Trump’s Tariff Threat Causes Stocks and Futures to Drop – Asia Market Wrap
Stocks sank alongside equity-index futures as Trump escalated trade tensions ahead of next week’s deadline for heavier tariffs.
A barometer of Asian equities fell 0.3%, with South Korean stocks leading with a 1.6% decrease. Trump said his administration may start sending letters to trading partners as early as Friday, setting unilateral tariff rates ahead of the July 9th deadline for discussions. Equity index futures in the US and Europe both fell by 0.3%. Gold gained 0.5%, while the Dollar fell 0.2%. There is no cash trading in Treasuries on Friday due to a holiday in the US.
Investors are waiting for the outcome of various trade agreements as Trump’s April tariffs are paused for 90 days to enable time for talks. Stocks have risen to new highs, as initial fears that the taxes would plunge the US into a recession have subsided. On Thursday, US job growth outpaced estimates, thus erasing bets on a July rate cut.
Treasuries sank and the Dollar surged Thursday, indicating that traders expect less pressure on the Fed to cut rates following the June jobs report. Swap traders saw essentially no possibility of a July Fed cut, compared to a 25% probability prior to the report. The chances of a transfer in September have dropped to roughly 70%.
