Stock indices decline amid renewed trade uncertainty and economic concerns

On Thursday, the Dow Jones Index (US30) fell by 0.74%, the S&P 500 Index (US500) declined by 0.37%, and the tech-heavy Nasdaq Index (US100) closed down by 0.03%. All three major US indices ended Thursday lower, as gains in Microsoft and Meta shares failed to lift the broader market amid renewed trade uncertainty and growing economic concerns. Market sentiment deteriorated following President Trump’s decision to extend the 25% tariff on Mexican imports and the approaching deadlines for broader trade actions.

The Canadian dollar weakened to 1.38 per US dollar, its lowest level in two months, after the Bank of Canada left its benchmark interest rate unchanged at 2.75%. The move provided little stimulus for an economy expected to remain flat in the second quarter, assuming a modest 0.1% rise in June materializes.

The Fed’s preferred inflation gauge, the Core PCE Index, rose by 0.3% in June and 2.8% year-over-year, increasing uncertainty around a potential rate cut in September. On the earnings front, Meta rose by 11.2% after beating estimates and issuing a strong sales forecast, while Microsoft gained +3.9%, pushing its market valuation above $4 trillion thanks to strong Azure growth. Investors now await results from Apple and Amazon, along with Friday’s jobs report, for further insight into economic prospects.

European stock markets traded mixed on Thursday. Germany’s DAX (DE40) fell by 0.81%, France’s CAC 40 (FR40) declined by 1.14%, Spain’s IBEX35 (ES35) rose by 0.11%, and the UK’s FTSE 100 (UK100) edged down by 0.05%. European equities erased early gains and closed lower on Thursday, weighed down by disappointing corporate results. Ferrari shares dropped 11.7%, its worst performance since its 2016 IPO, after missing earnings and revenue expectations. Sanofi fell by 7% on weaker revenue, while Schneider Electric declined by 4.5% after reporting a margin contraction despite strong performance in its data center segment. Meanwhile, Hermes and Adidas both fell more than 4%, extending their losses from the previous session.

The US natural gas prices (XNG/USD) hovered near $3.03/MMBtu on Thursday, the lowest since April 22, pressured by oversupply concerns and forecasts for mild weather. The latest EIA data showed a higher-than-expected storage injection of 48 billion cubic feet last week, surpassing the estimates of 38 billion. Natural gas prices have declined by over 12% in July, ending a two-month rally as production continues to outpace demand.

Asian markets were mostly lower on Thursday. Japan’s Nikkei 225 (JP225) rose by 1.02%, while China’s FTSE China A50 (CHA50) dropped by 1.63%, Hong Kong’s Hang Seng (HK50) declined by 1.60%, and Australia’s ASX 200 (AU200) closed down by 0.16%.

On Friday, the New Zealand dollar fell to $0.587, marking its seventh consecutive session of losses and reaching the lowest level since mid-May, after US tariffs on the country were raised to 15% from the previously announced 10% in April. The new rate, set to take effect next week, has intensified concerns about the outlook for New Zealand’s export-driven economy. Additional downward pressure came from a stronger US dollar, supported by the Fed’s hawkish stance and ongoing signs of resilience in the American economy.

The Australian dollar stabilized around $0.643 on Friday, ending a six-day losing streak, as Australia avoided higher US tariffs, with most imports still subject to a 10% rate. On Thursday, President Trump issued an order to revise “reciprocal” tariffs on several countries, increasing them by 10-41%, while nations not listed will automatically be subject to a 10% duty. However, Australia was spared harsher measures, maintaining the 10% rate. The White House cited progress in trade and security negotiations, noting that Australia is among the countries ready to finalize deals with the US. Meanwhile, the commodity-linked Aussie remained under pressure from a steep drop in copper prices, which plunged over 18% after the US clarified that raw copper is exempt from the new tariffs.