A Look at the Day Ahead in European and Global Markets

By Stella Qiu

The markets received a surprise boost on Friday from what initially appeared to be a mundane summer day. U.S. President Donald Trump’s announcement regarding the ongoing trade wars disrupted Wall Street’s recent climb to record highs.

Trump indicated that tariff letters to Canada and Europe would be dispatched “today or tomorrow,” proposing that blanket tariff rates on other countries that do not receive a letter might be raised to 15% or 20%, an increase from the current 10% baseline rate.

Shortly after, he shared the letter to Canada on social media, announcing a 35% tariff on all Canadian goods effective August 1.

Despite initial market jitters, an administration official later reassured that an exemption for goods covered under the United States-Mexico-Canada Agreement was anticipated. As a result, Wall Street futures dropped 0.8%, while EUROSTOXX 50 futures fell 0.7%, before stabilizing slightly to a decline of about 0.3%.

Currency markets reacted strongly, but after the initial turmoil, the dollar increased approximately 0.3% against the loonie, while the euro decreased by 0.2%.

The yen continued its steady decline as the likelihood of a successful U.S.-Japan trade deal diminished. On Friday, the dollar rose 0.6% to 147.12 yen, marking a weekly gain of 1.7%, the largest this year.

Additionally, the yen has depreciated for the seventh consecutive week against the euro and hit a five-month low against the Australian dollar.

With Trump announcing that the EU would also receive a letter, investors grew increasingly concerned about the stalled trade talks. EU officials expressed hopes for a deal before August 1.

The economic data calendar in both Europe and the U.S. was relatively sparse on Friday, as investors prepared for the second-quarter U.S. corporate earnings next week to assess the effects of Trump’s tariffs.

In an alarming indication of potential future impacts, Fast Retailing, the owner of Uniqlo, warned that tariffs could severely affect its U.S. operations later this year, prompting plans for price increases to alleviate the impact. Consequently, its shares plummeted nearly 7% in Tokyo.

Key Developments that May Influence Markets on Friday:

• UK May Monthly GDP
• Canadian Jobs Numbers for June
• Eurozone Final CPI for June
• Possible Trump Letter on Tariffs to the EU

(Editing by Edmund Klamann)