(Bloomberg) — US stock index futures fell while the dollar and gold rallied in a sign investors are retreating from risk after President Donald Trump imposed 25% tariffs on all US imports of steel and aluminum.
Contracts for the S&P 500 and Nasdaq 100 both declined, while an index of the dollar was higher after gaining ground on Monday. Support for haven assets briefly pushed gold above $2,940 Tuesday for the first time. Hong Kong and mainland China stocks fluctuated. Markets in Japan are closed for a holiday.
The moves are the latest sign investors are struggling to distinguish threat from action within Trump’s tariffs, while also gauging the potential flow-on effects for global trade, corporate earnings and inflation. While tariffs on China have gone into effect, uncertainty over more levies have sparked fresh concerns retaliatory measures will intensify a global trade war.
“The tariffs are not something that we will completely dismiss or ignore,” said Hartmut Issel, head of APAC equities and credit for UBS Wealth Management, speaking on Bloomberg Television. A mixed allocation of US stocks, high-grade bonds and gold “should give us a proxy against all of these tariff risks,” he said.
Trump set tariffs on steel and aluminum shipments from all countries, including major suppliers Mexico and Canada, from March 4, but said he would consider an exemption for Australia. The president earlier said he would announce reciprocal tariffs this week on countries that tax US imports.
Aside from the global trade picture, investors will also be focused on this week’s key inflation data and Fed Chair Jerome Powell’s testimony before Congress. Expected inflation rates over the next year and three years ahead were both unchanged in January at 3%, according to results of the New York Fed’s Survey of Consumer Expectations published Monday.
“Inflation data, Powell’s congressional testimony, and tariffs are poised to drive the market story,” said Chris Larkin at E*Trade from Morgan Stanley. “If the S&P 500 is going to break out of its two-month consolidation, it may need a respite from the types of negative surprises — like DeepSeek, tariffs, and consumer sentiment — that have tripped it up over the past few weeks.”
The whipsawing trade in Chinese equities follows a rally this year helped along by fresh demand for technology stocks that has lifted a gauge of Hong Kong tech companies around 17% this year.
“We have rallied a lot,” Jason Lui, head of APAC equity and derivative strategy, BNP Paribas, said on Bloomberg Television regarding Chinese stocks. The uplift from DeepSeek, a Chinese generative AI alternative, comes just weeks before next month’s National People’s Congress in China, where policy initiatives are typically disclosed, he said.
“DeepSeek bought us some time. It allows investors to rethink Chinese tech valuations and it also gives time for Chinese policymakers to rethink some of the potential measures as well.”
The S&P 500 rose 0.7% Monday while the Nasdaq 100 climbed 1.2%. The yield on 10-year Treasuries was little changed at 4.5%. The Bloomberg Dollar Spot Index gained 0.2%. Oil advanced from near its lowest levels this year as shrinking Russian production eased concerns over a glut.
The resilience of stocks in the face of tariffs may invite further trade escalations, making equity pullbacks likely, according to Deutsche Bank AG strategists including Binky Chadha.
They noted these pullbacks require the same playbook as for geopolitical shocks, which have historically seen sharp but short-lived selloffs, with equities typically bottoming even as the event continues and recouping losses before any de-escalation.
In such scenarios, equities would typically weaken 6%-8%, moving lower for three weeks before gaining strength for three weeks.
Key events this week:
Fed Chair Jerome Powell gives semiannual testimony to Senate Banking Committee, Tuesday
Fed’s Beth Hammack, John Williams, Michelle Bowman speak, Tuesday
US CPI, Wednesday
Fed Chair Jerome Powell testifies to House Financial Services panel, Wednesday
Fed’s Raphael Bostic and Christopher Waller speak, Wednesday
Eurozone industrial production, Thursday
US initial jobless claims, PPI, Thursday
Eurozone GDP, Friday
US retail sales, industrial production, business inventories, Friday
Fed’s Lorie Logan speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 11:13 a.m. Tokyo time
Australia’s S&P/ASX 200 rose 0.1%
Hong Kong’s Hang Seng was little changed
The Shanghai Composite fell 0.2%
Euro Stoxx 50 futures were unchanged
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0301
The Japanese yen was little changed at 152.02 per dollar
The offshore yuan was little changed at 7.3127 per dollar
Cryptocurrencies
Bitcoin rose 0.5% to $97,915.67
Ether rose 1% to $2,691.69
Bonds
Commodities
West Texas Intermediate crude rose 0.4% to $72.58 a barrel
Spot gold rose 1.2% to $2,942.34 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Rita Nazareth and Rob Verdonck.
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