This report is from today’s TNC’s Daily Open, our international markets update. TNC Daily Open keeps investors informed on everything they need to know, no matter where they are.
The actual implementation of U.S. President Donald Trump’s 25% tariffs on Canada and Mexico and an additional 10% on China shows that he wasn’t just using them as a negotiation tool, as many had hoped. Since then, China and Canada have declared retaliatory tariffs, and Mexico has stated that it will respond on Sunday.
The United States may splinter international ties and geopolitical trade, but the economy and domestic consumers may suffer the most. Company executives in the retail and shipping sectors, which are key indicators of the economy’s state, voiced worries that the tariffs would cause prices to increase even in the coming days.
Investors in the markets were also alarmed. Every significant U.S. benchmark fell. The S&P 500’s gains from riding the wave of Trump’s election-day triumph are now gone. Tech stocks have suffered since January, when Trump took office. The levy on foreign imports is also beginning to resemble a tax on equities.
Investors in the markets were also alarmed. Every significant U.S. benchmark fell. The S&P 500’s gains from riding the wave of Trump’s election-day triumph are now gone. Tech stocks have suffered since January, when Trump took office. The levy on foreign imports is also beginning to resemble a tax on equities.
What To Note Today
Tariff Compromise?
The 25% tariffs imposed by U.S. President Donald Trump on goods imported from Canada and Mexico, along with an additional 10% tax on China, went into effect at midnight on Tuesday. According to U.S. Commerce Secretary Howard Lutnick on Tuesday, Trump will “probably” announce tariff compromise agreements with Canada and Mexico as early as Wednesday. Lutnick did, however, seem to rule out the idea that Trump would completely remove the tariffs.
Businesses Think Price Rises Are Likely
Business leaders say Trump’s tariffs may drive up prices within days. Maersk’s North American president warned of immediate inflationary effects, while Target’s CEO indicated consumers could see price hikes soon. This has raised concerns about potential stagflation in the U.S. economy, where rising prices coincide with slowing growth.
Markets Decline Due To Concerns Over Tariffs
Afraid of the tariffs’ impact on the economy, investors dumped off U.S. stocks on Tuesday. The Dow Jones Industrial Average fell 1.55%, the S&P 500 fell 1.22%, and the Nasdaq Composite was down 0.35%. The Stoxx 600 index in Europe experienced its largest daily decline since August, falling 2.14%. The automobile sector, one of the industries most likely to be impacted by the additional taxes, had a 5.7% decline in the Stoxx 600 basket of equities.
Election Advantages Wiped Out By The “Trump Bump”
The market “Trump bump” has vanished. The S&P 500 fell Tuesday and ended at 5,778.15, below the 5,782.76 mark on Election Day, November 5. This indicates that the index’s post-election gains are gone. The Russell 2000 small-cap index is down almost 8% after rising 5.84% on November 6. Since Trump took office in January, technology stocks have fallen more than 7%.
Analysts advise looking to Europe for stocks
Analysts pointed out that growing valuations and political risk in the U.S. market are disadvantages compared to Europe’s more stable geopolitical environment, indicating that Europe is the place for equities investors. The market and economy of Europe have some additional benefits over the United States.
Other News
This month alone has seen several geopolitical developments, including the implementation of U.S. tariffs on Canada, Mexico, and China; the alleged suspension of military aid to Ukraine by U.S. President Donald Trump; the release of weaker U.S. economic data; and the commitment by European leaders to increase defense expenditures. According to Quantum Strategy strategist David Roche, such occurrences can cause the dollar to lose its position as the haven of the foreign exchange market.
Jane Foley, head of FX strategy at Rabobank London, expects the British pound and Japanese yen to benefit in the current market. Meanwhile, Dominic Schnider of UBS Global Wealth Management suggests investors may favor higher-yielding currencies like the Australian dollar and the British pound.
