Stocks and commodities have been under heavy selling pressure overnight on fears that this week’s Trump Tariffs may have ignited a global trade war. Overnight, China responded with 34% tariff on all US goods it imports. This news particularly impacted Australia as its stock market fell 2.4% and the Australian Dollar plunged 3.6%. Commodities have also been crushed with Crude Oil down 6.7% and Copper down 5.7%. The Hang Seng fell 1.5%, the Nikkei fell 2.75%.
This morning finds US index futures down about 2.5%-2.6% which is less than they were down earlier on. The FTSE, CAC, and Dax are all down in the 3.6%-3.8% range while Italy’s MIB is down 5.8%.
The US 10-year treasury note yield has broken down below 4.00% and is currently trading near 3.90%. Fed Chair Powell is speaking today at 11:25 am EDT. In recent years, investors have seemingly become accustomed to the Fed and other central banks aggressively riding to the rescue whenever the economy or the markets hit the rocks, but so far this year, Powell has been non-committal. Investors may look to his comments for hints on what, if anything, the Fed may be planning to do should the situation worsen.
North American job numbers came in mixed. US Nonfarm Payrolls were much better than expected (228K vs street 135K) while Canada jobs were a lot worse than expected (-32K vs street +12K).
Currencies are all over the place today, indicating confusion and indecision among investors. In addition to the Australian Dollar selloff, the Loonie is down 0.9%, the Pound is down 0.7%, Gold is down 0.5% Silver is down 2.8% and the Euro is down 0.3%. Meanwhile, the Japanese Yen is up 0.4% and surprisingly in a risk off market, Bitcoin is up 0.9%.