US President Donald Trump has set Aug 1 as the date when trading partners need to reach agreement with the United States in order to avert major tariffs.
While Washington has reached tentative deals with several key countries, dozens of economies – including key commercial partners like Canada — had yet to secure US tariff accords.
Major US indices began the day strongly, with both the S&P 500 and Nasdaq surging above closing highs. But stocks were unable to hold on to gains, with all three indices finishing in the red.
Some of the caution was due to a squaring of trading positions ahead of Friday’s jobs data, which could lead to market volatility, said Steve Sosnick of Interactive Brokers.
Facebook parent Meta surged 11.3% and Microsoft jumped 4% after both companies reported strong quarterly results that underscored their strength in artificial intelligence. Microsoft’s valuation topped US$4 trillion for part of the day before retreating.
“There was no follow through” to the broader market from the strong tech results, Sosnick said.
Europe was sluggish, meanwhile, London sliding just into the red by the close while eurozone indices Paris and Frankfurt both lost around one percent.
“As Wall Street braces for a slew of further tech earnings and key economic data releases, volatility looks set to rise – particularly with the looming tariff deadline tomorrow, on 1st August, casting a shadow over sentiment,” said Fawad Razaqzada, market analyst with FOREX.com.
Trump said Thursday he would hold off a planned tariff hike on Mexican products and instead keep duties at existing levels for 90 days after speaking with his counterpart Claudia Sheinbaum.
After initially greeting trade deals, investors are also reevaluating Trump’s trade agreements, most recently with South Korea, the latest to set a 15% tariff on goods.
“I think the market has kind of come to grips with the idea that 15% is the new standard but maybe there’s a little bit of a realisation that 15% tariffs are not actually all that market friendly,” Sosnick said.
Health was the weakest sector in the S&P 500, with pharmaceutical companies selling off after Trump threatened using “every tool in our arsenal” if the sector doesn’t lower prices. Pfizer, Merck and Bristol-Myers Squibb all dropped more than 2%.
In the foreign exchange market, the yen retreated against the dollar after the Bank of Japan decided not to hike interest rates, while lifting economic growth and inflation costs. It also cautiously welcomed the country’s trade deal with the United States.
Tokyo and Washington last week announced a deal that will see Japanese shipments to the United States – excluding steel and aluminum – hit with a 15% tariff.