U.S. stock futures opened sharply lower Monday night as investors digested the latest bombshell trade news from the White House. Futures for the Dow Jones Industrial Average futures fell by 87 points, or 0.19%. This drop followed the real index, which fell hard, plummeting more than 400 points, or 0.9%. The S&P 500 and Nasdaq Composite followed suit, with the former losing 0.8% and the latter retreating 0.9%.
The market dip comes after President Biden hinted at a future 10% tariff. This new threat is directed at any country that gets behind the BRICS countries—Brazil, Russia, India, and China. This announcement has raised the alarm bells among investors with respect to possible fallout from the move on international trade.
In a similar vein, the President released annex letters describing new tariff rates. These rates will apply to 14 member countries and are set to go into effect on August 1. Tariffs hurt all of the above countries. Not common, as these are the only examples so far—Bangladesh, Bosnia and Herzegovina, Cambodia, Indonesia, Japan, Laos, Malaysia, Myanmar, Serbia, South Africa, South Korea, Thailand and Tunisia. Analysts pointed out that these tariff rates are harsher than most were expecting.
Adam Parker, CEO of Trivariate Research, recently joined CNBC’s “Closing Bell” to share his take on what these trade news mean for the markets. He voiced concern about the specifics of the new tariffs and how they’ll affect companies.
“If you go through the details, I don’t even know if anybody understands the difference between what was announced today, what was there previously, and if it will actually be implemented, and which companies it actually impacts,” – Adam Parker, Trivariate Research CEO
Parker indicated that the longer-term realignment of the markets may be an initial rebalancing more than a structural reset. He suggested that investors might be using this time to start to recalibrate their positions in advance of the July earnings season.
“So, I think it’s just a little bit of selling as we got the highs, and kind of recalibrating before July earnings season. But I don’t think this is the sign of a new regime at all,” – Adam Parker
S&P 500 futures fell by 0.16%, and Nasdaq 100 futures were down by 0.15%. Investors have become skittish in the capital markets. They are particularly looking forward to further clarity around how these trade restrictive measures will play out and affect various industries.