Global stocks were lower yesterday dragged down by losses on Wall Street and in European equities as fresh uncertainty over US trade policy erupted following President Donald Trump’s new global tariff in the wake of a Supreme Court ruling.
The US Supreme Court struck down Trump’s emergency tariffs on Friday, leading the president to quickly announce a new 10 per cent rate on all US imports, only to then lift it to 15pc on Saturday. The new tariffs are based on Section 122 of the Trade Act of 1974.
The Dow Jones Industrial Average fell 1.44pc, the S&P 500 fell 1pc and the Nasdaq Composite fell 1.2pc.
“We are giving up roughly half of Friday’s gain due mostly to the shift to 15pc on Section 122 versus 10pc announced Friday, reminding us that uncertainty remains high,” said Mark Hackett, chief market strategist at Nationwide in Philadelphia.
US stock markets are also set to be tested later this week by earnings from Nvidia, which are likely to cause waves given that the chip designer makes up almost 8pc of the S&P 500 index. The pan-European STOXX 600 index fell 0.2pc. Germany’s DAX lost 0.75pc but Britain’s FTSE 100 was flat. MSCI’s gauge of stocks across the globe fell 0.63pc.
Gold rose nearly 2pc to a three-week high yesterday. Spot gold was up 1.8pc at $5,198.72 per ounce, having hit its highest since January 30 earlier in the session. The metal touched a record high of $5,594.82 an ounce on January 29.
US gold futures for April delivery were up 2.7pc at $5,219.
“There’re a lot of economic and political problems around the world, and with markets quieter during the Lunar New Year, our expectation is that gold prices could rise sharply this week once activity picks up,” said CPM Group managing partner Jeffrey Christian.
Mainland China, a major gold consumer, remained closed for the Lunar New Year holiday and will reopen today.
“In a longer-term view over the next several quarters, we think the gold price will continue to rise and probably set new records,” Christian said.
Gold, seen as a safe store of value during economic and geopolitical uncertainty, also tends to perform well when interest rates are low.
Spot silver climbed 2.8pc to $86.93 an ounce, a more than two-week high. Platinum edged 1.5pc lower to $2,123.86 an ounce, while palladium lost 1.2pc to $1,726.50 an ounce.
US Treasury yields were lower across the board. The yield on benchmark US 10-year notes fell 2.7 basis points to 4.056pc. The 2-year note yield fell 0.8 basis points to 3.472pc.
It was unclear when the new tariffs would be imposed, what might be excluded and whether every country would face a 15pc rate. Some, including the UK and Australia, had 10pc tariff rates under the former rules, while many countries in Asia had higher rates.
The Yale Budget Lab said the overall average effective tariff rate would stand at 13.7pc after Trump’s announcement on Saturday, down from 16pc – the highest since 1936 – before the Supreme Court’s ruling.
It added that it expected the 15pc tariffs would expire after 150 days, following the Trade Act of 1974, under which they will be set. If so, the average rate would fall to 9.1pc.
The US dollar was weaker against the euro, Japanese yen and Swiss franc. The dollar fell 0.41pc to 154.41 against the Japanese yen. Against the Swiss franc, the dollar weakened 0.27pc to 0.774. The euro was up 0.16pc at $1.1799. The dollar index rose 0.23pc to 97.60.
Brent crude oil prices rose 0.88pc to $72.35 a barrel, adding to the gains made last week when Trump said the US could strike Iran amid a large-scale buildup of forces in the region. Further US-Iran talks are scheduled for Thursday.
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