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14.07.2025 02:48 PM
Wall Street and European equity indices opened the week in the red, following losses across Asian markets on Monday. Investors are reacting to the latest bout of trade war rhetoric from the US, though many believe it may be a pressure tactic rather than a firm commitment.
On Saturday, US President Donald Trump announced plans to impose 30% tariffs on most imports from the European Union and Mexico starting August 1. The statement, coming amid prolonged negotiations with both sides, stirred unease across global markets.
Brussels emphasized that retaliatory steps are on hold until August, allowing room for a diplomatic solution. Meanwhile, Germany's finance minister said the EU must be ready to take decisive action if Washington's threats materialize.
Although investors are no strangers to Trump's erratic style, the market response was relatively subdued. The US dollar remained largely unchanged against the euro, while equity losses were contained.
The MSCI Asia Pacific Index excluding Japan dipped by 0.1%, while Japan's Nikkei stayed flat. In China, the blue-chip index rose by 0.2% on the back of surprisingly strong export data.
June data showed total exports from China rose by 5.8% year-over-year, beating expectations despite a nearly 10% drop in shipments to the US. Investors are now focused on Tuesday's release of key figures on GDP, industrial output, and retail sales.
European markets responded to fresh threats of new trade barriers from the US with visible unease. EUROSTOXX 50 futures slipped by 0.6%, DAX fell by 0.7%, while the UK's FTSE remained unchanged, holding steady.
Futures on the S&P 500 and Nasdaq declined by 0.4%. Investors are gearing up for the beginning of earnings season, with the spotlight on major banks. Key reports are due as early as Tuesday.
According to analysts at LSEG IBES, S&P 500 companies are projected to grow profits by 5.8% in the second quarter compared to the same period last year. That is notably below the 10.2% forecast issued back in April. BofA warns profit growth could slow to 4%, down from 13% in the previous quarter.
US Treasuries continue to attract demand as a safe haven, though yields on 10-year notes remain moderate at 4.41%. Fed funds futures have edged higher, reflecting expectations for a moderate monetary easing path next year.
Federal Reserve Chair Jerome Powell maintains a wait-and-see stance on interest rate cuts. Meanwhile, Donald Trump is ramping up pressure, calling for more aggressive moves to support the economy. White House advisor Kevin Hassett said over the weekend that renovation costs for the Fed's headquarters could become a reason for Powell's resignation.
Amid renewed tariff talk, the euro eased slightly to 1.1675, retreating from its recent high of 1.1830. The US dollar fell by 0.1% against the yen to 147.35 but remained flat against the dollar index, holding at 97.882.
The US currency climbed by 0.3% against the Mexican peso, reaching 18.6730. The move was driven by confidence from Mexican President Claudia Sheinbaum that trade talks with Washington will conclude successfully before the August deadline.
The leading cryptocurrency continues its ascent to historic highs. For the first time ever, Bitcoin topped the $120,000 mark, reaching an all-time high of $121,207.55.
Amid lingering market jitters, gold rose by 0.1% to $3,359 per troy ounce. Investors continue to view the metal as a reliable asset in times of uncertainty.
Global oil benchmarks posted modest gains: Brent crude rose by 0.2% to $70.49 per barrel, while US West Texas Intermediate (WTI) added 0.1% to settle at $68.55.
European stocks began the week on a downbeat note. Fresh threats from Donald Trump to impose tariffs on imports from the EU and Mexico weighed on investor sentiment, particularly in the auto sector.
The pan-European STOXX 600 index fell by 0.6% to 544.3 points. Most regional indices were in the red, with the exception of the UK's FTSE 100, which gained 0.2%.
Europe's auto sector dropped by 1.4%, while retail stocks declined by 1%. Both industries were particularly vulnerable to renewed trade barrier concerns.
Amid broad declines, shares of pharmaceutical giant AstraZeneca rose by 1.9%. Investors welcomed news that its drug Baxdrostat successfully completed late-stage trials in patients with resistant hypertension.
