US Stock Futures Fall, Dollar Gains on Tariff Jitters: Markets Wrap

Equity-index futures retreated and the dollar strengthened after President Donald Trump raised trade tensions, hinting at higher tariffs on most partners.

Contracts for the S&P 500 and European stocks fell 0.2% after Trump said Thursday he plans to impose blanket levies of 15% or 20%. The current blanket tariff rate is 10%. The Canadian dollar weakened after Trump said he will impose 35% levy on some goods from the country. A gauge of the dollar rose 0.2% and the yen fell. Bitcoin extended its record rally, jumping to over $118,000.

Asian shares rose 0.3% after Goldman Sachs Group Inc. strategists raised their forecast for the region’s stocks, excluding Japan, citing a more favorable macro environment and lower tariff risk. Trump is also planning to make a “major statement” on Russia and is mulling the use of sanctions.

“The latest news of a higher tariff rate on Canada and potentially others as well has seen risk getting pared back,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group Ltd.

Tariff tensions have increased recently as Trump pushed ahead with his plans to impose levies on various trading partners in a bid to remake the global trade, which he says wasn’t favorable to the US. Even so, investors have been piling into stocks - the S&P 500 closed at a record Thursday - in a sign traders are shifting their focus from concerns about lower growth and higher inflation to preparing for the upcoming earnings season.

The levy on Canada is a blow to Prime Minister Mark Carney’s bid to avoid punishing levies on goods sold to the US. The tariff level would take effect from Aug. 1.

The announced rate is an increase from the current 25% levy on Canadian imports not covered by the trade deal negotiated between the US, Canada and Mexico, which do not face additional tariffs. That exclusion would remain unchanged, according to a official, who spoke on condition of anonymity to discuss the matter.

“Markets are likely to be concerned about further escalations given that Canada has retaliated before,” said Fiona Lim, a senior strategist at Malayan Banking Bhd in Singapore. “Given that US dollar has fallen substantially in the first half of the year, we could be seeing some unwinding of short US dollar positions amid intermittent tariff announcements.”

Trump’s moves signal no retreat from his flagship economic policy. Investors are having a “tariff fatigue,” said David Chao, a global market strategist at Invesco Asset Management.

“There’s just been so much policy overload, with constant updates, delays and new announcements that is creating a confusing environment,” Chao said.

The president has spent the week sending missives to trading partners, informing them of new rates that will kick in on Aug. 1 if they cannot negotiate better terms. Letters to members of the European Union are also expected.

Meanwhile, the yen was the worst performer among the Group-of-10 currencies, weakening to as low as 147.18 a dollar.

“Investors now appear to be lining up to sell currencies that will face relatively higher tariffs if trade deals fail to get signed,” said David Forrester, a senior strategist at Credit Agricole CIB in Singapore.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 6:48 a.m. London time

• Nasdaq 100 futures fell 0.2%

• The MSCI Asia Pacific Index rose 0.4%

• Japan’s Topix rose 0.5%

• Australia’s S&P/ASX 200 was little changed

• Hong Kong’s Hang Seng rose 2%

• The Shanghai Composite rose 0.9%

• Euro Stoxx 50 futures fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.2% to $1.1681

• The Japanese yen fell 0.5% to 146.94 per dollar

• The offshore yuan rose 0.2% to 7.1679 per dollar

• The British pound fell 0.1% to $1.3562

Cryptocurrencies

• Bitcoin rose 4.2% to $118,410.78

• Ether rose 7.4% to $3,028.89

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.36%

• Japan’s 10-year yield was little changed at 1.495%

• Australia’s 10-year yield advanced five basis points to 4.33%

Commodities

• Spot gold rose 0.3% to $3,334.15 an ounce

• West Texas Intermediate crude rose 0.5% to $66.88 a barrel

This story was produced with the assistance of Bloomberg Automation.