MARKET WRAPS

Watch For:

Services PMI data for EU, U.K., Germany, France, Italy; EU PPI; France industrial production; trading updates from Bayer, Atos, adidas, Dassault Aviation, Capita, IMCD, Intermediate Capital Group

Opening Call:

European stock futures were higher, tracking gains in Asian stock benchmarks. The dollar weakened and Treasury yields were mixed; oil futures fell and gold gained.

Equities:

Stock futures in Europe were higher early Wednesday as markets digest tariff developments, U.S. President Trump's speech to Congress, and China's economic targets for 2025.

U.S. futures were up after a top Trump official said Mexico and Canada tariffs could be rolled back quickly. The U.S. stock market declined sharply Tuesday after 25% U.S. tariffs on imports from Canada and Mexico and another 10% tariff on imports from China took effect.

President Trump in his address to Congress late Tuesday, offered a no-apologies assessment of his decisions to crack down on illegal immigration, slash the federal workforce and impose stiff tariffs on imports.

Mark J. Grant, chief global strategist at Colliers Securities said, "What is clear is that the old way of doing business has vanished and President Trump's new policy statements are a significant break from the past. We have entered a new era, and it is one more reason to invest with 'Caution' as our future outcomes are quite uncertain."

Earlier today, China set an economic growth target of around 5% for 2025, raised its fiscal deficit target to 4.0% of GDP from 3.0% last year, and set a consumer inflation target of around 2.0%.

Markets expect the U.S. ADP employment report due out today to slow in February from January, and Friday's nonfarm payrolls to rise in February from January. "Hence, it remains doubtful that the Fed will subscribe to the market's three rate cut projection when it deliberates its Summary of Economic Projections," DBS Group Research said.

Forex:

The U.S. dollar weakened slightly early Wednesday. George Saravelos, global head of FX research at Deutsche Bank, contends the dollar could lose its coveted haven status. The speed and scale of global shifts is so rapid that this needs to be acknowledged as a possibility," Saravelos said.

"Our dollar views remain neutral for now but the key message is that we are becoming a lot more open-minded about two-sided risks to the dollar."

Bonds:

U.S. government debt mostly sold off on Tuesday, pushing 10- and 30-year yields higher for the first time in three sessions, as traders appeared to look past a tit-for-tat trade war and focused on the prospects of a military spending boom in Germany.

Bond investors have been bracing for more supply in Europe as the continent ramps up its defense spending. Germany's moves appeared to have had the effect of making U.S. government debt look less attractive by comparison, according to FHN Financial strategist Will Compernolle.

As of Tuesday, fed-funds futures traders were moving toward higher chances of 2025 rate cuts by the Federal Reserve.

Energy:

Oil fell, dragged by ongoing worry over the OPEC+ decision to increase production starting April 1 by gradually unwinding voluntary production cuts of 2.2 million barrels per day. The "OPEC+ decision to start increasing production again is a materially bearish development, loosening markets at a time that U.S. macro data are starting to soften, " Citi Research analysts said.

This equates to a monthly production increase of over 138,000 barrels/day through end-2026 into a market that Citi is already seeing as oversupplied, the analysts added.

Metals:

Gold was higher after hovering near the $2,915/oz level breached overnight. Recent gains have been supported by concerns about the escalation of a broader tariff war, and after Beijing announced 15% retaliatory tariffs on some U.S. farm goods, including cotton, the ANZ Research team said.

The potential economic slowdown and rising inflationary pressures could keep markets highly uncertain about the path of the U.S. monetary policy, and this confusion could drive gold prices higher, said Samer Hasn, senior market analyst at XS.com.

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Copper rose in early Asian trade. However, sentiment is impacted by the prospect of further tariffs, ANZ Research analysts said. U.S. levies on aluminum and steel are due to begin next week, while a review on copper imports is also being undertaken, they said.

Market participants are also digesting the news that China has set its 2025 GDP growth target at 'around 5%', which is the same as last year.

TODAY'S TOP HEADLINES

China Sets 2025 Growth Target at About 5% Despite Looming Trade Tensions

China has set an economic growth target of around 5% for 2025, unchanged from last year, despite mounting challenges from trade tensions, weak domestic demand and a prolonged property downturn.

The target, announced by Chinese Premier Li Qiang on Wednesday, comes after China said that it met its 2024 growth goal, with gross domestic product expanding by 5%.

Trump Touts 'Swift and Unrelenting' Action on Border, Budget and Economy

WASHINGTON-President Trump put his disruptive return to power on full display during a prime-time address to Congress, offering a no-apologies assessment of his decisions to crack down on illegal immigration, slash the federal workforce and impose stiff tariffs on imports.

"I return to this chamber tonight to report that America's momentum is back, our spirit is back, our pride is back, our confidence is back," Trump said, standing in the House chamber five years after his last address to Congress, describing what he called a "swift and unrelenting" campaign to transform the country.

Canada, Mexico tariff deal could be in works, Lutnick suggests. Here's what markets will watch.

A deal to roll back U.S. tariffs on Canadian and Mexican goods may be in the works, a top Trump administration official suggested Tuesday, as President Donald Trump prepared to give a major address to Congress.

Howard Lutnick, Trump's commerce secretary, said on Fox Business: "I think [Trump] is going work something out with them," referring to Canada and Mexico. Lutnick noted he'd been speaking with officials from both countries "all day."

Germany Paves Way for Defense Spending Increase

BERLIN-Germany will exempt military spending from its strict fiscal rules and create an off-budget fund of 500 billion euros to finance infrastructure spending, laying the ground for a big boost in the country's defense budget.

Friedrich Merz, the victor of last month's election and likely future chancellor, and his prospective coalition partners said they would introduce amendments to the constitution in parliament next week to enact the changes.

Aperol Maker Campari Enters a Transition Year Amid Industry Woes

Italian liquor maker Davide Campari-Milano said it expects 2025 to be a transition year due to cyclical headwinds and amid a global trade dispute that is hampering the beverage sector.

For this year, the maker of Aperol aperitifs forecasts moderate growth in organic revenue, with an improving trend expected in the second half of the year, as drink makers continue to face waning demand after a surge in beverage consumption during the pandemic.

Goldman Sachs to Target Vice Presidents in Next Round of Cuts

Goldman Sachs is preparing its annual round of layoffs, this time with a focus on its vice presidents.

Goldman CEO David Solomon has told senior executives that the firm hired too many vice presidents in recent years in relation to its overall hiring, according to people familiar with the matter. The cuts are intended to improve the firm's efficiency, which Solomon has made a priority.

Disney to Cut Nearly 6% of Staff Across ABC News, Disney Entertainment Networks

About 200 employees are being let go at Disney's ABC News Group and Disney Entertainment Networks unit, people familiar with the matter said.

The layoffs are being announced to employees as early as Wednesday and represent just under 6% of the combined staff at the two units, according to one of the people with knowledge of the cuts.

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Expected Major Events for Wednesday

01:01/IRL: Feb Ireland Services PMI

07:00/NOR: 4Q Balance of Payments

07:30/SWI: Feb CPI

07:45/FRA: Jan Industrial production index

08:15/SPN: Feb Spain Services PMI

08:30/EU: Feb EuroCOIN indicator of euro area economic activity

08:45/ITA: Feb Italy Services PMI

08:50/FRA: Feb France Services PMI

08:55/GER: Feb Germany Services PMI

09:00/EU: Feb Eurozone Services PMI

09:00/ITA: 4Q GDP

09:00/UK: Feb UK monthly car registrations figures

09:30/UK: Feb UK Official Reserves

09:30/UK: Feb S&P Global UK Services PMI

09:30/UK: Feb Narrow money (Notes & Coin) and reserve balances

10:00/EU: Jan PPI

10:00/LUX: Feb CPI

10:00/CRO: Jan Retail trade

10:00/ITA: Jan Retail Sales

11:00/IRL: Feb Monthly Unemployment

11:00/FRA: Jan OECD CPI

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This article is a text version of a Wall Street Journal newsletter published earlier today.

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March 05, 2025 00:00 ET (05:00 GMT)

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