At the start of the week, US and European stock markets showed a decline amid new tariff threats from President Donald Trump, affecting investor sentiment.
Trading on Stock Markets
US and European equity futures eased, putting pressure on Asian stocks. Many investors remained optimistic, believing Trump’s new tariff threats were primarily rhetoric. A 30% tariff on most imports from the European Union and Mexico is set to take effect on August 1. In response, Germany warned of possible strong retaliatory measures should the tariffs be implemented.
Demand for Safe Assets
In light of the prevailing uncertainty, investors have shifted towards safer US government bonds, with the 10-year Treasury yield hovering around 4.41%. While Fed Chair Jerome Powell maintains a cautious view on rate cuts, pressure from the president for more rapid monetary easing is intensifying. The market is looking forward to the consumer price report that may reveal any inflationary effects from the tariffs.
Dollar and Commodities
In currency markets, the euro slightly dipped, while the US dollar showed mixed results. Gold attracted investor interest as a safe haven, experiencing a price increase. The commodity has risen over 25% year-to-date, reaching an all-time high. Anticipation for upcoming consumer and producer price data remains high.
New tariff threats from the US government significantly impact both stock and currency markets. Investors are advised to remain vigilant and monitor economic indicators and corporate results.