President Trump’s threat of 30% tariffs on EU and Mexican imports from August 1 added to market jitters, as investors weighed the impact of higher duties on consumer prices and corporate margins.
Wall Street futures fell and European stocks were in the red as American consumer inflation sped up more than expected in June, rekindling inflation fears and potential tariff-related cost pressures. Treasury yields spiked after a 0.3% month-to-month CPI rise, and market participants reduced expectations of Federal Reserve reductions in the course of the year.
Considering policy uncertainty, Tuesday’s figures highlight the precarious tightrope central banks walk: U.S. tariff designs risk spilling through into headline inflation at the very moment markets had become convinced consumer price pressure was cooling off. Core CPI stripping out food and energy sits at 2.9% and we get the PPI Wednesday, and the traders now look to September for the Fed’s initial rate cut, from previous expectations of July.
Vas Gkionakis, a senior economist at Aviva Investors, said, “Up to now, we haven’t observed a clear pass-through from tariffs into inflation readings.” He added that the full effect of import duties “is likely to emerge later, but timing and extent are unclear.”
Tariff concerns fueled cross-market concerns. The MSCI World Equity Index fell 0.1% at 10:03 GMT, reversing a gain from a record high in the previous session. Brent crude was down to $68.50 a barrel on concerns about growth, and gold rose 0.5% to $1,338.75 an ounce as investors fled to havens.
To read more on Finance News, head to the 🔗 link.
