Stocks, dollar drop as tariff talk dominates
Traders work on the floor of the New York Stock Exchange (NYSE) at the opening bell in New York City. Stock markets mostly fell on Friday. (Photo by CHARLY TRIBALLEAU / AFP)
LONDON, United Kingdom – Stock markets mostly fell while the dollar largely retreated Friday as international tensions over tariffs dominated sentiment.
Traders digested news also of Congress narrowly passing US President Donald Trump’s signature tax and spending bill that analysts argue risks ballooning national debt and wider inflation.
On tariffs, Trump said he planned to start sending letters informing trading partners of their import levies as soon as Friday, as negotiations to avoid higher US rates entered the final stretch.
READ: Trump says likely to start informing countries of US tariffs Friday
In Europe, EU stock markets fell, with sentiment hit by China moving forward with “anti-dumping” taxes of up to 34.9 percent on cognac and other brandy imported from the bloc if producers don’t voluntarily hike prices.
London ended the day flat.
Asian stock markets closed out the week mixed.
Oil prices extended losses, with OPEC and the cartel’s crude-producing allies expected this weekend to announce a rise to output.
The main focus heading into next week was on Trump’s tariff plans.
“We draw ever closer to Wednesday’s reciprocal tariff deadline, and thus traders are likely to grow jittery despite the tentative signals of a potential pathway to a deal,” noted Joshua Mahony, chief market analyst at Rostro trading group.
Governments around the world have fought to hammer out tariff deals with Washington after Trump unveiled a blitz of levies in early April.
He and his top officials have said several were in the pipeline, but only Britain and Vietnam have signed pacts.
China has agreed to a framework for it and the United States to slash tit-for-tat tolls and ship certain products.
The prospect that trading partners from Japan and South Korea to India and Taiwan could be hit with stiff tariffs fueled fresh worries about the global economy.
“While we are unlikely to see a repeat of volatility like we did in early April, when markets were at the peak of tariff-related turbulence, we could potentially see some selling pressure if we see the return of tit-for-tat trade tariffs,” said City Index and FOREX.com analyst Fawad Razaqzada.
Uncertainty leading up to next week’s cut-off tempered the positive lead from another record Thursday on Wall Street, where a forecast-busting US jobs report soothed worries about the world’s top economy.
The data dented the prospect of the Federal Reserve cutting interest rates at its July policy meeting, with bets now on two reductions before the end of the year — the first likely in September.
However, analysts suggested that all was not what it seemed, pointing to softness in the private sector.
“We think that private-sector hiring has stalled, and we may see sporadic layoffs in some industries in the coming months,” warned analysts at Japanese financial group MUFG.
“Despite the unemployment rate having fallen… the flow of potential workers that remained out of the labor force rose sharply in June, further highlighting the weak hiring environment.
“We continue to view labor demand as being fundamentally weak relative to the past several years,” they added.
Wall Street was closed on Friday for the US Independence Day holiday.
