U.S. futures pointed towards a lower Wall Street open on Monday as the latest salvo of threats in the U.S. tariff wars kept investors on edge, although there were some hopes this would prove to be mostly bluster by President Donald Trump. S&P 500 futures and Nasdaq futures both eased 0.3%. Earnings season kicks off this week with the major banks leading the pack on Tuesday. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. S&P companies are expected to have increased profits by 5.8% from the year-earlier period, down from an expectation of a 10.2% gain on April 1, according to LSEG IBES. Advertisement · Scroll to continue
Report This Ad MSCI's broadest index of world shares (.MIWD00000PUS), opens new tab dipped 0.1% with the pan-European STOXX 600 index (.STOXX), opens new tab last down 0.4%. Other regional indexes also declined, barring the UK's FTSE 100 .FTSE, which was up 0.4%. Trump on Saturday said he would impose a 30% tariff on most imports from the European Union and Mexico from August 1, even as they are locked in long negotiations. The EU said it would extend a suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement, though Germany's finance minister called for firm action if the levies went ahead. Advertisement · Scroll to continue German 10-year government bond yields briefly hit their highest since early April on Monday after settling back to 4.60%. Yields move inversely to price. "To use the biggest cliché in the book, it continues to be a rollercoaster ride for all of us following the trade story, even if the market has increasingly overcome its queasiness and ensured it has been well stocked up on motion sickness tablets," said Deutsche Bank strategist Jim Reid in a note to clients. A rise in Japanese government bond yields also added to upward pressure on borrowing costs elsewhere, said Jens Peter Soerensen, chief analyst at Danske Bank. JGB yields surged as concerns grew that an upcoming election could pave the way for increased fiscal spending. Chinese blue chips (.CSI300), opens new tab closed 0.1% higher as data showed annual export growth topped forecasts at 5.8% in June, even as exports to the U.S. fell almost 10%. Retail sales figures, industrial output and gross domestic product are due Tuesday. And it will suspend trade countermeasures that were due to kick in tomorrow after the White House said Europeans need to offer more.
PRESSURING POWELL In bond markets, Treasuries got a very marginal safety bid and 10-year yields held at 4.41% . Futures for the Federal Reserve funds rate edged higher as markets priced in a little more policy easing for next year. While Fed Chair Jerome Powell has signalled a patient outlook on cuts, Trump is piling up political pressure for more aggressive easing. White House economic adviser Kevin Hassett over the weekend warned Trump might have grounds to fire Powell because of renovation cost overruns at the Fed's Washington headquarters. Trump said on Sunday that it would be a great thing if Powell stepped down. U.S. consumer prices data for June are due on Tuesday and could finally start to show early upward pressure from tariffs, though retailers still have pre-levy inventory to draw on and some companies are absorbing the costs into margins.
