U.S. stock futures fell a bit, and people are buying more dollars and gold. This happened after President Donald Trump said he would add 25% tariffs on all steel and aluminum imports to the U.S. Futures for the S&P 500 and Nasdaq 100 went down about 0.2% on Tuesday. The dollar went up a little, and gold prices rose, hitting over $2,921 for the first time.
Asian stocks didn’t change much, with Australian and South Korean shares showing slight increases after a drop the day before. Japan’s markets were closed for a holiday, meaning no trading for U.S. Treasury bonds in Asia after quiet movements in U.S. yields. Hong Kong’s stock futures remained steady.
Trump’s new tariffs will apply to all countries, even major ones like Mexico and Canada, starting March 4, although Australia might be exempt. He plans to announce more tariffs this week on countries that tax U.S. imports.
Hartmut Issel from UBS Wealth Management told Bloomberg that we can’t ignore the tariffs. He suggests a mix of U.S. stocks, high-quality bonds, and gold to help protect against tariff risks.
Besides the trade situation, investors are also looking at important inflation data this week, along with Fed Chair Jerome Powell’s speech in Congress. Recent data showed expected inflation rates staying at 3%.
On Wall Street, technology stocks surged again. Nvidia’s stock jumped 15% over five days, and Meta Platforms rose for the 16th day. Steel companies like U.S. Steel Corporation and Alcoa also saw stock rises.
Hedge funds bought a lot of U.S. stocks last week, turning positive after better-than-expected earnings, making it the largest buying spree in three years. They bought the most in the tech sector.
On Monday, the S&P 500 rose 0.7%, and the Nasdaq 100 climbed 1.2%. The yield on 10-year Treasuries held steady at 4.5%. The Bloomberg Dollar Index also gained 0.2%, and gold went over $2,900 an ounce. Oil prices rose as concerns about a supply glut eased.
Despite the tariffs, stock prices have been doing well, but Deutsche Bank’s strategists warn that trade tensions could cause pullbacks. In the past, similar situations have led to quick but temporary sell-offs, often recovering before peace is reached. Stocks usually drop 6%-8% and take a few weeks to bounce back.
Christian Floro from Principal Asset Management noted that unpredictability in policies is a big risk for investors. To handle this environment, he recommends having a diverse portfolio to minimize risks and seize opportunities as situations change.
Leave a Reply