Orlando, FL – The S&P 500 and NASDAQ experienced a decline after reports emerged that US President Donald Trump is advocating for a minimum 15-20% tariff on imports from Europe, particularly after both indexes reached new highs late last week.
Despite this, Wall Street and many global benchmarks saw gains throughout the week. This was largely due to positive US economic data that seemed to offset growing uncertainties surrounding trade, including Trump’s increasing criticism of Federal Reserve Chairman Jerome Powell.
Key market movements for the week include:
- The S&P 500, NASDAQ, and MSCI expected to influence global indexes by Friday. Large investments in tech are anticipated, though the S&P 500’s technology sector dropped 2% for the week, despite a 55% gain post-release.
- The Japanese yen fell to its lowest level since early April, nearing 150.00 yen per dollar.
- Bitcoin reached a new high of over $123,000, though it dipped 1% this week after a 9% surge the previous week, which isn’t entirely surprising.
- Platinum continued its impressive rise, increasing by 2% to reach an 11-year peak, with over 50% growth in just two months.
The trading week, filled with volatility, ended on a somewhat stable note. Again, Trump’s tariff discussions are central in investors’ minds regarding major trade partners.
According to the Financial Times, Trump’s proposal for a minimum EU tariff reaffirms that global trade tensions persist, which could hinder growth and spur inflation.
In the broader context of trade, Trump’s conflict with Brazil is something to keep an eye on next week, particularly as Treasury Secretary Scott Bescent visits Japan over the weekend.
On Friday, economists from Fitch raised the projected effective US tariff rate from 14.1% to 19.4%. There remains uncertainty on who will bear the cost of these tariffs, but it’s worth noting that the collection of this magnitude isn’t overly burdensome.
Next week, attention will also shift towards financial reports from over 80% of S&P 500 firms, combined with policy decisions from the European Central Bank, which will likely influence corporate revenues in the US.
This week’s notable chart highlights Japan’s interest rate situation in the context of upcoming significant Senate elections.
The Bank of Japan is currently dealing with an inflation-adjusted policy rate close to -3%. They aim to raise prices, although it’s a complicated process.
The impending elections might open avenues for public spending and tax reductions, potentially affecting the finances of developed nations and putting further pressure on the yen.
However, long-term bond yields are already at historic highs. Rising rates and increased bond yields could negatively affect growth—perhaps even quite seriously.
Policy makers find themselves somewhat constrained.
Here are some interesting reads from this week:
- American Budget Blindfolds and the Disabled – James K. Galbraith
- For the Euro to Go Global, the EU Must Align Ambition with Action – Sinzia Alcidi
- The British Billionaire Tax Debate – Dan
- Who Will Benefit from Dollar Dominance? – Mona Ali
- Trump’s Tariff Threat Against Brazil Could Be Politically Beneficial – Andre Pagrillini
What should we expect from the market on Monday?
- The Japanese market’s response to Senate elections
- June inflation figures for Taiwan
- The Q2 CPI inflation report for New Zealand
- June’s Canadian PPI inflation data
The insights shared here reflect my personal views. They do not represent any specific news outlet.
