Trump's tariffs "give some leeway," U.S. stock indices rebound over 1%, Chinese concept stocks soar, Alibaba rises nearly 9%, the dollar plunges, and German bonds post their worst performance since 1990

U.S. economic data is mixed, with a cooling job market. February's ADP employment figures unexpectedly fell to 77,000, the smallest increase since July last year. However, the U.S. ISM services PMI for February unexpectedly rose to 53.5, exceeding expectations, and employment indicators reached a three-year high, somewhat alleviating concerns about a decline in the services sector, while U.S. Treasury yields narrowed their decline.

The Federal Reserve's Beige Book shows that overall economic activity in the U.S. has slightly increased since mid-January this year, but consumer spending has generally declined, further confirming the uncertainty surrounding the U.S. economic outlook. The market is pricing in the probability of a recession in the U.S. this year, with expectations that the Federal Reserve will cut interest rates by more than 70 basis points by the end of the year, leading to a 1.29% drop in the dollar to a four-month low.

The White House has made slight adjustments to its policies, delaying the imposition of tariffs on auto imports from Mexico by one month. The White House also indicated that Trump is willing to consider more requests for tariff exemptions, boosting market sentiment. U.S. Treasury yields rose further, and U.S. stocks rebounded across the board during midday trading, with the Canadian dollar and Mexican peso strengthening, while oil price declines narrowed.

Germany's fiscal reform aims to break through the "debt brake," allowing defense spending to exceed 1% of GDP, and has introduced a €500 billion defense and infrastructure investment plan. Analysts say this is key to loosening fiscal policy, expected to boost Germany's weak economy while enhancing its defense capabilities. Additionally, increased government spending may stimulate inflation expectations, cooling market expectations for European Central Bank rate cuts.

Following the announcement, the benchmark 10-year German bond yield in the Eurozone surged by 30 basis points, marking the largest single-day increase since 1990. German stocks rose by 3.38%, leading European stocks, with defense stocks continuing to rise. The euro increased by 1.55% to a four-month high.

Trump announces tariff exemptions for automakers, U.S. stocks rebound across the board, reversing the downward trend of the previous two days, with the automotive sector performing well. Stellantis ADR rose by 9.2%, marking the best single-day performance in nearly three years. The China concept index surged over 6%, significantly outperforming the U.S. stock market:

All three major U.S. stock indices rose.

• The S&P 500 index closed up 1.12%. The Dow Jones Industrial Average closed up 1.14%. The Nasdaq closed up 1.46%.
• The Nasdaq 100 rose by 1.36%. The Nasdaq Technology Market Capitalization Weighted Index (NDXTMC), which measures the performance of Nasdaq 100 technology stocks, rose by 1.69%.
• The Russell 2000 small-cap index rose by 1.02%. The VIX fear index fell by 6.68%, closing at 21.94.

Most U.S. sector ETFs rose.

• The global airline industry ETF rose by 3.68%, the semiconductor ETF rose by 1.85%, while the regional bank ETF fell by 0.56%, the utilities ETF fell by 0.7%, and the energy sector ETF fell by 1.46%

Investment Research Strategy:

• Wall Street models show that the probability of a U.S. economic recession is as high as 50%. JP Morgan's model indicates that as of March 4, the recession probability rose from 17% in November to 31%, with the 5-year U.S. Treasury yield and basic metal indicators showing a recession probability close to 50%. Goldman Sachs' model also shows that the recession risk increased from 14% in January to 23%.
• JP Morgan pointed out that the U.S. economy is weak, with deteriorating confidence among businesses and consumers, alongside the implementation of tariffs on Canada and Mexico. These factors combined have made consumers and businesses more pessimistic, leading to concerns about an economic recession, which is reflected in higher market prices indicating a greater recession probability.

"Magnificent Seven" Only Apple Declines:

• The Magnificent 7 index rose about 1.6%, with Microsoft closing up 3.19%, Meta up 2.57%, Amazon up 2.24%, Google A up 1.23%, and Nvidia up 1.13%.
• Tesla rose 2.6%, as Musk's political involvement faced backlash, with Tesla's February sales in Germany plummeting 76% year-on-year.
• Apple closed down 0.08%, after launching a new MacBook Air equipped with the M4 chip, with a price reduction of $100.

Chip Stocks Generally Rise.

• The Philadelphia Semiconductor Index closed up 2.09%. Nvidia's double long ETF rose 2.33%.
• Nanomicro Semiconductor rose 8.2%, STMicroelectronics rose 7.07%, Broadcom rose 2.19%. TSMC ADR rose 2.38%.

AI Concept Stocks Mostly Rise.

• Airship AI rose 10.09%, Jet.AI rose 3.73%, Dell Technologies rose 3.38%, Palantir rose 6.79%, Applovin fell 2.82%, and Advanced Micro Devices fell 0.61%.

Chinese Concept Stocks Surge.

• The Nasdaq Golden Dragon China Index closed up 6.4%. The FTSE A50 futures index rose 0.41% in continuous night trading. The FTSE A50 Index will include Cambricon, China Unicom, and Guotai Junan.
• In ETFs, the Direxion FTSE China Bull 3X ETF (YINN) closed up 14.77%, and the Chinese Internet Index ETF (KWEB) closed up 7.13%.
• Among popular Chinese concept stocks, ZEEKR rose 10.2%, Xiaomi Group ADR rose 8.97%, Alibaba rose 8.61%, XPeng rose 7.12%, JD.com rose 6.86%, Tencent Holdings rose 6.54%, New Oriental rose 6.37%, Pinduoduo rose 6%, and Baidu rose 5.43%.
• Alibaba launched a new inference model late at night, with only 1/20 of the parameters comparable to DeepSeek R1.

Airline Stocks Mostly Rise.

• JetBlue rose 6.4%, Embraer ADR rose over 6%, United Airlines rose 5.87%, American Airlines rose 5.54%, Delta Air Lines rose 3.8%, Boeing rose 2.68%, Southwest Airlines rose 1.7%.

Among other key stocks:

• The U.S. signaled a reduction in tariffs on imports from Mexico. General Motors rose 7.21%, Ford rose 5.81%.

Affected by Germany's fiscal reforms and the potential easing of U.S. tariffs, European stocks rebounded across the board, with the German stock market soaring 3.38% to lead the gains. The automotive sector rebounded 2.4% on Wednesday after plummeting nearly 6% on Tuesday:

European Stocks:

• The pan-European STOXX 600 index closed up 0.91%. The Eurozone STOXX 50 index closed up 1.89%.
• The German stock index rose 3.38%. The French stock index rose 1.56%. The Italian stock index rose 2.08%. The British stock index fell 0.04%. The Spanish stock index rose 1.4%.

Industry Sectors:

• The defense sector continued to rise, with the Stoxx Aerospace & Defense index up 2.7%. Kion Group AG rose 20.18%, and Rheinmetall AG rose 7.17%.
• Chip stocks rose broadly, with Infineon Technologies AG up 6.82%.
• Automotive manufacturing concept stocks rose broadly, with Aston Martin up 14.29%.
• German stocks rose broadly, with construction company Hochtief up 15.5%, manufacturer Kion Group soaring 20%, and Germany's largest lending institution Deutsche Bank up 12.4%.

Due to the dual impact of strong services PMI and the postponement of auto tariffs, U.S. Treasuries ultimately closed at low levels. The "historic" fiscal expansion plan stimulated German bond prices to record the worst single-day performance since 1990, with the 10-year German bond yield rising by 30 basis points:

U.S. Treasuries:

• The yield on the benchmark 10-year U.S. Treasury rose by 2.85 basis points to 4.2727%. The yield on the 2-year U.S. Treasury was roughly flat at 3.9923%.

European Bonds:

• At the end of the European session, the yield on the 10-year German government bond rose by 29.8 basis points to 2.793%. The yield on the 2-year German bond rose by 21.6 basis points to 2.253%.
• The yield on the 10-year British government bond rose by 14.9 basis points. The yield on the 2-year British bond rose by 9.4 basis points. The yield on the 10-year French government bond rose by 26.1 basis points, and the yield on the 10-year Italian government bond rose by 27.6 basis points.

The US dollar index has fallen for three consecutive days, down 1.3% approaching the 104 mark, hitting a new low since November last year. Germany's investment plans have driven the euro to lead the G10 currencies, with the euro rising 1.55%, accumulating a 4% increase over three days. The US has delayed tariffs on Canadian and Mexican automobiles, leading to two consecutive days of gains for the Canadian dollar and a significant rise in the Mexican peso, erasing previous tariff-related declines. The Japanese yen rose over 0.6%, briefly approaching 148, but its gains were limited due to a rebound in risk appetite.

US Dollar:

• At the New York close, the ICE US dollar index fell 1.29%, reporting 104.377 points.
• The Bloomberg US dollar index fell 0.96%, reporting 1272.19 points.

Non-US Currencies:

• At the New York close, the euro rose 1.55% against the US dollar, reporting 1.0791, with a cumulative increase of 4.01% over the past three days. The British pound rose 0.79% against the US dollar. The US dollar rose 0.14% against the Swiss franc.
• Among commodity currencies, the Australian dollar rose 1.03% against the US dollar, the New Zealand dollar rose 1.12% against the US dollar, and the US dollar fell 0.43% against the Canadian dollar.

Japanese Yen: At the New York close, the US dollar fell 0.62% against the Japanese yen, reporting 148.86 yen.

Offshore Renminbi: The offshore renminbi (CNH) rose 167 points against the US dollar at the close, reporting 7.2366 yuan, trading overall in the range of 7.2769-7.2333 yuan during the day.

Cryptocurrency: At the New York close, the largest cryptocurrency Bitcoin rose 3.81% compared to Tuesday's close, reporting 90,660.00 USD. The second-largest Ethereum rose 3.93% at the close, reporting 2,235.50 USD.

Under the dual pressure of OPEC+ production increase plans and US trade policies, as well as an unexpected increase in US oil inventories, oil prices have fallen for three consecutive days, with US oil dropping to the lowest level since May 2023 and Brent oil to the lowest level since December 2021. During the session, there were reports that Trump might decide to reduce tariffs on certain industries, which slightly alleviated the decline in oil prices:

US Oil: WTI April crude oil futures closed down 2.85%, reporting 66.31 USD/barrel.

Brent Oil: Brent May crude oil futures closed down about 2.45%, reporting 69.30 USD/barrel.

The US Energy Information Administration (EIA) reported that last week US oil inventories increased by 3.6 million barrels to 433.8 million barrels, far exceeding analysts' expectations of a 341,000 barrel increase.

This was mainly due to seasonal maintenance at refineries, while gasoline and distillate inventories decreased due to increased exports. Market concerns about oversupply deepened further, and after the data was released, Brent crude oil futures briefly fell more than 2 USD

Natural Gas:

• U.S. April natural gas futures rose about 2.30%, closing at $4.4500 per million British thermal units.
• TTF benchmark Dutch natural gas futures fell 3.15%, closing at €41.450 per megawatt hour.
• ICE UK natural gas futures fell 3.65%, closing at 99.790 pence per kilocalorie.

Weaker dollar drives up precious metals, New York gold futures rose about 0.3%, briefly surpassing $2940, New York copper futures rose 5.5%:

Gold:

• COMEX gold futures rose 0.29%, closing at $2929.00 per ounce.
• Spot gold slightly rose 0.04% at the close, closing at $2919.19 per ounce.

Silver:

• COMEX silver futures rose 2.73%, closing at $33.265 per ounce.
• Spot silver rose 2.09% at the close, closing at $32.6487 per ounce.

Most London industrial metals closed higher:

• London copper rose $242. COMEX copper futures rose 5.51%, closing at $4.8075 per pound. London aluminum rose $42. London zinc rose $68. London lead rose $24. London nickel fell $82. London tin rose $127. London cobalt rose $805.