Ticking tariff timebomb unnerves markets

by Andre Janse van Vuuren and Anand Krishnamoorthy 

Stocks retreated at the start of a potentially volatile week as US trading partners rushed to finalize trade deals with the Trump administration ahead of a July 9 tariff deadline. 

S&P 500 futures fell 0.5% after cash equity markets were closed on Friday for the Fourth of July holiday. Tesla Inc. slumped more than 7% in premarket trading on concerns that Elon Musk’s bid to form a new political party could trigger backlash from President Donald Trump. European stocks were flat, while a gauge for Asian equities declined 0.7%.  

Trade tensions are back in view as the tariff deadline approaches, with Trump pledging to start issuing unilateral rates to dozens of countries in the coming days. Stocks had climbed to record highs — recovering from their April plunge when sweeping levies were announced — fueled by expectations that tariffs will be less severe than expected and signs that the US economy remains resilient.  

US officials earlier signaled Aug. 1 as the date for higher levies to kick in. Treasury Secretary Scott Bessent indicated some countries may be offered a three-week extension to negotiate.  

“I think there’s been too much relaxation,” Christian Mueller-Glissman, head of asset allocation research at Goldman Sachs Group Inc., told Bloomberg TV. “There’s this expectation that there’s a lot of offsetting factors. But if uncertainty picks up on the tariffs, and we start to see the first signs that in the hard data there’s some negative impacts, the market might question the Goldilocks pricing it currently has.” 

In bond markets, Japan’s 30-year yield surged 10 basis points to 2.96% on concerns that the outcome of this month’s upper house election may result in bigger fiscal spending. US Treasuries were little changed, with the 10-year yield at 4.34%.  

Metals fell and the yuan weakened after Trump said those aligning with the BRICS group of nations will face an additional 10% levy. The dollar rose 0.4%. 

BRICS members include Brazil, China, South Africa and India. Over the weekend, leaders agreed to continue talks on a cross-border payment system for trade and investment — a project they’ve been discussing for a decade. 

“Trump’s comments are a warning shot for emerging-market nations looking to go down the BRICS alignment path,” said Mingze Wu, a trader at StoneX Financial in Singapore. “You’d want the smoke to clear first before putting on any active trades right now — nobody likes political uncertainty.” 

Meanwhile, oil extended declines after OPEC+ agreed to a bigger-than-expected production increase next month, raising concerns about oversupply just as US tariffs fan fears about the demand outlook. Brent slid to 0.6% to $67.92 a barrel after falling 0.7% on Friday. 

Corporate Highlights: 

• President Donald Trump blasted Elon Musk’s bid to start a new political party, intensifying a feud between former allies and deepening investors’ concerns about implications for Tesla Inc. and other companies led by the world’s richest man. 
• France’s Capgemini SE plans to acquire IT outsourcing firm WNS Holdings Ltd. for $3.3 billion, beating rival suitors to a deal aimed at expanding its AI operations. 
• Shell Plc said its second-quarter trading results in both gas and oil will be significantly lower than the previous three months, in an indication of how major energy companies have navigated recent market volatility. 
• Nissan Motor Co. plans to sell about $5 billion in debt to help fund Chief Executive Officer Ivan Espinosa’s turnaround of the ailing automaker, part of a broader financing initiative to keep operations on track. 
• Billionaire Richard Li’s FWD Group Holdings Ltd. rose in its trading debut in Hong Kong after raising HK$3.5 billion ($442 million) in an initial public offering. 

Some of the main moves in markets: 

Stocks 

• The Stoxx Europe 600 was little changed as of 9:30 a.m. London time 
• S&P 500 futures fell 0.5% 
• Nasdaq 100 futures fell 0.6% 
• Futures on the Dow Jones Industrial Average fell 0.2% 
• The MSCI Asia Pacific Index fell 0.7% 
• The MSCI Emerging Markets Index fell 0.5% 

Currencies 

• The Bloomberg Dollar Spot Index rose 0.4% 
• The euro fell 0.3% to $1.1738 
• The Japanese yen fell 0.5% to 145.16 per dollar 
• The offshore yuan fell 0.2% to 7.1781 per dollar 
• The British pound fell 0.4% to $1.3591 

Cryptocurrencies 

• Bitcoin rose 0.2% to $108,925.25 
• Ether rose 1.1% to $2,575.36 

Bonds 

• The yield on 10-year Treasuries was little changed at 4.34% 
• Germany’s 10-year yield was little changed at 2.61% 
• Britain’s 10-year yield declined two basis points to 4.53% 

Commodities 

• Brent crude fell 0.6% to $67.92 a barrel 
• Spot gold fell 0.8% to $3,310.61 an ounce 

This story was produced with the assistance of Bloomberg Automation.