Wall Street and European share futures slipped slightly in early Asian trading on Monday after former U.S. President Donald Trump announced plans to impose a 30% tariff on most imports from the European Union and Mexico starting August 1. Though markets remained relatively calm, the move heightened trade tensions and raised concerns of retaliatory action from Europe, despite the EU’s decision to continue suspending countermeasures in hopes of a negotiated solution. Germany’s finance minister, however, called for firm retaliation if the tariffs go ahead.
Investors have become somewhat desensitized to Trump’s unpredictable policy announcements, and market reactions were muted. Analysts suggest this could indicate either market resilience or dangerous complacency. Major indices such as the MSCI Asia-Pacific Index dipped slightly, and Japan’s Nikkei remained flat. Meanwhile, Chinese blue-chip stocks edged higher thanks to stronger-than-expected export growth, though exports to the U.S. fell by nearly 10%.
In Europe, the threat of tariffs triggered sharper reactions, with EUROSTOXX 50 and DAX futures falling 0.6% and 0.7% respectively. S&P 500 and Nasdaq futures also slid 0.4% ahead of a new earnings season. Analysts forecast modest earnings growth for U.S. companies, down from earlier expectations. Bank of America noted that while the bar for corporate performance is low, only a slight beat is anticipated in this quarter’s results.
On the political front, Trump has also been increasing pressure on Federal Reserve Chair Jerome Powell, even suggesting he might have grounds for dismissal over Fed building renovation costs. Trump further claimed Powell stepping down would be beneficial, amid ongoing calls for rate cuts. Markets are watching closely as U.S. inflation data due this week could offer insight into the effects of tariffs on consumer prices, while figures on retail sales and producer prices will help gauge broader economic health.
Elsewhere, the euro dipped slightly, and the dollar strengthened against the Mexican peso, though Mexico’s President expressed optimism over a potential trade deal. Bitcoin hit a new record above $121,000, while gold prices rose marginally as investors sought safe-haven assets. Oil prices also firmed on speculation that Trump may announce tougher sanctions on Russia, which could affect global crude supply and energy markets.
Source: Reuters