
Trading Day: Tariff cloud reappears over sunny Wall Street
Making sense of the forces driving global markets
By Jamie McGeever, Markets Columnist
I'd love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com, opens new tab. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social.
The S&P 500 and Nasdaq touched new highs on Friday before cooling off following a report that U.S. President Donald Trump is pushing for a minimum 15-20% tariff on goods from Europe.
But Wall Street and most global benchmark indices rose on the week, as upbeat U.S. economic data more than compensated for the heightened trade uncertainty and Trump ramping up his verbal attacks on Fed Chair Jerome Powell.
This Week's Key Market Moves
Yet another choppy and event-filled trading week ended on a more subdued note on Friday, with trade and the Trump administration's hefty tariffs on major trading partners again at the forefront of investors' minds.
Trump's call for a minimum 15-20% tariff on imports from the European Union, as reported by the Financial Times, is a reminder that global trade tensions are still alive and could yet hit growth and fuel inflation.
Elsewhere in the global trade war, Trump's deepening spat with Brazil will be worth monitoring next week, while Treasury Secretary Scott Bessent is in Japan this weekend.
Economists at ratings agency Fitch on Friday raised their projected effective U.S. tariff rate to 19.4% from 14.1%. There's still a great deal of uncertainty over who will end up eating the tariffs, but levies of that magnitude will not be cost-free.
As well as trade, investors' focus next week will turn to U.S. corporate earnings, with more than a fifth of the S&P 500 companies reporting, and the European Central Bank's policy decision.
Chart of the Week
Following Friday's latest Japanese inflation data and ahead of Sunday's potentially crucial upper house election, it's worth reminding ourselves of how much of an outlier Japanese interest rates are in real terms.
The Bank of Japan's inflation-adjusted policy rate is almost -3%. The BOJ wants to continue raising rates, but it's not so simple.
Sunday's election could pave the way for a wave of public spending and tax cuts, putting the developed world's worst public finances under even more strain and weakening the yen further.
Yet long bond yields are already the highest on record. Raising rates and driving bond yields even higher could have a negative impact on growth. Maybe a very serious impact.
Policymakers are in a bind.
Here are some of the best things I read this week:
What could move markets on Monday?
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Auto Car
7 minutes ago
- Auto Car
New Maserati flagship could get V6 and MANUAL gearbox!
Maserati and Alfa boss reveals plan for two firms to collaborate once again on a limited-run supercar Close News Maserati is considering a new flagship super-GT with V6 power and a manual gearbox as part of a drive to emphasise its sporting heritage and strengthen the brand's luxury credentials. Set to be a limited-run creation, the new top-rung Maserati could be launched as early as next year as the most exclusive and powerful combustion-engined car the firm has produced since the MC12 landed two decades ago. It is tipped to be based on the Granturismo and will be twinned with an equivalent Alfa Romeo model, similar to the way in which the new Alfa 33 Stradale is based on Maserati's MC20. Speaking to Autocar at the Goodwood Festival of Speed earlier this month, Santo Ficili, who is CEO of both marques, said: 'We have infinite possibilities to customise products for our customers, for the entire range of Maserati. I'm imagining to do something like we did in the past, also considering Alfa Romeo.' Ficili referenced previous collaborations between the two firms, highlighting that the Alfa Romeo 8C Competizione was based on the previous Maserati Granturismo and built alongside that car at Maserati's plant in Modena, where the later 4C sports coupé was also produced. More recently, Alfa Romeo turned to Maserati to provide the basis for the new 33 Stradale supercar, which shares its basic monocoque chassis and twin-turbocharged 3.0-litre V6 engine with the mid-engined MC20 (now rebadged MCPura). 'We built the 4C and 8C in Modena, so why not?' said Ficili of the prospect of another limited-run supercar tie-up. 'We can imagine a 'few-off' Maserati. It's easy, because you can look at the past of these two brands, and you can find a nice car like the 33 Stradale, and we can invent something like this.' Ficili stopped short of describing in more detail his vision for a new bespoke creation but suggested the aim is to use the new flagship to celebrate Maserati's Nettuno V6 engine, as used in the Granturismo, Grecale and MCPura. 'It's a masterpiece,' he said. It is likely that any V6-powered limited-run special would ramp up the Nettuno's output beyond the 621bhp of the MCPura, in line with a price that would be well in excess of that car's £230,000, but the firm is unlikely to use electrification to achieve that power boost. Maserati engineering boss Davide Danesin said: 'There are still customers looking for pure mechanical cars.' He added that there is a 'bad feeling' about having a battery on board a supercar, due to the heightened complexity and extra weight it brings. The Nettuno's 'super-advanced' pre-chamber combustion technology and twin injection system help to cut emissions and boost performance, he said, and the engine is 'getting to 210hp per litre with very efficient combustion'. That figure is why the MCPura can remain a pure-combustion car and it means Maserati can keep the V6 in production with the same power once Euro 7 regulations are in force. Giving further clues to what a limited-run Maserati supercar could look like, Danesin even dropped a hint that it could reintroduce a manual gearbox to Maserati's ranks for the first time in years. He said: 'A manual gearbox is an opportunity. I don't see that in big series [production], but why not do a special version with a manual gearbox? No reason to say never. It could be the right choice for a limited edition of a car.' He added that a manual gearbox would emphasise the 'pure', analogue ethos of a Maserati supercar. 'By doing a purely mechanical car, it does make sense to have a mechanical gearbox with a shifter,' he said. 'So why not? It fulfils perfectly the brand. It fulfils perfectly our approach and the mindset. So honestly, I think one day we'll do it.' Ficili said he plans to emphasise Maserati's Italian heritage going forward, adding that the company's headquarters in Modena – 'the middle of Motor Valley' – is 'the right place' to build sports cars. The firm will shortly begin production of the Granturismo and Grancabrio at its factory there once again, having built the current generation at Fiat's Mirafiori plant since 2023. Any new V6 special edition will be closely related to those cars. Neither Danesin nor Ficili gave any indication of when this new supercar could break cover, but next year will be the 100th anniversary of the launch of Maserati's first car, the Tipo 26 grand prix racer that won Italy's legendary Targa Florio endurance race on its first competitive outing in 1926. The following year, Alfa Romeo launched the venerable 6C 1500 sports car, which went on to win the Mille Miglia and the Spa 24 Hours. An Alfa Romeo version of Maserati's next limited-run sports car would no doubt celebrate the centenary of that seminal model. Alfa has already confirmed it will reveal a second supercar in 2026 from its new 'Bottega' division for limited-run cars, which launched with the 33 Stradale. Join our WhatsApp community and be the first to read about the latest news and reviews wowing the car world. Our community is the best, easiest and most direct place to tap into the minds of Autocar, and if you join you'll also be treated to unique WhatsApp content. You can leave at any time after joining - check our full privacy policy here. Next Prev In partnership with


Reuters
7 minutes ago
- Reuters
Stocks surge, euro steady after US-EU trade agreement
SINGAPORE, July 28 (Reuters) - Global stocks rose and the euro appreciated on Monday after a tradeagreement between the United States and the EU lifted sentiment and provided some clarity in a week of key policy meetings by the Federal Reserve and the Bank of Japan. The U.S. struck a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods - half the threatened rate, a week after agreeing to a similar trade deal with Japan. Countries are scrambling to finalise trade deals ahead of an August 1 deadline set by U.S. President Donald Trump, with talks between the U.S. and China set for Monday in Stockholm amid expectations of another 90-day extension to the truce between the world's top two economies. "A 15% tariff on European goods, forced purchases of U.S. energy and military equipment and zero tariff retaliation by Europe, that's not negotiation, that's the art of the deal," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities. "A big win for the U.S." European futures surged more than 1%, while S&P 500 futures rose 0.5% and Nasdaq futures advanced 0.6%. The euro strengthened across the board, rising against the dollar, sterling and yen. "We have to be a bit cautious from here," said Sim Moh Siong, currency strategist at Bank of Singapore, of the broader risk-on rally. "A lot of good news is already in the price." MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab was up 0.32%, just shy of the almost four-year high it touched last week. Japan's Nikkei fell 1% after hitting a one-year high last week. While the baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, it is better than the threatened 30% rate. The U.S.-EU deal provides clarity to companies and averts a bigger trade war between the two allies that account for almost a third of global trade. "A major tail-risk has now been defused," said Marc Velan, head of investments at Lucerne Asset Management in Singapore. "Markets are interpreting this as a sign of stability and predictability returning to trade policy," he added. "The China delay fits the same pattern: the administration is opting for controlled diplomacy over confrontation." Gains for China's blue-chip stocks (.CSI300), opens new tab petered out towards the midday break, while Hong Kong's Hang Seng index (.HSI), opens new tab gained 0.5%. The Australian dollar , often seen as a proxy for risk appetite, was at $0.657, hovering around the near eight-month peak scaled last week. In an action-packed week, investors will watch out for the monetary policy meetings from the Fed and the BOJ as well as the monthly U.S. employment report and earnings from megacap companies Apple (AAPL.O), opens new tab, Microsoft (MSFT.O), opens new tab and Amazon (AMZN.O), opens new tab. While the Fed and the BOJ are expected to maintain rates, comments from the officials will be crucial for investors to gauge the interest rate path. The trade deal with Japan has opened the door for the BOJ to raise rates again this year. Meanwhile, the Fed is likely to be cautious on any rate cuts as officials seek more data to determine tariffs' impact on inflation before they ease rates further. But tensions between the White House and the central bank over monetary policy have increased, with Trump repeatedly lashing out at Fed Chair Jerome Powell for not cutting rates. Two of the Fed Board's Trump appointees have articulated reasons for supporting a rate cut this month. In commodities, oil prices rose after the U.S.-EU trade agreement. Brent crude futures and U.S. West Texas Intermediate crude both rose 0.5%. Gold prices fell on Monday to their lowest in nearly two weeks on reduced appetite for safe havens.


Telegraph
7 minutes ago
- Telegraph
The $6tn bank tweak that risks triggering the next crisis
Bair's big fear is that the money won't end up being funnelled back into boring bonds at all, but end up lining shareholders' pockets or in more exotic investments. She says: 'Banks will likely find a way to distribute some of it to shareholders, or otherwise deploy it into their market operations which are riskier and more vulnerable to crisis conditions than insured banks.' Covid buffer Those who back removing Treasuries from the calculations highlight that it was done during the pandemic without much fanfare as banks ploughed more money into bonds. However, analysts at Morgan Stanley have highlighted that this was in part a function of a 21pc jump in bank deposits as workers had nowhere to spend their cash during lockdowns. It recently noted: 'The Covid-related surge in deposits means that 2020-21 is not comparable with today's environment, as deposit growth is tepid at 1pc year-on-year. Deposit growth, combined with loan demand, are key drivers of bank demand for securities as banks will prefer to use deposits to support client lending activity and build client relationships.' Bair says capital buffers were put there for a reason. 'If there should be a future crisis, regulators have the authority to provide emergency temporary relief. 'Reduce capital requirements now, they don't know how banks may deploy it. Better to maintain strong requirements in good times so capital cushions will be there when bad times hit.' Regulators are also keeping a close eye on this side of the Atlantic amid concerns we are moving towards a world where sovereign risk is completely removed from the leverage ratio. While the UK has already taken steps to remove central bank reserves from its calculations, officials here believe removing government bonds would be a step too far. Rogoff, now a Harvard professor, agrees that capital buffers have served their purpose during times of crisis. 'It is notable how well the banking system held up during the pandemic, and later from the sharp rise in global interest rates. It is precisely when the system hits peak stress moments – especially when the economy is hit by completely out of the box shocks – that the SLR suddenly does not seem quite so crazy,' he says. The rules tweaks may look benign, but bond sell-offs are often quick and violent. And it's usually the taxpayer left picking up the pieces.