Crude oil prices swung sharply on Monday. The price for a barrel of benchmark US crude topped $US74.50 in the morning before pulling back to $US72.36, down 0.2 per cent, after Mexico’s announcement of the pause on tariffs.
Trump himself warned Americans they may feel “some pain” from the tariffs, which he said would be “worth the price” to make America great again. He also said Sunday night that import taxes will “definitely happen” with the European Union and possibly with the United Kingdom as well.
Some on Wall Street remain sceptical about how long a trade war may last, especially considering how closely Trump pays attention to the stock market. An escalating trade war can cause sharp drops on Wall Street, as Monday morning quickly demonstrated, and “significant stock market volatility could lead to a change in approach,” said Solita Marcelli, chief investment officer, Americas, at UBS Global Wealth Management.
Constellation Brands, the company that sells Modelo and Corona beers in the United States, fell 2.9 per cent. Best Buy, which sells electronics made around the world, lost 2.8 per cent. Brown-Forman, which sells Jack Daniel’s and other alcohol in Canada, fell 3.2 per cent.
Instead of stocks and crypto, investors moved instead into longer-term US government bonds, which are seen as some of the safest possible investments. The resulting rally in their prices drove Treasury yields down.
The yield on the 10-year Treasury fell to 4.51 per cent from 4.55 per cent late Friday.
Loading
It’s a reprieve, at least temporarily, from a rise in longer-term Treasury yields that had shaken Wall Street in recent months. Yields had climbed in part on worries about just such tariffs from Trump, and the possible result of higher interest rates they could entail.
Short-term Treasury yields rose Monday as expectations waned for cuts to rates from the Fed. The yield on the two-year Treasury rose to 4.23 per cent from 4.21 per cent
Higher yields put pressure on all kinds of investments, but they’re particularly burdensome on stocks seen as the most expensive.
That puts the spotlight on companies like Nvidia and other winners of the artificial-intelligence boom. Nvidia fell 2.6 per cent and was one of the heaviest weights on the S&P 500.
Such AI superstars had already come under pressure last week, after a Chinese upstart said it had developed a large language model that could perform as well as big US rivals, but without having to use the most expensive, top-flight chips.
Trump’s tariffs took centre stage in a week where other events would typically take the spotlight, including a report on Friday showing how many workers US employers hired last month. A slew of profit reports are also due this week from Alphabet, Amazon and other highly influential companies.
In stock markets abroad, indexes fell 1.1 per cent in London, 1.3 per cent in Paris and 1.5 per cent in Frankfurt. In Asia, South Korea’s Kospi sank 2.5 per cent, and Japan’s Nikkei 225 fell 2.7 per cent.
AP
