The US selling capped an uneven week in the market as Wall Street kept an eye on the Trump administration’s rollout of new tariff threats and looked ahead to the upcoming corporate earnings reporting season.
The administration had initially set Wednesday as a deadline for countries to make deals with the US or face heavy increases in tariffs. But with just two trade deals announced since April, one with the United Kingdom and one with Vietnam, the window for negotiations has been extended to August 1.
The initial rollout of Trump’s tariff policies earlier this year roiled financial markets. But Wall Street has been relatively stable in recent weeks, with stocks steadily rising to record levels. That suggests the market has mostly adjusted to the unpredictability of Trump’s rapidly shifting tariffs. Some market watchers, however, aren’t so sure.
The market’s response to Trump’s tariff escalation this week “has been surprisingly muted. Markets appear to believe that Trump will again back down,” Paul Ashworth, chief North America economist at Capital Economics, wrote Friday. “We are not so sure.”
Despite the uncertainty around tariffs, Wall Street has already come to accept a “base case” of 10 per cent tariffs across the board, said Eric Teal, chief investment officer at Comerica Wealth Management.
“To the extent that this gets extended, I think the market has priced a lot of that in,” he said.
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Trade policy aside, the market is now set to shift at least some of its focus on companies due to report quarterly earnings over the next few weeks.
Meanwhile, bitcoin remains near record highs amid bullish momentum across risk assets, and coincides with Nvidia’s surge to a $US4 trillion valuation. It also comes days before the US Congress’ Crypto Week on July 14, where lawmakers will debate a series of bills that could define the regulatory framework for the industry.
With AP, Reuters