Growing Tariff Threats Rattle World Markets

World stock markets have stabilized from Friday’s declines as traders await the next developments in the ongoing tariff war between the US and everyone else. With the three-month moratorium ending on Wednesday, the White House has indicated that letters should start going out today to trade partners threatening to bring back the higher tariffs on August 1st. President Trump has also apparently threatened any country aligning with the BRICS group, who is holding a summit meeting today, with an additional 10% tariff.

US index futures are trading flat to down 0.4% as US traders return from the long weekend. In Europe today, stocks are bouncing back with the FTSE up 0.1% and the Dax up 0.8%. The Eurozone reported stronger than expected retail sales (1.8% vs street 1.2%), helping stocks there.

The US Dollar is rallying on the weekend developments, gaining 0.4% against the Euro, Pound and Loonie, 0.6% against the Yen, 0.8% against the Aussie and 1.0% against Gold. 

The potential that a trade war could impact the global economy has dragged Copper down 2.2% so far today. Crude Oil, however, is holding steady despite OPEC+ announcing a larger production increase for August (+548K bbl/d vs previous +411K bbl/d).

Meanwhile, with the passage of the “Big Beautiful Bill” last week which is widely expected to add trillions of dollars to the US national debt, Elon Musk has formalized his break from President Trump, announcing plans to start a new political party. On this news Tesla shares are down 6.2% in premarket trading and back under $300.00.  

There are two central bank meetings this week. Australia is expected to announce a 0.25% interest rate cut, New Zealand is expected to remain on hold. Canada employment is due on Friday, China inflation is due Wednesday. Earnings season doesn’t start in earnest until July 15th.

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