By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
Although markets are trying to shrug off the week’s U.S. tariff threats as yet another negotiation tactic, there’s growing unease at the daily barrage, the latest being a 35% tariff on Canadian goods and higher levies on other countries.
It’s Friday, so today I’ll provide a quick overview of what’s happening in global markets and then offer you some weekend reading suggestions away from the headlines.
Today’s Market Minute
* U.S. President Donald Trump ramped up his tariff assault on Canada on Thursday, saying the U.S. would impose a 35% tariff on imports next month and planned to impose blanket tariffs of 15% or 20% on most other trading partners.
* The 50% tariff that the Trump administration has slapped on Brazilian imports has rattled the global coffee market and could make the price of a cup of coffee in the U.S. jump beyond recent highs, and will likely raise prices for beef used in American hamburgers
* Bitcoin rallied to an all-time high on Friday, powered by demand from institutional investors and crypto-friendly policies from Trump’s administration.
* U.S. corn exports and export sales are still on fire despite the imminent ramp-up of Brazil’s corn shipping season, meaning the U.S. government might need to up its export target yet again. Read the latest from ROI agriculture columnist Karen Braun.
* Utilities across the European Union cranked output from natural gas and coal-fired power plants during the opening half of 2025, boosting power sector emissions and reversing recent energy transition momentum, says ROI columnist Gavin Maguire.
Canada back in tariff crosshairs
President Donald Trump said the U.S. would impose the 35% tariff next month on Canadian imports not covered by the United States-Canada-Mexico pact and planned to impose blanket tariffs of 15% or 20% on most other trading partners.
That comes on top of 50% tariff pledges on copper and Brazilian imports, which are set to lift the U.S. price of the metal and coffee, among other goods.
It also adds to the planned 25% tariffs on Japan and South Korea, and doused optimism of a more favorable deal with the European Union as investors awaited word on what levies Trump would assign the EU later on Friday.
After Wall Street stock indexes hit record closing highs on Thursday, S&P 500 and Nasdaq futures fell back ahead of today’s bell. European and Japanese shares were in the red and the Canadian dollar slipped to two-week lows.
Somewhat weary of the seemingly endless back-and-forth on tariffs and attempting to look beyond the short-term headlines, investors are wary of overreacting as they brace for almost three weeks of ‘ifs’ and ‘buts’ ahead of the new August 1 deadline.
The effect on economic activity and prices may take months to materialize. In a thin week for data, the weekly jobless update remained robust.
The inflation impact is perhaps most immediate, but Thursday’s long-bond auction matched decent demand for the 10-year note sale earlier in the week.
Federal Reserve easing expectations slipped back a touch, however, and both ten- and thirty-year yields ticked higher. Alongside gains against the Canadian dollar, the greenback’s index firmed more broadly.
Fed officials struck a relatively benign tone. Arch dove Christopher Waller restated his preference for cutting rates again later this month, while saying the Fed’s balance sheet run-off had some way to go. “We’re just too tight and we could consider cutting the policy rate in July,” he said.
San Francisco Fed boss Mary Daly said she still sees two rate cuts over the remainder of the year.
The White House, meanwhile, upped its attack on Fed Chair Jerome Powell – this time over the Fed’s accounts and spending on its HQ renovations.
But tech and the artificial intelligence theme continued to enthuse stock investors, with Taiwan chip giant TSMC beating forecasts on its AI chip demand and Nvidia closing above a $4 trillion valuation for the first time on Thursday.
The second-quarter earnings season kicks into gear next week, with Delta Air Lines shares rallying 12% on Thursday after the carrier forecast third-quarter and full-year profit above Wall Street estimates. That lifted the broader airline sector.
The other big market gainer was Bitcoin, which rallied to an all-time high on Friday – powered by demand from institutional investors and Trump’s crypto-friendly policies.
The world’s largest cryptocurrency rose to a peak of $116,781.10 in the Asian session, taking its gains for the year so far to more than 24%. Gold was firmer too on the tariff jitters.
In China, a Shanghai regulator said it held a meeting this week for local government officials to consider strategic responses to stablecoins and digital currencies – a marked shift in tone for China where crypto trading is banned.
Bracing for GDP updates next week, Chinese shares bucked the downbeat global stock mood on Friday and pushed higher.
Elsewhere, sterling ebbed on a surprising monthly contraction in UK GDP, with jitters about Britain’s public finances nudging gilt yields higher as finance minister Rachel Reeves prepares for the set-piece Mansion House speech next week.
In company news, BP’s second-quarter results are expected to be affected by lower prices received for gas and oil, while its upstream output is set to be higher than previously forecast, the company said in a trading update on Friday ahead of results due on August 5.
In the euro zone, European Central Bank hawk Isabel Schnabel said the hurdle for another ECB interest rate cut is “very high” as the euro zone economy is holding up better than expected despite uncertainty over trade.
Weekend reads
* RETURN TO ZERO: The prospect of the Federal Reserve once again setting interest rates near zero in coming years remains real despite today’s relatively high short-term borrowing costs, according to a paper published jointly between the New York and San Francisco Feds this week. The paper, which counted New York Fed chief John Williams as a co-author, extracted measures of risk of hitting the so-called “zero lower bound” from financial derivatives, and found a near one-in-ten chance of a return to zero from seven years and beyond – similar to levels in 2018. While expected rates are higher than back then, the level of uncertainty around the outlook is also much higher, it said.
* ‘OFFSHORING’ MIGRANTS: The Trump administration’s approach to offshoring asylum seekers and migrants is unprecedented, but there is a “sordid history” of extraterritorial detention centers both in the United States and around the world, writes Professor David Scott Fitzgerald in Foreign Affairs magazine. Describing offshore immigration processing and detention as “forms of disappearance”, he said the major question globally is how domestic and international law pushes back against a “race to the bottom” after last month’s U.S. Supreme Court ruling on deportations to South Sudan. “Rich countries around the world are watching one another for policy models.”
* POLITICAL ECONOMY RETHINK: The phasing out of green investment subsidies in Trump’s successful fiscal bill challenges basic theories of political economy as many Republican lawmakers voted against their constituents’ economic interests, writes Harvard economist Dani Rodrik in Project Syndicate. “It was ideas about what is important and how the world works, rather than economic lobbies or vested interests, that prevailed,” he wrote, adding there’s a broader lesson here about political economy. Narratives can be as important as interest-group politics in gaining traction for a party’s agenda, he concludes, and Democrats may have to learn this too.
* COMMUNICATING SCENARIOS: Threats to central bank independence have mounted since the inflation spikes of recent years and amid losses on expanded balance sheets, but the inflation-targeting process should still best illustrate the benefits of keeping political interference at arm’s length. So concludes a piece on CEPR’s VoxEU site by Fed economist Michael Kiley and Columbia University professor Frederic Mishkin. Regular public communication is needed to explain the process and retain political support, with greater use of scenario analysis likely to be helpful in this regard.
* CHINA AUTO DEVELOPMENT SPEED: Over just one weekend, engineers at Chinese automaker Chery planned an overhaul of the suspension and steering on their Omoda 5 SUV for use on bumpier and more winding European roads. In a Reuters Special Report, Nick Carey and Norihiko Shirouzu show how this makeover exemplifies the disruptive speed and flexibility of Chinese automakers, which have seized control of their home market, the world’s largest, from once-dominant foreign competitors. Now, China’s auto giants are racing to expand globally, with Chery as the leading exporter and China’s largest automaker BYD posing an even bigger long-term competitive threat, industry executives say.
Chart of the day
The 50% tariff that the Trump administration has slapped on Brazilian goods has rattled the global coffee market and could make the price of a cup of coffee in the U.S. jump beyond recent highs. Brazil is the world’s largest grower and exporter of coffee, while the U.S. is its biggest client and the world’s largest drinker of the beverage, with nearly 200 million Americans having a cup every day.
Today’s events to watch
* U.S. June Federal Budget (1400 EDT)
* Canada June employment report (0830 EDT)
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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(By Mike Dolan; editing by Rachna Uppal.)
