Before the bell: General Ceasefire

Good news across the board, yet markets continue to decline. Today, all eyes are on the U.S. inflation report.

Ukraine is expected to sign a 30-day ceasefire agreement with Russia. Meanwhile, the U.S. and Canada have also decided to “temporarily” bury the hatchet. Donald Trump announced that he would shelve his plans to raise steel and aluminum tariffs to 50%. Doug Ford, the premier of Ontario, stated that Canada will not implement the 25% surcharge on electricity exports to the U.S. This is all positive news for consumers and investors, as they—rightfully—dislike wars and trade conflicts. But can you really trust those who are now smoking the peace pipe? Seeing is believing, according to the markets. European stocks still fell by an average of 1.4% yesterday, and both the S&P 500 (-0.8%) and the Nasdaq (-0.2%) failed to close the trading day in positive territory. Will today be any different?

Japanese stocks are already being bought up this morning, with the Topix in Tokyo climbing 0.9%. Cable manufacturer Sumitomo Electric is up 4.8%. In Hong Kong, however, investors are cashing in their profits. The Hang Seng index is down 0.4%, though automaker BYD is still managing to rise 1.9%. Today, Basic-Fit, Inditex, Porsche, and Puma will report earnings. In Germany, defense giant Rheinmetall has already released its results, reporting a 36% increase in revenue for 2024 to 9.75 billion euro. Its order book also swelled by 44% to 55 billion euro. Investors had anticipated the news, and the stock has already more than doubled since November 2024. In Belgium, we have earnings reports from Agfa-Gevaert and Tinc. Later in the U.S., software company Adobe will release its figures, while markets await the American inflation report for February. If inflation turns out higher than expected, stock markets could come under further pressure.

Liftoff

Airlines collectively took a hit yesterday after Delta Air Lines (-7.2%) downgraded its growth expectations. The American consumer is increasingly opting to stay grounded and spend less. However, there was one exception—Southwest Airlines managed to take off. The low-cost airline’s stock even jumped 8.3%. But not because the company is lowering fares. Quite the opposite—Southwest Airlines announced it would start charging baggage fees. For years, the airline allowed passengers to check in two bags for free. That policy is now coming to an end. Southwest Airlines’ stock has lost a quarter of its value over the past five years, but with activist investor Elliott Management stepping in, investors are feeling more optimistic about the company’s future.

Workarounds

Even the world’s largest car manufacturer is feeling the impact of import tariffs. In 2024, Japan’s Toyota sold a staggering 10.8 million vehicles, with one-fifth of those sales occurring in the U.S. Although Toyota manufactures 11 of its models in the U.S., the company will still be affected by Donald Trump’s import tariffs. However, if the company’s factory in the United Kingdom remains exempt, Toyota’s European CEO has not ruled out the possibility of circumventing the tariffs by shipping certain models to the U.S. via the UK. Tough times call for creative solutions.

Did You Know…

that Donald Trump has promised to buy a brand-new Tesla? He says he wants to show support for Elon Musk after Tesla’s stock lost more than 15% over five days. Yesterday, Tesla’s stock rebounded by 3.8%.

This article was translated from Dutch and was originally published on Spaarvarkens.be.