Today's Edition
London (AFP)
Major stock markets diverged and the dollar largely steadied Monday after President Donald Trump's latest trade war salvos that saw him threaten to hit the European Union and Mexico with 30% tariffs.
Trump's move followed his warnings last week of potential 50% levies on copper and Brazilian goods, 35% on Canadian goods, and a possible 200% charge on pharmaceuticals.
While observers warn the measures could deal a hefty blow to the global economy, investors are largely optimistic that governments will hammer out agreements before the White House's August 1 deadline.
Eurozone stock markets declined in midday trading Monday after leading Asian indices closed mixed.
London climbed with Britain no longer part of the European Union, while comments from Bank of England governor Andrew Bailey hinting at more cuts to UK interest rates boosted sentiment.
"Investors are lurching from hopes that Trump's (tariff) threats are just a big negotiating tactic, to fears that his impatience will turn more vengeful and big hikes will come into force in August," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Traders were awaiting news following Trump's meeting due Monday with NATO chief Mark Rutte in Washington after the president teased a "major statement" on Russia's war in Ukraine, with senior Republicans preparing an arsenal of sanctions against Moscow.
The prospect of additional sanctions on Russian crude sent oil prices climbing 1.5%.
Meanwhile bitcoin struck a record-high above $123,000.
Tariffs reaction
Regarding tariffs, Trump on Saturday cited Mexico's role in illicit drugs flowing into the United States and a trade imbalance with the European Union.
The move threw months of painstaking talks with Brussels into disarray.
European Commission chief Ursula von der Leyen has insisted the bloc still wants to reach an accord -- and on Sunday delayed retaliation over separate US duties on steel and aluminium as a sign of goodwill.
EU officials threatened in May to impose tariffs on US goods worth around 100 billion euros ($117 billion), including cars and planes, should talks fail.
Heading into Brussels talks with EU trade ministers Monday, the bloc's trade chief Maros Sefcovic said despite Trump's latest threat he "felt" Washington was ready to continue negotiating -- and he planned to speak with his US counterparts later in the day.
Analysts pointed out that the levies against Mexico and Canada come even after Trump agreed a trade deal with the two during his first administration.
Tensions, meanwhile, have eased between the United States and China.
Official data Monday showed Chinese exports jumped more than expected in June after Washington and Beijing agreed a tentative deal to lower swingeing levies on each other.
That included a 32.4% surge in shipments to the United States, having dropped in May.
Traders are also keeping a nervous eye on the Federal Reserve as Trump continues to berate boss Jerome Powell for not cutting interest rates soon enough, saying Sunday "I hope he quits", and adding "He should quit".
Reports also said the president's allies were targeting the Fed chief over his handling of an expensive renovation at the bank's headquarters, with some suggesting they were building a case to have him removed over it.
However, strategists warned that such a move would bring the independence of the central bank into question and send US Treasury yields soaring and the dollar plunging.
