US stock futures showed significant decline following US President Donald Trump's announcement of new trade tariffs on China, Mexico, and Canada.
Stock Futures in Decline
Nasdaq 100 futures slumped by 2.7% on February 3, according to Finviz. Other US stock indexes also opened down: the Russell 2000 index fell by 3.2%, S&P 500 by 2%, and futures tied to Dow Jones decreased by around 1.5%.
Reasons for Future Declines
The US stock futures sell-off was prompted by President Trump's decision to impose trade tariffs on Canada, Mexico, and China, which are set to take effect on February 4. The tariffs include a 25% levy on imports from Canada and Mexico and 10% on those from China. "The market needs to structurally and significantly reprice the trade war risk premium," stated Deutsche Bank's head of FX research, George Saravelos. Wolfe Research head of US policy Tobin Marcus noted: "Markets may now need to take the rest of Trump's tariff agenda more literally."
Crypto Market Reaction
Cryptocurrency markets also took a hit, with total market capitalization dropping by more than 13%, losing $450 billion over the past 24 hours, according to CoinGecko. However, Bitwise's head of alpha strategies, Jeff Park, believes that Trump's trade war could eventually push Bitcoin prices higher due to a weakening dollar and lower US government securities yields.
The introduction of new trade tariffs led to a sharp decline in US stock futures and significant losses in the crypto markets. Experts believe this could have long-term implications for cryptocurrency growth.
