European Stocks to Take Worst of Trump’s Tariff Threat
Stoxx 50 futures are down 1.2%, outpacing declines in US contracts and Asian stocks after President Donald Trump proposed new levies on eight European countries over Greenland. The drop in FTSE futures is more measured as the index will benefit from its larger exposure to the defense sector that often outperforms when geopolitical tensions escalate. Miners should also benefit from gains across most of the metals complex.
The dollar weakens versus all its G-10 peers having initially seen a small bid against currencies from targeted nations. There were murmuring of the so-called Sell America doing the rounds last week after the Trump administration renewed its spat with the Federal Reserve and a standoff with NATO countries won’t assuage those concerns. The Swiss franc has emerged as the FX haven of choice, rising 0.5% against the greenback.
There will be no cash trading in Treasuries due to a holiday in the US although futures imply a twist steepening move. German shorter-dated bonds also look set to outperform as Schatz futures climb, presumably as traders bet the potential hit to growth could put more ECB easing back on the table. Buxl futures are flat as the long end will likely be held back by expectations of additional borrowing by European governments to fund increased defense spending. There is also likely some spillover from the sharp drop in longer-dated JGBs after reports of a possible cut to food tax renewed fiscal concerns. Japanese 30-year yields are up over 10 bps.(asd)
Sumber: Bloomberg
