US Stock Futures Drop as Trade Nerves Spur Caution: Markets Wrap

(Bloomberg) — Stocks struggled as the latest tariff news spurred caution among traders who are also looking ahead to testimony from Federal Reserve Chair Jerome Powell and key US inflation data.

S&P 500 and Nasdaq 100 futures retreated after President Donald Trump ordered tariffs on US imports of steel and aluminum. Europe’s Stoxx 600 index was held back by tumbling mining and travel shares and a gauge of Asian stocks dropped. Gold touched a fresh record high, while an index of the dollar held gains from Monday. Treasury yields rose.

The moves underscore how investors are struggling to gauge the potential flow-on effects from Trump’s actions for global trade, corporate earnings and inflation. The European Union said Tuesday it will respond to any tariffs the US might impose on it, escalating a potential transatlantic trade dispute.

“The best approach in terms of asset allocation is to find assets that can protect you,” said Christian Mueller-Glissmann, head of asset allocation research for Goldman Sachs, on Bloomberg Television. “The big challenge is that this is going to be much more difficult from here because the tariffs are very specific.”

Trump on Monday set 25% tariffs on steel and aluminum shipments from all countries, including major suppliers Mexico and Canada, effective March 12. The president earlier said he would announce reciprocal levies this week on countries that tax US imports. 

Aside from the global trade picture, investors will also be focused on this week’s key inflation data and Federal Reserve Chair Jerome Powell’s testimony before Congress. Expected inflation rates over the next year and three years ahead were both unchanged in January at 3%, according to results of the New York Fed’s Survey of Consumer Expectations published Monday.

“The CPI data will be the most important this week,” said Viktor Hjort, global head of credit and equity derivatives strategy at BNP Paribas. “The risks are asymmetric; if inflation were to go higher, that’s worse for credit markets than the upside if inflation were to move lower.”

Treasury yields were higher across the curve, with the 10-year climbing three basis points to 4.53%.

“The selloff in Treasuries today — which is a moderate one — could easily be rationalized as positions paring ahead of a pretty important data print,” Hjort said.

UK Interest Rates

On the UK monetary policy front, Bank of England rate-setter Catherine Mann said she voted for a bumper half-point interest-rate reduction at last week’s BOE meeting to “cut through the noise” after seeing more evidence of a weakening economy. The pound weakened before paring the move.

Before last week, Mann was seen as the BOE’s most hawkish rate-setter and was the only member of the Monetary Policy Committee not to back either of the previous two reductions of the cutting cycle.

Oil advanced from near its lowest levels this year as shrinking Russian production eased concerns over a glut. Gold set a fresh peak above $2,940 an ounce, before retracing some of that advance. Bullion has surged about 11% this year, setting successive records, as Trump’s disruptive moves on trade and geopolitics reinforce its role as a store of value in uncertain times.

Corporate Highlights:

• Coca-Cola Co.’s profit beat Wall Street expectations as shoppers paid higher prices for the company’s sodas, energy drinks and juices.
• Travelers Cos Inc. announced a preliminary estimate of catastrophe losses of $1.7 billion pretax or $1.3 billion after-tax related to the California wildfires.
• BP Plc pledged major changes at its upcoming strategy update after reporting a sharp drop in profit, as the company seeks to reverse a prolonged period of under-performance that has now drawn in activist Elliott Investment Management.
• UniCredit SpA failed to impress investors with a pledge to return more money over the coming years as Chief Executive Officer Andrea Orcel pursues takeovers in Italy and Germany.
• Kering SA shares rose as investors took encouragement from better-than-expected profit and signs of stabilization at Gucci, its biggest brand, which has suffered in recent years from weaker demand.
• Robinhood Markets Inc. is launching US equity options trading for UK customers on Tuesday, as the investment firm looks to expand into tax-free accounts in Britain soon.

Key events this week:

• Fed Chair Jerome Powell gives semiannual testimony to Senate Banking Committee, Tuesday
• Fed’s Beth Hammack, John Williams, Michelle Bowman speak, Tuesday
• US CPI, Wednesday
• Fed Chair Jerome Powell testifies to House Financial Services panel, Wednesday
• Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
• Eurozone industrial production, Thursday
• US initial jobless claims, PPI, Thursday
• Eurozone GDP, Friday
• US retail sales, industrial production, business inventories, Friday
• Fed’s Lorie Logan speaks, Friday

 

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.3% as of 7:19 a.m. New York time
• Nasdaq 100 futures fell 0.4%
• Futures on the Dow Jones Industrial Average fell 0.2%
• The Stoxx Europe 600 was little changed
• The MSCI World Index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.2% to $1.0324
• The British pound was little changed at $1.2366
• The Japanese yen fell 0.2% to 152.27 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $97,817.5
• Ether rose 0.9% to $2,687.93

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.53%
• Germany’s 10-year yield advanced five basis points to 2.41%
• Britain’s 10-year yield advanced three basis points to 4.48%

Commodities

• West Texas Intermediate crude rose 1.4% to $73.34 a barrel
• Spot gold fell 0.2% to $2,901.47 an ounce

This story was produced with the assistance of Bloomberg Automation.

 

–With assistance from Rob Verdonck and Richard Henderson.

©2025 Bloomberg L.P.