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PrintGLOBAL MARKETS-Trump tariff plan rattles stocks, dollar; Treasury yields jump
BY Reuters | TREASURY | 01/31/25 03:27 PM EST(Updates to afternoon U.S. trading)
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US stocks dip after tariff plans confirmed
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Dollar gains versus euro, yen
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10-year Treasury yields jump
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Oil prices tick down
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Gold hit record
By Lawrence Delevingne and Harry Robertson
BOSTON/LONDON, Jan 31 (Reuters) -
Wall Street
stocks slipped
and the dollar gained, on Friday after President Donald Trump announced tariffs on Canada, Mexico and China, capping a volatile week for markets. The U.S. will impose 25% tariffs on Canada and Mexico, along with 10% on China, White House spokeswoman Karoline Leavitt said on Friday, but she declined to say whether there will be exemptions.
Reuters earlier quoted sources familiar with the tariff deliberations as saying that Trump would announce tariffs on Canadian and Mexican imports on Saturday but delay collection of the duties until March 1 and offer a limited process for certain imports to be exempted.
The Dow Jones Industrial Average fell 0.56%, the U.S.
S&P 500 stock index lost 0.25%, while the tech-heavy
Nasdaq was flat, set to end the week slightly lower.
The Nasdaq had dropped 2.9% on Monday as the surging popularity
of cheap Chinese AI model DeepSeek shook investor confidence in
U.S. tech stocks and sent chipmaker Nvidia
TARIFFS LOOM
In currency markets, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.3% Options contracts showed investors were preparing for potential swings in the Canadian dollar and Mexican peso . The Canadian dollar was last down 0.17% and the peso was 0.3% higher in choppy trading.
Trump is threatening punitive duties if Canada and Mexico do not take stronger action to halt the flow of the deadly opioid fentanyl and precursor chemicals into the United States, as well as illegal migration.
"There is big market complacency in terms of the manner that the market could digest the tariffs," said Michael Nizard, multi-asset chief investment officer at Edmond de Rothschild.
The euro and sterling both declined about 0.2% versus the dollar .
Data on Friday showed the U.S. personal consumption expenditures price index rose 0.3% last month after an unrevised 0.1% gain in November, in line with economists' expectations.
"Disinflation continues, and should continue given underlying trends," David Alcaly, lead macroeconomic strategist at Lazard Asset Management, said in an email.
"Concerns about recent bumpiness are overblown and have more to do with the potential for inflationary policy change like tariffs than with current conditions."
Benchmark 10-year Treasury yields jumped following the Trump tariff plans and were last up 6.1 basis points to 4.573% . Data on Thursday showed U.S. economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Federal Reserve - which held interest rates on Wednesday - to lower borrowing costs only gradually this year. Euro zone short-dated government bond yields were on track to record their biggest weekly drop in months, after a raft of weak economic data led traders to ramp up their bets on future rate cuts from the European Central Bank. The ECB cut rates on Thursday and signaled more easing was coming. Oil prices edged lower ahead of the new tariffs against Canada and Mexico. U.S. crude fell 0.48% to $72.38 a barrel and Brent dropped to $76.77 per barrel, down 0.13% on the day.
Gold prices surpassed
the key $2,800 mark for the first time on Friday, fuelled by a rush to safety. It was last trading at $2,796.
(Reporting by Lawrence Delevingne in Boston and Harry Robertson in London. Additional reporting by Iain Withers and Ankur Banerjee. Editing by Rod Nickel and Nick Zieminski)
