Euro Hits 5-Month High, FTSE Nears 2-Month Low

The euro surged to a five-month peak as Ukraine signaled acceptance of a US-proposed ceasefire, though Russia has yet to respond. European stocks, including the STOXX 600, were set for a strong rebound after losing nearly 3% earlier in the week, while US markets stabilised following Trump's tariff flip-flop on steel and aluminum. Investors remain focused on US inflation data, with recession fears pressuring markets.

Equities

The FTSE 100 fell 1.2% on Tuesday, marking its lowest close since 16 January and extending its losing streak to six sessions. Travel and leisure stocks led the decline, with British Airways owner IAG dropping 6.1% after Delta Air Lines warned of weaker demand in the US.

The midcap FTSE 250 slipped 0.5% to a two-month low. Sterling rose 0.5% against the dollar, weighing on the export-heavy FTSE 100. The UK government confirmed it would not impose retaliatory tariffs after the US increased duties on Canadian steel and aluminium.

Domino’s Pizza lost 3.6% in volatile trading after forecasting annual core profit in line with expectations. In contrast, homebuilders outperformed, with Persimmon rising 5.5% after confirming plans to build more homes, citing the Bank of England’s interest rate cuts as a supportive factor. Rotork surged 7.1% after announcing the acquisition of South Korean electric actuator firm Noah Actuation for £44 million, alongside a share buyback plan.

In the US, the S&P 500 fell 0.76%, bringing its two-day drop to over 3.4%, its largest decline since August. The Dow Jones Industrial Average lost 1.14%, while the Nasdaq edged down 0.18%. The S&P 500 briefly touched correction territory, down 10% from its February peak. The declines followed President Donald Trump’s decision to double tariffs on Canadian steel and aluminium to 50%, raising concerns about trade tensions.

Kohl’s plunged 24.1% after forecasting a sharper-than-expected decline in annual comparable sales. Dick’s Sporting Goods fell 5.7% after issuing a cautious outlook. Airline stocks also struggled, with Delta Air Lines down 7.3% after slashing its first-quarter profit estimates by half, while American Airlines dropped 8.3% after warning of a larger-than-expected quarterly loss. Weakness in the airline sector dragged the Dow transportation index down 3.1%.

Oracle fell 3.1% after missing quarterly revenue estimates. Meanwhile, Citigroup downgraded its outlook on US stocks to “neutral”, adding to the cautious market sentiment. A US Labour Department report showed job openings rose to 7.74 million in January, but economic concerns weighed on investor confidence ahead of key US inflation data due on Wednesday.

Forex & Commodities

The US dollar remained under pressure, trading near a five-month low as concerns over the economic impact of President Donald Trump’s trade policies persisted. The dollar index edged up 0.08% to 103.53 in Asian trading after sliding 0.46% on Tuesday, hitting its lowest level since 16 October. Sterling slipped 0.13% to $1.2931, after gaining 0.53% in the previous session. The euro hovered near a five-month high, easing slightly to $1.0905, after Ukraine signalled its willingness to accept a US-backed 30-day ceasefire proposal. The Canadian dollar remained steady at C$1.4444 ahead of the Bank of Canada’s policy decision, following a volatile session driven by Trump’s tariff flip-flop on Canadian steel and aluminium.

Gold fell 0.2% to $2,908.93 per ounce as a slight rebound in the dollar made the metal more expensive for overseas buyers. Investors are awaiting the latest US inflation data, due at 12:30 GMT, which could influence the Federal Reserve’s interest rate decisions. Gold reached a record high of $2,956.15 on 24 February, driven by concerns over inflation and economic uncertainty linked to Trump’s tariff policies. Silver dropped 0.7% to $32.70 an ounce, while palladium fell 0.8% to $938.00.

Oil prices edged higher as a weaker dollar provided support, but concerns over economic growth limited gains. Brent crude rose 13 cents to $69.69 a barrel, while US West Texas Intermediate crude also gained 13 cents to $66.38. US crude stockpiles increased by 4.2 million barrels last week, and the Energy Information Administration expects production to average a record 13.61 million barrels per day this year.