Global stock markets showed mixed trends on Monday as investors reacted to President Donald Trump’s announcement of tariffs on all steel and aluminum imports.
Stock Market Performance:
- European Markets: The Stoxx 600 index gained 0.3%, marking its eighth consecutive weekly rise, the longest rally since March 2024. However, mining stocks faced pressure due to Trump’s tariff declaration.
- US Markets: Stock futures in the US edged higher, indicating a recovery after last week’s 1% decline in the S&P 500.
- Asian Markets: A benchmark index for Asian stocks recorded its biggest weekly drop, reflecting investor caution over the potential trade war escalation.
Key Corporate Moves:
Shares of BP Plc surged 6.7% following reports that a leading activist investor had acquired a stake, aiming to drive higher profitability and operational efficiency.
Currency & Bond Market Reaction:
- The US dollar strengthened against major global currencies, including the Canadian dollar and the Japanese yen, amid expectations that increased tariffs could fuel inflation and constrain the Federal Reserve’s ability to cut interest rates.
- 10-year US Treasury yields remained stable, reflecting investor wait-and-watch sentiment ahead of key economic data releases.
Trump’s Tariff Plan & Market Sentiment:
- Trump is expected to announce a 25% tariff on steel and aluminum imports, applying to all countries. However, the timeline for implementation remains unclear.
- The announcement comes ahead of Federal Reserve Chair Jerome Powell’s congressional testimony, where investors seek insights into future monetary policy.
- Speculation is also growing over Trump’s possible introduction of reciprocal tariffs on imports from multiple countries.
Analysts remain divided over the market impact of Trump’s tariffs. Mohit Kumar from Jefferies International noted, “Markets are becoming less reactive to Trump’s tariff announcements. We anticipate short-term volatility, but the long-term impact may not be as severe as feared. However, Europe could be the next target.”
US Market Outlook:
Despite last week’s downturn, some investors appear optimistic, interpreting Trump’s tariff stance as a negotiation strategy rather than a definitive policy shift. Phillip Wool, Head of Portfolio Management at Rayliant Global Advisors, commented, “US traders largely view Trump’s tariff threats as a bargaining tool, which is why the equity market’s reaction has been relatively muted.”
Federal Reserve & Economic Indicators:
- Jerome Powell’s semi-annual testimony will provide key insights into the Fed’s stance on interest rate policy.
- US Nonfarm Payrolls data indicated moderate job growth in recent months, suggesting a stable labor market.
- Upcoming inflation data will play a crucial role in determining market expectations for the next Fed rate decision.
Commodity Market Trends:
- Investors remain cautious, waiting for further clarity on Trump’s tariff policies.
- Aluminum and copper prices remained largely stable in London trading, while gold hit a record high, benefiting from increased market uncertainty.
Key Market Events to Watch This Week:
✔ China’s retaliatory tariffs on US imports come into effect – Monday
✔ European Central Bank President Christine Lagarde testifies before the European Parliament – Monday
✔ US Inflation Data (CPI) and Powell’s Fed Testimony to influence market direction
Conclusion:
Trump’s tariff announcement has sparked fresh concerns over global trade, impacting stock markets and commodity prices. However, analysts suggest that investors are increasingly viewing such moves as negotiation tactics rather than immediate threats. As key economic events unfold this week, markets are expected to remain volatile, with traders closely monitoring US inflation data, Federal Reserve signals, and potential international trade responses.
news source:- bloomberg
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