Markets roiled by volatility as trade uncertainty deepen

Global markets swung sharply on Tuesday as investors grappled with fresh trade tensions, political uncertainty, and economic policy shifts. U.S. stocks seesawed throughout the session, with the S&P 500 closing down 1.2% after an initial plunge, a brief recovery, and renewed selling pressure. Late trading saw equities regain some ground following comments from Commerce Secretary Howard Lutnick, who suggested that Washington may outline tariff relief measures for Mexico and Canada as early as Wednesday.

Asian equities were mixed on Wednesday, while U.S. futures pointed higher. Oil prices slipped, and the New Zealand dollar briefly dipped after Reserve Bank of New Zealand Governor Adrian Orr announced his unexpected resignation.

Trade disputes escalate as Canada hits back

Canadian Prime Minister Justin Trudeau accused former U.S. President Donald Trump of attempting to undermine Canada’s economy, alleging his ultimate goal was annexation.

Ontario announced a 25% export tax on electricity sent to the U.S., and Trudeau claimed Trump was using the fentanyl crisis as a pretext to justify new tariffs in what he described as an "unjustified trade war."

Markets were rattled after Trump’s latest round of tariffs against major U.S. trading partners drove the S&P 500 Index to its lowest level since before his election. Lutnick’s comments on possible tariff relief for Mexican and Canadian goods covered under an existing free trade agreement provided a late-session reprieve for stocks.

U.S., Ukraine move toward minerals agreement

The U.S. and Ukraine are preparing to sign a minerals trade agreement, Reuters reported. Ukrainian President Volodymyr Zelenskiy, speaking earlier, said he was committed to expediting efforts to end the war with Russia. He also described his deteriorating relationship with Trump as "regrettable."

China targets 5% growth amid fiscal expansion

China set an economic growth target of around 5% for 2025, raising expectations for further stimulus as the country navigates its ongoing trade war with the U.S. Premier Li Qiang delivered the target on Wednesday in his annual work report to the national parliament.

The government also set a fiscal deficit target of around 4% of GDP for this year, the highest in more than 30 years. Both figures aligned with economists’ expectations, but maintaining such targets is expected to be challenging amid global headwinds.

Euro strengthens amid trade turmoil

The euro emerged as one of the biggest beneficiaries of recent market turbulence, outperforming most Group-of-10 currencies. After the Swedish krona, the euro was the best-performing major currency this week, briefly touching its highest level against the U.S. dollar since December.

Investor sentiment toward U.S. economic resilience has soured, with concerns mounting over Trump’s tariff escalations, proposed budget cuts, and growing corporate layoffs. The geopolitical landscape also weighed on U.S. markets. Trump’s tense televised exchange with Zelenskiy underscored Washington’s retreat from global leadership, while Germany signaled a historic shift in defense policy by announcing plans to amend its constitution to lift budget caps on security spending.

European Central Bank policymakers are also shifting tone. While a rate cut is widely expected on Thursday, several ECB governing council members are signaling a reduced likelihood of further easing. Germany’s aggressive fiscal measures, particularly its accelerated and broad-based stimulus efforts, are likely to support economic sentiment and spending, further bolstering the euro.