Stocks Struggle as Trade War Jitters Spur Caution: Markets Wrap

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Stocks Struggle as Trade War Jitters Spur Caution: Markets Wrap

stock :: 2025-02-11 :: source - bloomberg

By John Viljoen and Margaryta Kirakosian

Image source: Bloomberg

(Bloomberg) -- Stocks struggled as the latest tariff news spurred caution among traders who are also looking ahead to testimony from Federal Reserve Chair Jerome Powell and key US inflation data.

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Europe’s Stoxx 600 index was steady, while US equity futures contracts declined and a gauge of Asian stocks dropped. Gold touched a fresh record high, while an index of the dollar held gains from Monday after President Donald Trump ordered tariffs on US imports of steel and aluminum.

The moves underscore how investors are struggling to gauge the potential flow-on effects from Trump’s actions for global trade, corporate earnings and inflation. The European Union said Tuesday it will respond to any tariffs the US might impose on it, escalating a potential transatlantic trade dispute.

“The best approach in terms of asset allocation is to find assets that can protect you,” said Christian Mueller-Glissmann, head of asset allocation research for Goldman Sachs, on Bloomberg Television. “The big challenge is that this is going to be much more difficult from here because the tariffs are very specific.”

On the UK monetary policy front, Bank of England rate-setter Catherine Mann said she voted for a bumper half-point interest-rate reduction at last week’s BOE meeting to “cut through the noise” after seeing more evidence of a weakening economy. The pound weakened before paring the move.

Trump on Monday set tariffs on steel and aluminum shipments from all countries, including major suppliers Mexico and Canada, effective March 12. The president earlier said he would announce reciprocal tariffs this week on countries that tax US imports.

Aside from the global trade picture, investors will also be focused on this week’s key inflation data and Federal Reserve Chair Jerome Powell’s testimony before Congress. Expected inflation rates over the next year and three years ahead were both unchanged in January at 3%, according to results of the New York Fed’s Survey of Consumer Expectations published Monday.

“The CPI data will be the most important this week,” said Viktor Hjort, global head of credit and equity derivatives strategy at BNP Paribas. “The risks are asymmetric, if inflation were to go higher — that’s worse for credit markets than the upside if inflation were to move lower.”

Treasury yields ticked higher, with the 10-year rising two basis points to 4.52%.

The weakness in Treasuries Tuesday “could easily be rationalized as position-paring ahead of a pretty important data print,” Hjort said.

Oil advanced from near its lowest levels this year as shrinking Russian production eased concerns over a glut. Gold set a fresh peak above $2,940 an ounce, before retracing some of that advance. Bullion has surged about 11% this year, setting successive records, as Trump’s disruptive moves on trade and geopolitics reinforce its role as a store of value in uncertain times.

Corporate Highlights:

BP Plc pledged major changes at its upcoming strategy update after reporting a sharp drop in profit, as the company seeks to reverse a prolonged period of under-performance that has now drawn in activist Elliott Investment Management.
UniCredit SpA failed to impress investors with a pledge to return more money over the coming years as Chief Executive Officer Andrea Orcel pursues takeovers in Italy and Germany.
Kering SA shares rose as investors took encouragement from better-than-expected profit and signs of stabilization at Gucci, its biggest brand, which has suffered in recent years from weaker demand.
Robinhood Markets Inc. is launching US equity options trading for UK customers on Tuesday, as the investment firm looks to expand into tax-free accounts in Britain soon.

Key events this week:

Fed Chair Jerome Powell gives semiannual testimony to Senate Banking Committee, Tuesday
Fed’s Beth Hammack, John Williams, Michelle Bowman speak, Tuesday
US CPI, Wednesday
Fed Chair Jerome Powell testifies to House Financial Services panel, Wednesday
Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
Eurozone industrial production, Thursday
US initial jobless claims, PPI, Thursday
Eurozone GDP, Friday
US retail sales, industrial production, business inventories, Friday
Fed’s Lorie Logan speaks, Friday

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 was little changed as of 9:57 a.m. London time
S&P 500 futures fell 0.3%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 0.4%
The MSCI Emerging Markets Index fell 0.4%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $1.0318
The Japanese yen was little changed at 151.96 per dollar
The offshore yuan was little changed at 7.3085 per dollar
The British pound was little changed at $1.2367

Cryptocurrencies

Bitcoin rose 0.7% to $98,038.79
Ether rose 1.6% to $2,706.93

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.52%
Germany’s 10-year yield advanced four basis points to 2.40%
Britain’s 10-year yield advanced two basis points to 4.48%

Commodities

Brent crude rose 1.1% to $76.74 a barrel
Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Rob Verdonck and Richard Henderson.

(An earlier version corrected sixth paragraph to reflect March 12 implementation date stated in White House orders. A White House official had previously said they would take effect March 4.)