Stocks and dollar subdued as US shifts tariff goalposts
The United States is close to finalising several trade agreements in the coming days and will notify other countries of higher tariff rates by July 9, President Donald Trump said on Sunday, with the higher rates to take effect on August 1.
"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on August 1 you will boomerang back to your April 2 tariff level," US Treasury Secretary Scott Bessent told CNN.
Trump in April announced a 10 per cent base tariff rate on most countries and higher "reciprocal" rates ranging up to 50 per cent, with an original deadline of this Wednesday.
However, he also said levies could range in value from "maybe 60 per cent or 70 per cent", and threatened an extra 10 per cent on countries aligning themselves with the "Anti-American policies" of the BRICS group of Brazil, Russia, India and China.
With very few actual trade deals done, analysts had always suspected the date would be pushed out, though it was still not clear if the new deadline applied to all trading partners or just some of them.
Investors have grown somewhat used to the uncertainty surrounding US trade policy and the initial market reaction was cautious. S&P 500 futures fell 0.30 per cent and Nasdaq futures were down 0.45 per cent in early European trading hours.
Europe's benchmark STOXX index rose 0.30 per cent while MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.50 per cent.
The muted market reaction to the latest tariff twist showed that investors were becoming more attuned to the cycle of dramatic lurches in US trade policy under Trump, analysts said.
"The market now feels as if it has a handle on which countries or types of products will be most affected," said Scott Chronert, investment strategist for Citigroup.
"That doesn't mean every scenario is priced in – it's still set up for episodes of volatility. As always, people will sell first and ask questions later."
OPEC+ SQUEEZE SHRUGGED OFF
Safe-haven bonds were better bid, with 10-year Treasury yields down almost two basis points at 4.34 per cent.
Major currencies were mixed as the dollar index nudged up 0.40 per cent to 97.29. The euro held at US$1.1726, just short of last week's top of US$1.1830, while the dollar was 0.50 per cent firmer at 145.38 yen.
The export-exposed Australian dollar was again used as a proxy for trade risk and fell 0.80 per cent to US$0.6500.
The US dollar has been undermined by investor concerns about Trump's often chaotic tariff policy and what that might do to economic growth and inflation.
The same worries have kept the US Federal Reserve from cutting rates and minutes of its last meeting should offer more colour on when the majority of members might resume easing.
It is a relatively quiet week for Fed speakers, with only two district presidents on the docket, while economic data is also sparse.
The Reserve Bank of Australia is widely expected to cut its rates by a quarter point to 3.60 per cent at a meeting on Tuesday, the third easing this cycle, and markets imply an eventual destination for rates of 2.85 per cent or 3.10 per cent.
New Zealand's central bank meets on Wednesday and is likely to hold rates at 3.25 per cent, having already slashed by 225 basis points over the past year.
In commodity markets, gold slipped 0.90 per cent to US$3,303 an ounce, though it did gain almost two per cent last week as the dollar fell.
Oil prices shrugged off the impact of output hikes from the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+.
Brent reversed earlier losses and was up 0.70 per cent to US$68.77 a barrel, while US crude recovered 0.10 per cent to US$67.08 per barrel.
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