President Trump’s new tariffs come into effect today against countries who have not reached new trade deals yet, but traders appear undaunted as US index futures are up 0.4%-0.7%, adding to yesterday’s US index gains of 0.2% to 1.2% led both times by the NASDAQ. Sentiment appears to be getting a boost from reports that, while semiconductors are potentially facing a 100% tariff, foreign production of companies who already produce chips in the US could be exempted.
Trump appears to be targeting the health care sector next, as he has been sending letters to drug companies demanding they cut their US drug prices to the lowest they charge internationally by the end of September. This could help to explain why Eli Lilly is down 7.6% premarket despite announcing strong earnings and raising guidance.
Once again, we are seeing wildly different reactions to earnings reports. Overnight and this morning, DoorDash and Airbnb reported results well above expectations, but the market reaction has varied between an 7.2% gain for DASH, and a 6.1% loss for ABNB. Insurers struggled with Manulife and Metlife both coming in short of expectations, but the reaction has been limited with both stocks down less than 2.0% aftermarket. Sun Life reports results after the close today.
In Europe today, the FTSE is down 0.8% today partially due to a 0.4% gain for the Pound. Although the Bank of England did cut its benchmark interest rate by 0.25% to 4.00%, the vote was very close (5-4), making additional rate cuts less certain.
Continental markets are having a strong day, with the DAX up 1.5% and the CAC up 1.1%. Talk of a potential Trump-Putin meeting on Ukraine may be helping sentiment there, although a 0.7% gain for Gold suggests traders are not all breaking out the champagne yet. Commodity action finds Crude Oil up 0.5% and Copper up 0.3%.