LONDON, Feb 3 (Reuters) - Alun John, EMEA breaking news correspondent specializing in finance and markets, provides an overview of upcoming activity in U.S. and global markets.
Investors across Europe and Asia are reacting to President Donald Trump's announcement of higher tariffs imposed on major U.S. trading partners. Trump has introduced a 25% tariff on Mexican and most Canadian imports, and a 10% tariff on Chinese goods, set to take effect on Tuesday.
This news has resulted in U.S. S&P 500 futures down 1.7% and Nasdaq futures down 2.2% during mid-morning in Europe, with notable impacts seen in currency markets. Various currencies, including the Canadian dollar, euro, Mexican peso, and China's yuan, are experiencing significant declines against the dollar.
The immediate market responses are considered unexpected by some, considering Trump's well-known affinity for tariffs. The current reaction can be attributed to the larger-than-anticipated scale of the tariffs announced.
George Sarevlos from Deutsche Bank remarked that the repercussions of these tariffs could lead to economic recessions in some affected regions and have broad negative implications for the global economy. Analysts from Barclays have compared the magnitude of the current tariffs to those imposed during Trump's previous administration, highlighting a substantial difference.
Auto stocks have notably plummeted amidst concerns, as manufacturers had relocated production to Mexico to facilitate access to the U.S. market. Optimism earlier in the year centered around the hope that market pressure might prompt Trump to reconsider his tariff strategy, but his recent statements indicate otherwise.
As negotiations unfold, there is cautious anticipation regarding potential talks with Canadian and Mexican leaders. Nevertheless, skepticism looms amidst uncertainties surrounding the outcome. Trump's rhetoric towards the European Union, hinting at tariffs and trade disputes, adds another layer of tension to global markets.
Key events influencing U.S. markets later today include updates on tariff discussions, earnings reports from companies like Tyson Foods and Cabot, and insights from Fed's Bostic on the economy.