[New York Stock Market] Trump Rebounds Three Days After Mexico and Canada Auto Tariff Suspension... Focus on Additional Tariff Reduction Plan

White House: "One-Month Delay on Mexico and Canada Auto Tariffs"
Trump Holds Calls with Both Leaders... Attention on Further Relief Measures
February Private Sector Job Growth at 77,000... Lowest in Seven Months

The three major indices of the U.S. New York stock market rose on the 5th (local time) after three days. Market anxiety eased as U.S. President Donald Trump announced a one-month delay in tariffs on the automobile sector just one day after imposing a 25% tariff barrage on Canada and Mexico. Expectations are also spreading that the tariff conflict will be partially resolved as the White House left open the possibility of additional tariff exemptions.

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On that day, the Dow Jones Industrial Average (Dow Index), centered on blue-chip stocks, closed at 43,006.59, up 485.6 points (1.14%) from the previous trading day. The S&P 500 Index, focused on large-cap stocks, rose 64.48 points (1.12%) to 5,842.63, and the Nasdaq Index, centered on technology stocks, jumped 267.57 points (1.46%) to close at 18,552.73.

By stock, General Motors (GM) rose 7.22% due to the U.S. auto tariff exemption for Mexico and Canada. Ford increased by 5.75%. Among large tech stocks, Microsoft (MS) jumped 3.19%, and Nvidia rose 1.13%.

The White House's announcement of the auto tariff exemption led the stock market rebound after three days. White House spokesperson Caroline Levitt said, "We will provide a one-month (tariff) exemption for all automobiles entering under the United States-Mexico-Canada Agreement (USMCA)," adding, "At the request of companies related to USMCA, the President gave them a one-month exemption so they would not be economically disadvantaged."

The U.S. implemented the 25% tariffs on Canada and Mexico starting at midnight on the 4th, after a one-month delay. The U.S. finished vehicle industry, which has production bases in Mexico and elsewhere, feared significant damage. After speaking with the heads of the U.S. Big Three automakers?GM, Ford, and Stellantis?President Trump decided to delay the tariffs for one month. This measure gives U.S. automakers a temporary reprieve from the 25% tariffs for one month.

As spokesperson Levitt hinted at the possibility of additional tariff exemptions, expectations for further relief measures are spreading in the market. Currently, President Trump is discussing tariff issues with the leaders of Canada and Mexico. On that day, he spoke for 50 minutes with Canadian Prime Minister Justin Trudeau, discussing tariffs and the crackdown on fentanyl, a narcotic painkiller. A call with Mexican President Claudia Sheinbaum is also scheduled.

Ross Mayfield, investment strategy analyst at Baird, said, "Traders expect the administration to respond to market pressure," and analyzed, "The White House will move quickly to adjust policies as needed." Following the two-day sharp decline in the New York stock market due to tariff policies, there is speculation that President Trump, who values the stock market, will adjust the level of tariff policies.

However, tariff-driven market volatility is expected to continue. Following the implementation of steel and aluminum tariffs this month, reciprocal tariffs are also scheduled to be officially announced on April 2.

Michael Green, chief strategist at Simplify Asset Management, said, "What we have repeatedly emphasized is the uncertainty brought by Trump," diagnosing, "We are now in a situation where a single tweet or information disclosure can significantly change market interpretation."

Concerns among companies about tariff uncertainty are also growing. The U.S. Federal Reserve (Fed) stated in the 'Beige Book,' a report on economic trends released that day, that "manufacturing contacts, from petrochemical products to office equipment, expressed concerns about the potential impact of changes in trade policy." It added, "Most contacts in various regions expected prices to rise due to potential tariffs," and "There were reports that companies preemptively raised prices."

Employment indicators also revealed that private companies are hesitant to hire due to concerns about tariffs and other policies. According to the February employment report released by ADP, a U.S. private labor market research firm, private sector nonfarm payrolls increased by 77,000, the smallest increase since July last year. This figure is significantly below both the previous month's 186,000 and market expectations of 141,000.

The market is focusing on the U.S. Department of Labor's February employment report, scheduled for release on the 7th, which is expected to provide a more accurate picture of the labor market than the ADP employment report, which excludes public sector employment. Experts expect nonfarm payrolls to have increased by 156,000 last month, surpassing January's figure of 143,000. The unemployment rate is expected to have remained at 4.0%.

U.S. Treasury yields are on the rise. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 7 basis points (1 bp = 0.01 percentage points) from the previous trading day to 4.28%, while the 2-year U.S. Treasury yield, sensitive to monetary policy, moved up 4 basis points to around 4.0%.