Today, the US stock market closed lower, influenced by rising concerns over trade wars after President Trump announced potential tariffs ranging from 25% to 40% on various countries, including South Korea and Japan. The S&P 500 index fell by approximately 1%, while Tesla saw a decline of over 6% amid worries regarding company prospects following Elon Musk's announcement of a new political party.
The US stock market experienced a downturn today, primarily driven by heightened trade war concerns and an announcement from President Trump regarding impending tariffs. This uncertainty cast a shadow over market performance, prompting notable declines in major companies and indices.
Major News
President Trump took to social media to disclose the first draft of tariffs aimed at South Korean and Japanese goods, which are expected to impact 14 countries. A representative from the University of Chicago stated that additional communications regarding tariffs are anticipated in the coming days. In contrast, European Union officials do not expect news of tariff impositions today, as negotiations for a permanent agreement are ongoing, maintaining a 10% tariff temporarily until August 1.
Scott Pelley, appearing on CNBC, mentioned that discussions with China are scheduled in the coming weeks, indicating a busy period for trade-related announcements in South Korea. Over the weekend, Trump threatened an additional 10% tariff on nations participating in the BRICS summit that oppose American interests. This announcement came during the BRICS summit, where these nations have been showing signs of diversifying away from the dollar.
Experts highlight that, despite the tariff news, there is significant uncertainty regarding their actual implementation. Market reactions have been notably muted compared to responses during the initial tariff announcements in early April. Forex.com's Pavlina Czajda noted that the potential for renewed trade disputes remains high. Furthermore, the market observed a notable rise in long-term interest rates compared to short-term rates as the focus shifts back to tariff conflicts. The anticipated deadline for tariff exemptions has been indirectly extended, suggesting that without this delay, the economic impact could have been far more severe.
Jones Trading's Mike O'Rourke remarked that the market continues to doubt the likelihood of Trump following through with the original tariff plans announced in April. Despite tariff-related fluctuations, the labor market remains stable, and inflation is currently at manageable levels. Nonetheless, the Federal Reserve is cautiously monitoring how tariffs might influence inflation over the coming months, preparing to analyze detailed information from the upcoming FMC meeting.
In energy markets, Saudi Arabia surprised the market by announcing price increases for key crude oil grades for Asian customers, leading to a rise in oil prices.
Tomorrow's Economic Indicators
| Time | Indicator |
|---|---|
| 19:00 ET | US UA NFI Non-Farm Small Business Index |
| 20:15 ET | US Johnson Redbook Weekly Sales Index |
| 20:30 ET | US Expectations of Inflation |
| TBD | US 3-Year Treasury Auction |
| NasDaq | S&P 500 |
| Dow Jones | Won/Dollar |
Overall, today's market experienced a slight downturn due to the renewed trade war concerns ignited by President Trump's tariff announcements. As we look toward tomorrow, economic indicators will be closely scrutinized for insights into market performance and inflation expectations. The ongoing trade discussions and anticipated data releases could play a crucial role in shaping market sentiment in the days to come.
