Stocks Steady, Dollar Firms as U.S. Eases Auto Tariffs Amid Market Jitters

Markets opened Tuesday on a cautious yet slightly positive note after the U.S. announced a softening of auto tariffs, easing concerns among global automakers. The move, seen as a response to industry pressure, aims to reduce duties on foreign parts used in U.S.-made vehicles while avoiding stacking tariffs on fully imported cars. While S&P 500 and European futures inched up 0.1%, investors remained wary ahead of a busy week packed with earnings and key U.S. economic data, including GDP and job reports.

Currency trading was muted in Asia due to Japan’s public holiday, but the U.S. dollar gained ground broadly, most notably against the Canadian dollar, which softened after Canadian election results showed the Liberals holding on to power without a majority. Despite the easing of some tariffs, the dollar has not seen a strong rebound, while the euro’s 5% monthly rise marks its best performance in nearly three years. Meanwhile, the greenback’s fall against the Swiss franc was the steepest in a decade.

Tensions with China continued to weigh on sentiment after Treasury Secretary Scott Bessent warned that it was Beijing’s responsibility to de-escalate. China has granted limited tariff exemptions but resisted broader stimulus efforts, gambling on U.S. concessions. Analysts at J.P. Morgan warned of deeper supply chain disruptions ahead, citing a 42% plunge in Chinese shipments to the U.S. over the past 10 days—an alarming sign of potential long-term trade decoupling.

Outside of the geopolitical and macro backdrop, markets also braced for a flood of earnings reports. Major firms including Adidas, General Motors, and Coca-Cola are scheduled to release results Tuesday, with tech giants like Apple, Microsoft, Amazon, and Meta following later in the week. Commodities pulled back, with gold down 1% and Brent crude slipping to $65.21 per barrel, while U.S. Treasuries remained flat in quiet Asian trading.

Source: Reuters