Stocks Claw Back Losses From Trump Tariff Threat: Markets Wrap

(Bloomberg) — US equity futures and Treasuries stabilized after a roller-coaster session triggered by President-elect Donald Trump’s first specific threats to limit global trading.

Contracts on the S&P 500 and Nasdaq 100 ticked higher after recovering from earlier declines. Treasuries steadied and the dollar, a beneficiary of isolationist policies, gave up early gains to trade flat.

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Trump vowed to place an extra 10% tariffs on Chinese imports and 25% levies on all products from Mexico and Canada. The measures are needed to clamp down on migrants and illegal drugs flowing across the US border, he said on his Truth Social Network.

“We’re just seeing the start of the volatility and the volatility is going to continue as the rhetoric continues,” said Justin Onuekwusi, CIO at St. James’s Place. “It is very difficult to assess if it is a threat, promise or negotiation tool.” 

European and Asian stocks fell, reflecting worries that Trump’s policies will hurt US exporters. The Mexican peso and Canadian dollar weakened.

Traders await FOMC minutes due later to gauge how inflation expectations are reading across to Federal Reserve policy. Policymakers cut the interest rate by 25 basis points at the meeting, a widely expected move that reflected perceived lower downside risks to activity and employment. 

The account of the Nov. 6-7 policy meeting, which took place a day after the US election, may disappoint those seeking enlightenment from policymakers on how they view rates under Trump, as it’s unlikely they discussed election results, according to Bloomberg Economics.

“One thing that will be a big hurdle to tariffs being imposed is if inflation expectations are starting to move up in the short term,” Onuekwusi said.

Tuesday’s market moves marked a partial unwind of the relief rally in the previous session on Trump’s nomination of Scott Bessent as his Treasury Secretary, a hedge fund manager with a Wall Street mindset.

While Bessent has at times suggested that Trump’s maximalist approach is a negotiation tactic, he signaled strong support for tariffs in an op-ed for Fox News on Nov. 15.

In the premarket, Eli Lilly rose after the Biden administration proposed a rule that would require the US government to cover weight-loss drugs through the Medicare and Medicaid systems. Leslie’s shares tumbled after the outdoor supplies and sporting goods company’s fourth-quarter sales that missed estimates. Zoom Video Communications shares fell on disappointing third-quarter results.

Key events this week:

• Fed minutes, US new home sales, consumer confidence, Tuesday
• US PCE, initial jobless claims, GDP, Wednesday
• Eurozone consumer confidence, Thursday
• US Thanksgiving holiday. Markets closed, Thursday
• Eurozone CPI, Friday
• ECB releases consumer expectations survey for October, Friday
• “Black Friday,” the traditional start of the US holiday shopping rush

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 7:16 a.m. New York time
• Nasdaq 100 futures rose 0.3%
• Futures on the Dow Jones Industrial Average were little changed
• The Stoxx Europe 600 fell 0.2%
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.3% to $1.0529
• The British pound rose 0.2% to $1.2593
• The Japanese yen rose 0.7% to 153.21 per dollar

Cryptocurrencies

• Bitcoin fell 1.2% to $92,549.29
• Ether fell 3% to $3,334.43

Bonds

• The yield on 10-year Treasuries was little changed at 4.28%
• Germany’s 10-year yield declined one basis point to 2.20%
• Britain’s 10-year yield advanced one basis point to 4.36%

Commodities

• West Texas Intermediate crude rose 1% to $69.62 a barrel
• Spot gold rose 0.4% to $2,634.42 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sujata Rao and Aya Wagatsuma.

©2024 Bloomberg L.P.