Stocks sell off, dollar gains as Trump plans 25pct tariffs on Japan, South Korea
Longer-dated USTreasury yields rose.
Trump on Monday began telling trade partners including Japan and South Korea that the higher UStariffs will start August 1.
Trump in April capped all of the so-called reciprocal tariffs with trading partners at 10 per cent until July 9 to allow for negotiations. Only two agreements, with Britain and Vietnam, have been reached.
"Trade, inflation and earnings are going to be the next three catalysts that will drive the market higher or lower, depending on how they unfold," said Adam Sarhan, chief executive of 50 Park Investments in New York.
"But markets like certainty, and today's news increases the level of uncertainty, hence the selloff," he said.
Tariffs are expected to increase prices and to slow down growth, though uncertainty over the ultimate policies may be a bigger drag as it leads businesses to postpone decisions.
S&P 500 companies next week are expected to begin reporting results on the second quarter.
The Dow Jones Industrial Average fell 422.17 points, or 0.94 per cent, to 44,406.36, the S&P 500 fell 49.37 points, or 0.79 per cent, to 6,229.98 and the Nasdaq Composite fell 188.59 points, or 0.91 per cent, to 20,412.52. U.S.-listed shares of Japanese automotive companies fell, with Toyota Motor down 4 per cent and Honda Motor off by 3.9 per cent.
Also, electric vehicle maker Tesla shares fell 6.8 per cent after CEO Elon Musk announced the formation of a USpolitical party named the "American Party."
MSCI's gauge of stocks across the globe fell 5.80 points, or 0.63 per cent, to 919.93. The pan-European STOXX 600 index closed up 0.44 per cent.
The yield on benchmark US10-year notes was last up 5.7 basis points on the day at 4.397 per cent. The interest rate sensitive two-year yield rose 1.9 basis points to 3.901 per cent.
The dollar's rise was most notable against the yen. It was up 1.09 per cent at 146.130. The euro slipped 0.57 per cent to US$1.172 having rallied over 13 per cent so far this year.
The dollar index, which measures the currency against six major counterparts, rose 0.517 per cent to 97.467, reaching a one-week high.
Minutes of the last Federal Reserve meeting are also due this week. Investors are weighing how many times the Fed is likely to cut interest rates this year after jobs data for June on Thursday showed that employers added more jobs than economists had forecast.
Oil prices rose as signs of strong demand offset the impact of a higher-than-expected OPEC+ output hike for August and concerns about possible tariff impacts.
Brent crude futures rose US$1.28, or 1.9 per cent, to settle at US$69.58. USWest Texas Intermediate crude gained 93 cents or 1.4 per cent, to settle at US$67.93.
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