(Bloomberg) — US stock futures retreated Friday after the latest threat on tariffs from the Trump administration took the shine off a record rally for the S&P 500.
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Contracts for the US benchmark fell 0.6% after the gauge ended the trading week at a fresh all-time high, with payrolls data affirming the economy’s resilience. Trump dialed up trade tensions after Thursday’s close, warning partners he may start setting levies of as much as 70% unilaterally as soon as today.
Europe’s Stoxx 600 dropped 0.4% to pare some losses, after Bloomberg reported that a draft US-Swiss trade accord contained assurances about tariffs on pharma exports. Gold rose 0.3% as investors sought havens. The dollar dipped. US stocks and Treasury markets were closed for the July 4 holiday.
Equity markets have rallied sharply since April’s tariff-related volatility. Still, some investors remain cautious as uncertainties surrounding the trade war and its potential impact on the US economy and corporate earnings persist.
“There’s a little bit of doubt creeping in, especially after the bump up this week,” said Neil Wilson, investor strategist at Saxo UK. “Today’s a good day to take a little bit of risk off. But I don’t think there’s a fundamental shift, it’s all on the margins at the moment.”
What Markets Live Strategists Say:
“It would take a shocking set of trade outcomes to overwhelm the slew of good news we’ve recently had. All the more so, given that the bullishness of institutional investors has been tempered by constant threats, leaving them relatively underexposed to a market at record highs.”
— Mark Cudmore, Markets Live Executive Editor
The S&P 500’s surge has put it on the verge of triggering a sell signal, according to Michael Hartnett of Bank of America Corp.
The strategist advised that investors consider trimming their holdings once the index climbs beyond 6,300, a level just 0.3% above where it closed on Thursday. He also reiterated that bubble risks are mounting into the summer, especially following the House’s approval of a $3.4 trillion fiscal package featuring tax cuts.
“Overbought markets can stay overbought as greed is harder to conquer than fear,” Hartnett wrote in a note.
European bond markets firmed on Friday, but UK gilts made little headway after a selloff on Wednesday that was driven by fiscal concerns. The yield on 10-year UK government debt dropped one basis point to 4.53%, compared with 4.45% at the close on Tuesday. The pound was flat.
In signs of diplomatic and trade tensions escalating between China and the European Union, Beijing said it intends to cancel part of a two-day summit with EU leaders planned for later this month.
China also imposed anti-dumping duties on European brandy for five years, while exempting major cognac makers that meet a price commitment. Remy Cointreau SA briefly slipped before trading higher. Pernod Ricard SA pared losses.
In commodities, oil dropped in the lead-up to an OPEC+ meeting that’s set to deliver another oversized production hike, threatening to swell a glut forecast for later this year.
Corporate Highlights:
Air France-KLM will initiate the process of raising its minority stake in Scandinavian airline SAS AB to 60.5%, as it looks to extend consolidation in European aviation.
India’s regulator has temporarily barred Jane Street Group LLC from accessing the local securities market, dealing a severe hit to the US firm that allegedly made $4.3 billion in trading gains in the South Asian nation in less than two years.
French train maker Alstom SA has won a €2 billion ($2.4 billion) order from New York’s Metropolitan Transportation Authority, which is in the process of modernizing its fleet.
Frasers Group Plc warned Hugo Boss AG it will vote against any dividends, as the British retailer owned by billionaire Mike Ashley exerts its influence after years of building a stake in the German fashion house.
A European insurance group backed by Apollo Global Management Inc. offered to acquire a specialist UK insurer that’s partly owned by a company controlled by South African billionaire Johann Rupert for about £5.7 billion ($7.8 billion).
Airlines across Europe have canceled hundreds of flights on the second day of an air traffic controllers’ strike in France that’s causing chaos just as the busiest travel season of the year gets underway.
Banco Sabadell SA has called two shareholders meetings as it seeks to approve an extraordinary dividend after agreeing to sell it’s UK unit — part of its broader attempt to block a takeover by larger rival BBVA SA.
Country Garden Holdings Co.’s sales slid again in June, with the developer faring worse than peers, as a lack of policy support dampened demand.
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.6% as of 9:48 a.m. New York time
Futures on the Dow Jones Industrial Average fell 0.6%
The Stoxx Europe 600 fell 0.4%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.1775
The British pound was little changed at $1.3645
The Japanese yen rose 0.3% to 144.47 per dollar
Cryptocurrencies
Bitcoin fell 1.5% to $108,306.81
Ether fell 2.7% to $2,531.36
Bonds
The yield on 10-year Treasuries was little changed at 4.35%
Germany’s 10-year yield declined two basis points to 2.59%
Britain’s 10-year yield declined one basis point to 4.53%
Commodities
West Texas Intermediate crude fell 1% to $66.35 a barrel
Spot gold rose 0.3% to $3,337.49 an ounce
This story was produced with the assistance of Bloomberg Automation.
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