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The Australian and Canadian dollars, and the Norwegian krone, declined after Trump’s comments. Shares across Asia Pacific dropped at the open while iron ore futures rose.
News that a 25% levy on steel and aluminum will be announced Monday added to already jittery sentiment in markets before Federal Reserve Chair Jerome Powell’s semiannual congressional testimony and a potential unveiling by Trump of reciprocal tariffs on “everyone” this week. Trump said the metals tariffs would apply to imports from all countries, though he didn’t specify when they would take effect.
“Markets continue to react to Trump policy shifts rather than economic data,” Bob Savage, head of markets strategy and insights at BNY, wrote in a note to clients. “The take from Fed Chair Powell will be critical in judging the costs of tariffs and other policy shifts on easing plans.”
US Treasury yields dipped. Separately, Trump said Elon Musk’s government efficiency team has found irregularities while examining data at the US Treasury Department.
The S&P 500 index slumped 1% on Friday amid the heightened tariff angst and after data showed a slide in consumer sentiment amid concern over inflation. The dollar climbed while US Treasuries fell across the curve after jobs figures highlighted a moderating — yet healthy — labor market.
Nonfarm payrolls increased by 143,000 last month after upward revisions to the prior two months.
Powell will be making his semi-annual testimony at a time when officials are signaling they’re not in a hurry to further ease policy. Inflation data later this week may help buttress those arguments and underpin market pricing for just one US rate cut this year.
In Asia, Chinese shares will be closely watched Monday as the country’s growing clout in artificial intelligence space has sparked a wave of optimism toward the nation’s tech companies. The rally could be threatened as temporary spending boom around the Lunar New Year holiday, which caused consumer inflation to accelerate in January for the first time since August, masked deflationary pressures in China’s economy.
“Chinese consumers remain cautious and the trend of consumption downgrading persists,” Goldman Sachs economists including Andrew Tilton wrote in a note to clients. The seasonal boost in China’s inflation is likely to turn into a seasonal drag in February, they wrote.
Elsewhere, South Africa’s rand fell in early trading, underperforming global peers, after the US froze all aid to the nation over what Trump falsely claimed were rights violations stemming from a new land-expropriation law, as well as its allegations of genocide against Israel. South Africa’s foreign ministry in a statement Saturday expressed “great concern that the foundational premise of this order lacks factual accuracy.”
In commodities, oil steadied after a string of weekly declines as the market weighed the fallout from Trump’s tariffs.
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