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Investors brace for sweeping Trump tariff announcement

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Investors brace for sweeping Trump tariff announcement

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Investors braced themselves for Donald Trump to unveil sweeping tariffs on US trading partners on Wednesday in a move that threatens to ignite a full-blown trade war.

Trading on Wall Street was volatile in the lead-up to Trump’s announcement. The S&P 500 fell more than 1 per cent in early trading, but then rapidly swung modestly into positive territory.

The US president has said he will announce new “reciprocal” tariffs on foreign countries in a White House ceremony at 4pm local time on what he has dubbed “liberation day”.

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But the scope and scale of the levies remains unclear. Since retaking office, Trump has already announced steep tariffs on Canada and Mexico before watering down the plans.

Traders are already braced for the fallout from the announcement and are wary of making bold calls on what Trump will say, with measures of Wall Street volatility creeping higher in recent days.

“The investor community is universally anxious,” said Robert Tipp, head of global bonds at asset manager PGIM, pointing to “people reducing risk and backing away from credit, backing away from the dollar, backing away from stocks” in recent weeks.

After hours locked in discussions with aides on Tuesday, there was little sign that Trump would back down from his plan to ratchet up duties despite warnings of the impact on the US economy.

White House press secretary Karoline Leavitt said on Tuesday that the tariffs would be “effective immediately” and dismissed the anxiety in markets that has sparked a sharp sell-off in the S&P 500 index in recent weeks.

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The US stock exchange was a “snapshot in time”, said Leavitt, echoing comments from other Trump officials that the White House would look past market turbulence stemming from the tariffs.

“The president wants to ensure that Americans make out well, particularly Main Street — that’s the focus of these tariffs. Wall Street will be just fine,” she said.

Trump’s tariff threats and subsequent U-turns have whipsawed markets this year, pushing US equities lower and pressuring the dollar and riskier corporate bonds.

JPMorgan’s fixed-income team sent a note to clients on Tuesday afternoon with the title: “We don’t know what tomorrow brings.” They noted that “markets remained on edge” ahead of the president’s announcements.

European markets fell on Wednesday, with the Stoxx Europe 600 down 0.7 per cent.

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While some investors have reaped rewards by riding the volatility, many fund managers have shied away from making directional bets given the president’s unpredictability.

“People are doing aggressively nothing,” said Ed Al-Hussainy, senior rates analyst at Columbia Threadneedle Investments.

To hit US trading partners with tariffs immediately, Trump would need to resort to rarely used emergency economic measures. But whether he offers any relief to allies remains unclear — as does the ultimate purpose of the tariffs.

While Trump’s commerce secretary, Howard Lutnick, has pressed foreign officials for “deals” in meetings held over recent weeks, other Trump aides see the tariffs as a way to raise revenue for planned tax cuts.

Christopher Krueger, managing director at TD Cowen Washington Research Group, said that Trump’s announcement “should answer the biggest question from markets, which is if the tariffs are a means to an end, or the end”.

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Gauges of expected market volatility have risen in recent days, with the Vix index of projected equity market turbulence up 4.6 points over the past week to 22, above the long-term average of 20.

A CME index of tumult in the world’s five most-traded currencies and Bank of America’s closely watched gauge of implied volatility in the US Treasury market are both at the highest levels since mid-March.

But those measures remain well below peaks touched this year. Mandy Xu, head of derivatives market intelligence at Cboe Global Markets, said there was little sign of a “‘liberation day’ premium” in equity market volatility pricing.

At the same time, the derivatives market, where futures and options are traded, was showing “little extra risk” priced around April 2, said Rocky Fishman, a derivatives analyst at research group Asym 500.

“Most investors realise that, whatever they think, [Trump’s announcements on Wednesday] could leave them with egg on their face,” said Mike Zigmont, co-head of trading at Visdom Investment Group.

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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Supreme Court blocks redrawing of New York congressional map, dealing a win for GOP

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The Supreme Court on Monday intervened in New York’s redistricting process, blocking a lower court decision that would likely have flipped a Republican congressional district into a Democratic district.    
  
At issue is the midterm redrawing of New York’s 11th congressional district, including Staten Island and a small part of Brooklyn. The district is currently held by a Republican, but on Jan. 21, a state Supreme Court judge ruled that the current district dilutes the power of Black and Latino voters in violation of the state constitution.  
  
GOP Rep. Nicole Malliotakis, who represents the district, and the Republican co-chair of the state Board of Elections promptly appealed to the U.S. Supreme Court, asking the justices to block the redrawing as an unconstitutional “racial gerrymander.” New York’s congressional election cycle was set to officially begin Feb. 24, the opening day for candidates to seek placement on the ballot.  
  
As in this year’s prior mid-decade redistricting fights — in Texas and California — the Trump administration backed the Republicans.   
 
Voters and the State of New York contended it’s too soon for the Supreme Court to wade into this dispute. New York’s highest state court has not issued a final judgment, so the voters asserted that if the Supreme Court grants relief now “future stay applicants will see little purpose in waiting for state court rulings before coming to this Court” and “be rewarded for such gamesmanship.” The state argues this is an issue for “New York courts, not federal courts” to resolve, and there is sufficient time for the dispute to be resolved on the merits. 
  
The court majority explained the decision to intervene in 101 words, which the three dissenting liberal justices  summarized as “Rules for thee, but not for me.” 
 
The unsigned majority order does not explain the Court’s rationale. It says only how long the stay will last, until the case moves through the New York State appeals courts. If, however, the losing party petitions and the court agrees to hear the challenge, the stay extends until the final opinion is announced. 
 
Dissenting from the decision were Justices Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson. Writing for the three, Sotomayor  said that  if nonfinal decisions of a state trial court can be brought to highest court, “then every decision from any court is now fair game.” More immediately, she noted, “By granting these applications, the Court thrusts itself into the middle of every election-law dispute around the country, even as many States redraw their congressional maps ahead of the 2026 election.” 

Monday’s Supreme Court action deviates from the court’s hands-off pattern in these mid-term redistricting fights this year. In two previous cases — from Texas and California — the court refused to intervene, allowing newly drawn maps to stay in effect.  
  
Requests for Supreme Court intervention on redistricting issues has been a recurring theme this term, a trend that is likely to grow.  Earlier last month  the high court allowed California to use a voter-approved, Democratic-friendly map.  California’s redistricting came in response to a GOP-friendly redistricting plan in Texas that the Supreme Court also permitted to move forward. These redistricting efforts are expected to offset one another.     
   
But the high court itself has yet to rule on a challenge to Louisiana’s voting map, which was drawn by the state legislature after the decennial census in order to create a second majority-Black district.  Since the drawing of that second majority-black district, the state has backed away from that map, hoping to return to a plan that provides for only one majority-minority district.    
     
The Supreme Court’s consideration of the Louisiana case has stretched across two terms. The justices failed to resolve the case last term and chose to order a second round of arguments this term adding a new question: Does the state’s intentional creation of a second majority-minority district violate the constitution’s Fourteenth and Fifteenth Amendments’ guarantee of the right to vote and the authority of Congress to enforce that mandate?    
Following the addition of the new question, the state of Louisiana flipped positions to oppose the map it had just drawn and defended in court. Whether the Supreme Court follows suit remains to be seen. But the tone of the October argument suggested that the court’s conservative supermajority is likely to continue undercutting the 1965 Voting Rights Act.   

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Map: Earthquake Shakes Central California

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Map: Earthquake Shakes Central California

Note: Map shows the area with a shake intensity of 3 or greater, which U.S.G.S. defines as “weak,” though the earthquake may be felt outside the areas shown.  All times on the map are Pacific time. The New York Times

A minor earthquake with a preliminary magnitude of 3.5 struck in Central California on Monday, according to the United States Geological Survey.

The temblor happened at 7:17 a.m. Pacific time about 6 miles northwest of Pinnacles, Calif., data from the agency shows.

As seismologists review available data, they may revise the earthquake’s reported magnitude. Additional information collected about the earthquake may also prompt U.S.G.S. scientists to update the shake-severity map.

Source: United States Geological Survey | Notes: Shaking categories are based on the Modified Mercalli Intensity scale. When aftershock data is available, the corresponding maps and charts include earthquakes within 100 miles and seven days of the initial quake. All times above are Pacific time. Shake data is as of Monday, March 2 at 10:20 a.m. Eastern. Aftershocks data is as of Monday, March 2 at 11:18 a.m. Eastern.

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US says Kuwait accidentally shot down 3 American jets

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US says Kuwait accidentally shot down 3 American jets

The U.S. and Israel have been conducting strikes against targets in Iran since Saturday morning, with the aim of toppling Tehran’s clerical regime. Iran has fired back, with retaliatory assaults featuring missiles and drones targeting several Gulf countries and American bases in the Middle East.

“All six aircrew ejected safely, have been safely recovered, and are in stable condition. Kuwait has acknowledged this incident, and we are grateful for the efforts of the Kuwaiti defense forces and their support in this ongoing operation,” Central Command said.

“The cause of the incident is under investigation. Additional information will be released as it becomes available,” it added.

In a separate statement later Monday, Central Command said that American forces had been killed during combat since the strikes began.

“As of 7:30 am ET, March 2, four U.S. service members have been killed in action. The fourth service member, who was seriously wounded during Iran’s initial attacks, eventually succumbed to their injuries,” it said.

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Major combat operations continue and our response effort is ongoing. The identities of the fallen are being withheld until 24 hours after next of kin notification,” Central Command added.

This story has been updated.

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