On Thursday, July 10, Asian stocks experienced a slight uptick, buoyed by the optimism surrounding Nvidia's remarkable surge to a world-record valuation of $4 trillion. Investors seemed to largely overlook the latest round of tariffs announced by U.S. President Donald Trump, allowing for a modest increase in market confidence.
In a significant move, Trump declared plans to impose a 50% tariff on copper imports, which contributed to a widening of U.S. copper futures' premium over the London benchmark overnight. The tariffs are set to take effect on August 1, indicating that the market should brace for potential disruptions. Furthermore, Trump has shifted his trade focus towards Brazil, threatening a similar punitive tariff on exports to the U.S., and issued tariff notices to seven minor trading partners.
European markets reacted positively, with EUROSTOXX 50 futures gaining 0.18% and FTSE futures advancing by 0.4%. Meanwhile, U.S. stock futures saw a slight dip in Asia, with both Nasdaq and S&P 500 futures declining by approximately 0.2% following a stronger showing in the previous cash session. The market's response to Trump's latest tariff announcements has been notably less severe compared to the post-Liberation Day selloff in April.
Jeff Ng, head of Asia macro strategy at SMBC, commented on the evolving investor sentiment, noting that many traders have become somewhat desensitized to the ongoing fluctuations in trade policy. “There is still room for negotiation,” Ng stated, emphasizing that many of these announcements are initial and subject to change. He added that the potential for reversals in tariffs exists over the coming months.
Additionally, expectations for Federal Reserve rate cuts later in the year are providing additional support for stocks. Recent minutes from the Fed's last meeting indicated that most participants believe rate cuts would be appropriate, with any potential price shocks from tariffs expected to be temporary or modest.
On the currency front, the dollar faced some challenges on Thursday, weakening against the euro while maintaining stability against the yen at 146.27. The euro appreciated by 0.17% to reach $1.1742, and sterling gained 0.11%, rising to $1.3605. However, the Brazilian real struggled, hovering near a one-month low at 5.5826 per dollar due to Trump's tariff threats affecting Latin America's largest economy.
Julia Wang, a global market strategist at J.P. Morgan Private Bank, remarked on the U.S. dollar's performance, stating, "Despite the S&P 500's impressive rally, the U.S. dollar continues to retreat, highlighting a shifting global macro narrative." She noted that the greenback is believed to be 5-15% overvalued and anticipates ongoing weakness as capital reallocation trends continue.
In the world of cryptocurrencies, bitcoin maintained its position near a record high, trading at $111,085, while ether increased by 1.3% to reach $2,779. Gracie Lin, CEO of OKX in Singapore, highlighted a shift in client behavior, stating, "We're seeing our clients take a more measured approach, making strategic allocations into cryptocurrencies with real utility rather than chasing short-term moves." Bitcoin remains a top choice among investors, reflecting its sustained popularity.
In commodities, oil prices experienced a downturn on Thursday, with Brent crude futures falling by 0.16% to $70.08 per barrel, while U.S. crude dropped 0.22% to $68.23 per barrel. In contrast, spot gold saw a rise of 0.3%, trading at $3,322.69 an ounce, indicating a potential safe-haven appeal amidst ongoing market fluctuations.
Reporting by Rae Wee; Editing by Jamie Freed
