(Bloomberg) — Investor sentiment soured ahead of President Donald Trump’s tariff deadline, weakening US stocks and Asian equity futures.
Contracts for share benchmarks in Japan, Australia and Hong Kong all declined. The S&P 500 fell 0.4% on Thursday, erasing an initial advance on tech earnings that sent Microsoft Corp above $4 trillion in market value.
Apple Inc. shares rose in after-market trading following a sales beat, while those for Amazon.com Inc. fell as its outlook underwhelmed. Treasuries traded in a narrow range Thursday, gold climbed and the dollar strengthened for a sixth session.
The moves were a sign that concern over tariffs and growth has begun to outweigh the optimism linked to artificial intelligence that has supported mega-cap tech stocks. While AI continued to underpin long-term bullishness, investors were now bracing for potential trade disruptions as the US and key partners weighed new levies.
“While we expect equities to advance over the next 12 months, investors should be mindful of potential market swings in the coming weeks,” said Mark Haefele at UBS Global Wealth Management. “We think capital preservation or phasing-in strategies can be effective in navigating near-term volatility.”
Trump is set to sign an executive order imposing new tariff rates on trading partners that take effect Friday in Washington. He has struck deals with the European Union, the UK, Japan and South Korea, and unilaterally set rates on India and Brazil. The US extended Mexico’s current tariff rates for 90 days to allow more time for talks.
The US president sent letters to 17 of the largest pharmaceutical companies in a bid to lower prices, weakening their shares Thursday. Trump is also asking bank chief executive officers for their pitches on monetizing mortgage giants Fannie Mae and Freddie Mac, including a major public offering of stock, according to people familiar with the matter.
The yield on 10-year Treasuries was little changed at 4.37% Thursday. A stronger greenback saw the yen weaken past 150 per dollar. The weaker yen followed comments from Bank of Japan Governor Kazuo Ueda were seen as less hawkish than expected.
In Asia, traders will be on the lookout for jobs data in Japan, inflation in Indonesia and S&P Global manufacturing PMIs for Japan, Malaysia, South Korea and Taiwan. Elsewhere, Hong Kong will begin implementing licensing regime for stablecoin issuers.
Jobs Data
The market’s attention will soon turn to Friday’s jobs report for July, which is forecast to show companies are becoming more deliberate in their hiring. Employment likely moderated after a June increase, while the unemployment rate is seen ticking up to 4.2%.
In the run-up, the Fed’s preferred measure of underlying inflation accelerated in June to one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of rates.
The core personal consumption expenditures price index rose 0.3% from May. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year. The data also showed inflation-adjusted consumer spending edged up last month.
“Inflation remains sticky and justifies the Fed’s decision to keep rates unchanged at Wednesday’s meeting,” said Clark Bellin at Bellwether Wealth. “The stock market doesn’t need rate cuts in order to move higher and has already posted strong gains so far this year without any rate cuts.”
S&P 500 futures were little changed as of 7:07 a.m. Tokyo time Hang Seng futures fell 0.2% S&P/ASX 200 futures fell 0.7% Currencies
The Bloomberg Dollar Spot Index rose 0.2% The euro was little changed at $1.1418 The Japanese yen was little changed at 150.76 per dollar The offshore yuan was little changed at 7.2103 per dollar The Australian dollar was little changed at $0.6423 Cryptocurrencies
Bitcoin fell 0.2% to $116,285.83 Ether fell 0.5% to $3,715.51 Commodities
West Texas Intermediate crude rose 0.3% to $69.45 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
