Wall Street futures rose in Asia on Monday after the White House exempted smartphones and computers from “reciprocal” U.S. tariffs. However, gains were limited as President Donald Trump warned that tariffs could still be imposed at a later date.
Trump told reporters on Sunday that new tariffs on semiconductors would be announced within a week, with a decision on phones expected soon.
While the exemption of 20 product types, which make up 23% of U.S. imports from China, seemed like a win for manufacturers, the shifting tariff policies left investors uncertain. Analysts remain cautious about the long-term impact.
“The recent policy back-and-forth has led some to feel relieved, but not us,” said Bruce Kasman, head of economics at JPMorgan. “A 10% universal tax is still a massive shock, and a 145% tax on China is prohibitive. Trade between the world’s two largest economies can’t be stopped without widespread damage. We continue to predict a 60% chance of a U.S. or global recession.”
After an initial surge, S&P 500 futures rose by 0.8%, while Nasdaq futures were up by 1.2%. The S&P 500 gained 5.7% last week but is still over 5% lower than before the tariffs were announced in April.
European futures followed suit, with EUROSTOXX 50 futures rising 2.6%, FTSE futures adding 1.8%, and DAX futures gaining 2.2%.
This week, earnings reports from major banks like Goldman Sachs, Bank of America, and Citigroup are expected, along with numbers from chipmaker TSMC, as Trump plans to investigate the global semiconductor supply chain.
Economic data due this week includes U.S. retail sales, Chinese GDP figures, and a speech from Federal Reserve Chair Jerome Powell on Wednesday, where he is likely to face questions about the potential for rate cuts and the recent turmoil in the Treasury market.
Bond markets showed little signs of recovery, with 10-year yields sitting at 4.48%, following the largest rise in borrowing costs in decades.
Markets in Asia and the Dollar’s Struggles
In Asia, MSCI’s broadest index of shares outside Japan rose 1.6%, after dropping more than 4% last week. Chinese blue-chip stocks gained 0.5%, with Apple suppliers performing well.
Japan’s Nikkei added 1.6%, although its performance was volatile in response to fluctuating tariff news. Japanese officials are preparing for trade talks with the U.S. that are expected to cover currency policy, with some bracing for pressure to support the yen.
The dollar continued to struggle amid concerns that Trump’s erratic trade policy was undermining investor confidence in U.S. assets.
“The key issue is the extreme uncertainty surrounding U.S. policy and the economic outlook, the dislocations in the Treasury market, and the erosion of confidence in U.S. institutions,” said Jonas Goltermann, deputy chief markets economist at Capital Economics.
The dollar was under pressure at 142.80 yen after falling to a six-month low of 142.05 last week. It was also down to 0.8169 Swiss francs, its lowest in a decade.
The euro rose to $1.1384, nearing a three-year high of $1.1474. The European Central Bank is expected to cut rates by a quarter point to 2.25% on Thursday. Canada’s central bank also meets this week, with markets expecting a 1-in-3 chance of a rate cut.
Commodities React to Global Uncertainty
Gold prices surged to an all-time high of $3,245 per ounce as global uncertainty pushed investors toward the safe-haven asset.
Meanwhile, oil struggled, weighed down by concerns about a global economic slowdown and rising OPEC supply. However, it found some support due to fears that Iran’s oil exports could be cut off. Brent crude fell 17 cents to $64.59 per barrel, while U.S. crude dropped 15 cents to $61.35 per barrel.
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