By Sinéad Carew and Alun John
NEW YORK/LONDON (Reuters) -Ukraine’s acceptance of a U.S. proposal for a ceasefire with Russia briefly pushed the euro to a five-month high while equities fell in Tuesday’s choppy session as investors worried about a lack of clarity on tariffs.
The euro added to earlier gains and European stock futures pared some losses after Ukraine agreed to an immediate 30-day ceasefire during talks with U.S.
officials in Saudi Arabia. However, Russia has not yet responded to the proposal.
While the Ukraine news helped U.S. stock indexes end Tuesday well above their session lows, traders were having to make decisions amid dizzying changes on trade.
Earlier on Tuesday, President Donald Trump added to economic jitters by saying he told his commerce secretary to add an additional 25% tariff on all steel and aluminum imports from Canada, bringing the total tariff on those products to 50%.
But the U.S.
appeared to have reversed that decision by late afternoon after the premier of Canada’s Ontario province said he was suspending plans to impose a 25% surcharge on electricity exports to the United States and would fly to Washington this week for talks with the Trump administration.
“Uncertainty and volatility continue in this market,” said Mona Mahajan, head of investment strategy at Edward Jones, pointing to tariff announcements and resulting economic concerns.
“Economic growth had started to slow even before the tariff uncertainty in the U.S.
That is not uncommon in the first quarter of the year, but what is uncommon is adding to that with uncertainty around policy.”
On Monday, the S&P 500 had suffered its biggest one-day drop this year after Trump, in a weekend Fox News interview, declined to rule out a recession resulting from his trade policies.
Adding to concerns, Tuesday’s data showed U.S.
small-business confidence dropped for a third straight month in February, wiping away much of the gains notched after Trump’s November election victory.
Investors were also anxiously awaiting the latest information on inflation conditions from the U.S.
consumer price index reading for February, due on Wednesday.
A high reading would add to last month’s hotter-than-expected data, which included the biggest monthly price gain since August 2023.
After a choppy session, in which it briefly went 10% below its latest record-high close, the S&P 500 closed down 42.49 points, or 0.76%, at 5,572.07 while the Nasdaq Composite finished off 32.23 points, or 0.18%, at 17,436.10.
The Dow Jones Industrial Average lost 478.23 points, or 1.14%, to close at 41,433.48.
MSCI’s gauge of stocks across the globe fell 6.09 points, or 0.73%, to 826.64, which was roughly 7% below its most recent record high close on February 19.
European stock futures briefly pared losses after the Ukraine ceasefire proposal.
Earlier, the pan-European STOXX 600 index had closed down 1.7%.
After falling sharply on Monday, U.S. Treasury yields also steadied, pulling away from five-month lows hit earlier in the session.
The yield on benchmark U.S.
10-year notes rose 6.7 basis points to 4.28%, from 4.213% late on Monday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 5.5 basis points to 3.951%, from 3.896% late on Monday.
In currencies, the euro briefly hit a five-month high after the Ukraine agreement, while the dollar rose to a one-week high before weakening against the Canadian dollar on the tariff news.
The euro was up 0.71% at $1.0909, while against the Japanese yen the dollar strengthened 0.38% to 147.82.
The Canadian dollar was up 0.06% versus the greenback to C$1.44 per dollar.
Oil prices rose, after falling sharply on Monday. Concerns about a U.S. recession and the impact of tariffs on global economic growth capped gains.
U.S. crude settled up 0.33% at $66.25 a barrel and Brent settled at $69.56 per barrel, up 0.4%.
Gold prices gained after selling off in the prior day’s session.
Spot gold rose 0.92% to $2,915.86 an ounce. U.S. gold futures rose 0.88% to $2,916.50 an ounce.
(Reporting by Sinéad Carew in New York, Alun John in London, Ankur Bane, Caroline Valetkevitch in New York, Ankur Banerjee in Singapore; and Alun John in London, additional reporting by Dhara Ranasinghe; Editing by Rod Nickel and Lisa Shumaker)
