Global stocks climb despite threat of targeted tariffs
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The news: Global equities continued their rise on Monday, on the back of signs that certain electronics goods like smartphones may not face the steepest levies under US President Trump’s tariffs on Chinese imports.
The numbers: Futures tracking the S&P 500 and Nasdaq 100 were up 1.57% and 1.93% respectively, while the Stoxx 600 Europe was up 2.32%, and the FTSE 100 rose 2.1% in mid afternoon trading.
Earlier in the day Hong Kong’s Hang Seng Index climbed 2.4%, while benchmarks in Japan and South Korea added roughly 1%.
The US dollar extended its slide on Monday, while sterling is nearing its highest level since October.
The context: The Trump administration’s decision to pause tariffs on consumer tech products seems to have calmed investors’ nerves, despite both US Commerce Secretary Howard Lutnick and Trump denying that there will be a tariff “exception” for electronics, and that the products are “just moving to a different tariff ‘bucket.’” Lutnick said that new tariffs on products that were temporarily exempted on Friday will be included in forthcoming levies tied to semiconductors.
Monday’s Stoxx 600 Europe increase came as Goldman Sachs cut its 12-month forecast for the index to 520 from 570, trimming the index for the second time this month. Goldman added that it "anticipated more downgrades," warning that US tariffs and a stronger euro could hurt corporate Europe's earnings.
Former US Treasury Secretary Janet Yellen warned that investors appear to be shunning dollar-based assets in a CNBC interview on Monday, "I don't think we are seeing dysfunction in the sense of liquidity completely drying up in the markets," Yellen said of the rise in Treasury yields during last week's market selloff. "But a pattern suggestive of a loss of confidence in US economic policy and the safety of bedrock assets is really very worrisome." Yellen also described the Trump administration’s policy as chaotic.
The sources: Reuters, WSJ, Capital Brief
