The Dow Jones Industrial Average (DJIA) gained approximately 150 points on Friday, nearing the 43,400 mark, although it remains below Monday’s opening levels. Tensions arose between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy over a defence agreement and a proposed “rare earths deal.”
The US Personal Consumption Expenditure Price Index showed core inflation easing to 2.6% year-on-year from 2.9%, aligning with market expectations. However, persistent volatility in US inflation factors raises concerns amid fluctuating trade policies, and core metrics remain above the Federal Reserve’s target of 2%.
Trump’s heightened rhetoric on tariffs has raised apprehensions in the market. A new 25% tariff package aimed at Canada and Mexico is set to go into effect on March 4.
Attention will shift to upcoming Nonfarm Payrolls (NFP) data due next Friday, as recent economic indicators suggest a possible slowdown, exacerbated by rising jobless figures.
On Friday, 3M’s shares rose by 1.7% to $153, while IBM’s shares dipped by 2% to below $250. The DJIA trades below the 50-day Exponential Moving Average near 43,840 but remains above the 200-day EMA at around 42,000.
Tariffs serve to aid local producers by providing pricing advantages against imports. They are paid at entry points, distinguishing them from general taxes that consumers pay at purchase. Economists are divided on tariffs; some view them as protective tools, while others argue they could elevate prices and instigate trade wars.
Trump aims to leverage tariffs to bolster the US economy, focusing on Canada, China, and Mexico, which constituted 42% of total US imports in 2024. Mexico was the leading exporter, accounting for $466.6 billion. Additionally, Trump plans to use tariff revenues to reduce personal income taxes.
With markets responding to both economic data and shifting trade policies, the weeks ahead demand close attention. The Dow’s gain of around 150 points provided some upward movement, though it continues to trade below where it stood at the start of the week. Price action remains unstable, and with fresh trade concerns emerging, traders must stay mindful of potential shifts in risk appetite.
Inflation figures have provided mixed signals. While core inflation eased slightly as expected, we cannot ignore the fact that it still sits above the Federal Reserve’s long-standing 2% target. This suggests the Fed is unlikely to rush towards easing monetary policy, leaving rate-sensitive sectors exposed to potential turbulence. Inflation-linked products and interest rate derivatives will require careful hedging as policymakers weigh their options in the coming months.
Washington’s stance on tariffs has once again made its effects felt, with the President’s announcement of new levies directed at Canada and Mexico sparking concern across industries reliant on cross-border supply chains. With a 25% tariff package scheduled for enforcement from early March, we should anticipate responses not just from affected businesses but also from policymakers in Ottawa and Mexico City. Those trading in commodity-linked derivatives and currency pairs tied to the Canadian dollar and Mexican peso should factor possible retaliatory measures into their strategies.
Labour market data, particularly the Nonfarm Payrolls report due next Friday, stands as one of the most closely watched indicators in the near term. Recent rises in jobless claims may hint at slower growth, prompting speculation about the wider employment picture. If payroll figures disappoint, pressure may mount on the Fed to adjust its position, generating movement in bond yields and equity markets alike. Markets have already begun positioning for possible volatility, with traders watching whether wage growth figures indicate further inflationary risks or a cooling economy.
Individual stocks reflected the broader uncertainty, with some large names diverging in performance. 3M’s shares made modest gains, while IBM edged lower, continuing a recent downward trend. The DJIA remains stuck between key technical levels, with the 50-day Exponential Moving Average acting as a resistance point near 43,840. However, longer-term support around 42,000, defined by the 200-day EMA, remains intact. Positions in index futures should keep both levels in sight when planning risk exposure in the coming sessions.
The debate over trade policy remains fierce, particularly as tariffs shift cost structures in global markets. By raising import costs at entry points, domestic industries can benefit from reduced competition—but that protection comes with potential drawbacks, including higher prices for manufacturers reliant on foreign components. The effectiveness of such measures is widely debated among economists, with some arguing that they enhance economic independence, while others see them as inflationary policies that could strain consumer purchasing power.
The President has made it clear that tariffs will play a pivotal role in his economic strategy, particularly against major import sources such as Canada, China, and Mexico. These three countries combined accounted for over two-fifths of total US imports, giving trade policy a direct impact on a large segment of the domestic economy. The stated aim of directing tariff revenues towards cuts in personal income taxes adds another layer to fiscal strategy, with implications for government revenue trends and personal spending dynamics.
With markets absorbing the implications of current policy shifts, volatility will likely remain heightened. Economic data releases and potential retaliatory actions from impacted trading partners merit close observation, ensuring traders take informed positions as conditions shift.
