The long threatened 25% US tariffs against Canada and Mexico and 10% tariffs against Canadian Energy and China began at midnight this morning. The announcement yesterday, which sent US indices down 1.5% to 2.6%, has continued to impact stocks around the world overnight. Tokyo fell 1.2%, and European trading this morning finds Frankfurt down 2.4%, Paris down 1.5%, Milan down 2.8% and London down 0.6%.
US index futures are down 0.4% to 0.7% with the NASDAQ the weakest and the Dow the relatively strongest, same as yesterday, as investors await news on potential retaliatory measures from the impacted trade partners. President Trump is scheduled to speak to Congress this evening with the potential for more comments on trade and other contentious areas including international relations with the Ukraine, Europe and multilateral organizations like NATO or the UN, and domestic issues.
Accelerating risk-off sentiment can clearly be seen in currency action, where Bitcoin is down 2.6%, while Gold is up 1.2%. The US Dollar is down in currency trading, enabling the Canadian Dollar, Euro, Pound and Mexican Peso to climb 0.2% to 0.4%. The US 10-year treasury note yield continues to slide back toward 4.15%. Commodity action finds Crude Oil down 1.4% with OPEC+ continuing with a planned production increase for April, and Copper down 0.6%.
It’s a quiet day for economic data, tomorrow brings US ADP Payrolls and Service PMI reports. Today’s US retailer earnings have been mixed. Target ($2.41 vs street $2.27) and Best Buy ($2.58 vs street $2.40) beat expectations, but Target suggested sales softened in February.