An ocean apart
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Why are US and European markets moving in opposite directions today?
A world of difference between the US and Europe today on views over a Ukraine peace deal and on markets with bond yields and shares well up in Europe but shares down in the United States. And even before tariffs start in earnest, later today supposedly, the mere threat of tariffs, are they stagnating the acco economy? The manufacturing ISM was another worrying sign today, even though the uh that's the sector that the tariffs are supposed to help. And more tariffs, this time on agriculture. And Donald Trump's crypto reserves. They're gonna ride the wave. It's Tuesday, it's the fourth of March 2025. It's the morning call from NAB. Good morning. So get ready for this. We've got a naught point nine percent fall in the US dollar today, with a one percent rise in the euro and a naught point nine percent lift in the pound.
The Aussie is up as well, but only naught point one per cent to below sixty two point two US cents. It really is sitting on the sidelines where we've got big moves uh in European bond yields, up eight basis points in Germany and in the UK, up six or seven across the rest of Europe, ten year treasuries in the United States. One basis point. Aussie ten years yesterday at four point three three percent, not really moving overnight. But a very different story on both sides of the Atlantic for shares. So down in the United States, the Nasdaq closed uh down two point six percent, one and three quarter percent lower for the S P, the Dow is down one and a half percent, the Russell two thousand down two point eight percent of the close.
Whereas in Europe, well the DAX Finished up two point six percent, the cat current was up one point one percent, naught point seven percent higher for the FTSE one hundred, uh the DAX and the FTSE both closing at record highs. Have you ever seen such a difference?
How are European defence stocks driving the rise in bond yields and equity prices?
And European defence stocks have seen big rises. That's uh helped the European stocks generally. So BAE systems in the UK, for example, up seventeen percent early on, Talas in France up sixteen percent, Ryan meta. Coal in Germany up 14%. And oil is low as well, 2.4% off WTI. Brent now 2.1% lower, sitting below 7130 a barrel. So stocks and oil got noticeably worse after Donald Trump gave a press conference in which he confirmed that Mexico and Canada and China are going to see those tariffs go ahead from midnight Monday in the United States. So not Too many hours away from now. So yeah, the market reaction to that and the whole story around Ukraine, a very different story on both sides of the Atlantic.
Sky Masters is with me today from NAB in Sydney. I mean, it seems fairly easy to read the uh the reasoning behind this, doesn't it, really, Sky? I mean, unless I've got this wrong, but yields much higher because Europe obviously there's an expectation that those countries are gonna have to spend more, more debt to support bought defence projects and equities up because well there's gonna be more spending as a result, which is why we're seeing uh all those defence stocks so high.
Morning Phil. Yes, that's that's a pretty good explanation of of what went on in European session and and we can talk um a bit later about what's gone on in the US session because it's a bit of a tale of two halves. But yes, you know, y um European bonds uh headed, you know, closed higher, um, ten year bounds up eight point five basis points on the day. Um thirty years I think they closed up about ten ten basis points.
What impact are the newly announced US tariffs on Canada, Mexico and China having on markets?
And two two two things really driving the the sentiment in um in the European session. Firstly th there was a stronger than expected uh Eurozone inflation print. So the um what what was in focus was the core measure which um It it did head head lower, but it didn't it it did surprise to the upside. So it came in at two point six, down from two point seven, but the consensus expectation was was two and a half. So inflation sort of not not coming off as quickly as expected. Uh but then also as as you said, what was also driving sentiment and and obviously boosting the um European equity markets, at least the defence stocks.
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Chapters
8 chapters
1
Why are US and European markets moving in opposite directions today?
0:01–1:41
2
How are European defence stocks driving the rise in bond yields and equity prices?
1:41–3:19
3
What impact are the newly announced US tariffs on Canada, Mexico and China having on markets?
3:19–4:53
4
Why is the US manufacturing ISM reading lower than expected and what does it mean for inflation?
4:53–6:23
5
How are the latest Eurozone PMI and US PMI reports influencing investor sentiment?
6:23–8:06
6
What does the surge in European bond yields reveal about future defence spending?
8:06–9:29
7
How will the upcoming US agricultural tariff affect Australian beef exports?
9:29–11:53
8
What are the recent trends in Australian dwelling prices and RBA minutes?
11:53–13:21