11/07/2025
Global Markets Waver as Tariff Escalations and Policy Uncertainty Test Investor Sentiment
Equity markets showed signs of strain following a renewed escalation in global trade tensions. U.S. stock futures declined, with S&P 500, Nasdaq 100, and Dow Jones contracts all down around 0.5%, as President Trump imposed a 35% tariff on Canadian imports and floated broader blanket tariffs ranging from 15% to 20% on most trading partners, up from the 10% currently in effect. These measures, set to begin August 1, were communicated through a series of letters sent to various governments, including Canada, the EU, and Brazil. While markets had largely discounted the earlier tariff threats, the formal announcements appear to have reignited investor caution. All components of the Magnificent Seven saw premarket losses, and sentiment weakened further amid expectations of retaliatory moves and uncertainty surrounding the administration’s next steps.
Despite the tariff concerns, investor appetite for risk remains evident. U.S. equities had reached new record highs earlier in the week, driven by strong economic data and optimism ahead of earnings season. This was accompanied by a continued rally in Bitcoin, which surged past $118,000 amid increasing institutional demand and perceived policy support. Treasury yields rose at the long end of the curve, with the 10-year yield up 3 basis points to 4.38%, reflecting firmer growth expectations and the impact of upcoming deficit-financed government spending. Meanwhile, the 2-year yield remained steady at 3.88%.
Currency markets reflected divergent macro signals. The dollar strengthened broadly, with the yen notably weaker, while the British pound continued its slide, falling 0.3% against the greenback after UK GDP contracted for a second consecutive month. Traders maintained expectations that the Bank of England would cut rates again in the near term.
In commodities, oil markets showed mixed signals. Brent crude recovered from Thursday’s drop to trade near $69 per barrel, while WTI hovered around $67. Price action was influenced by a confluence of supply-side developments: Saudi Arabia exceeded its OPEC+ output quota in June, contributing to oversupply concerns, while Trump announced a forthcoming “major statement” on Russia, signaling potential for tougher sanctions that could disrupt global oil flows. ING noted that any sanctions targeting Russian oil could significantly tighten markets. Despite broader macro uncertainties, seasonal demand strength and physical market tightness continue to lend support to oil prices in the short term. OPEC+ discussions of a possible pause in production hikes beyond August further underscore the balancing act within the group amid growing fears of a year-end supply glut.
IMPORTANT DISCLAIMER
The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
