial intelligence capabilities.
Taiwan Semiconductor Manufacturing (TSMC) reported a 43% year-over-year revenue increase but a 11.3% decline from the previous month. This reflects the impact of U.S. export restrictions on AI chips.
XPeng announced plans to begin mass production of flying cars by 2026, briefly boosting its stock price.
MicroStrategy issued preferred shares worth up to $21 billion to finance Bitcoin purchases, leading to a 5.54% decline in its stock price.
Market Expectations for the Week
This week, investor attention will focus on the U.S. Consumer Price Index (CPI) report for February, set to be released on Wednesday. The CPI is expected to decline to 2.9% year-over-year, potentially influencing the Federal Reserve’s future interest rate decisions. Additionally, the Producer Price Index (PPI) for final demand will be released on Thursday, followed by the University of Michigan Consumer Sentiment Index on Friday.
Markets are also closely monitoring discussions in Congress regarding the new budget, as the deadline for passing the spending bill is March 15. Failure to reach an agreement could lead to a temporary government shutdown, exacerbating market instability.
Markets have entered a new trading week with high uncertainty. Stock indices continue to decline amid trade disputes, weak data from China, and a sell-off in tech stocks. Investors are focused on key U.S. macroeconomic reports and the upcoming Federal Reserve meeting. In a highly volatile environment, it is essential to monitor developments and adjust trading strategies accordingly.