Tariff cloud reappears over sunny Wall Street

By rahmat hidayat

Saturday, July 19, 2025

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Trading Day

Making sense of the forces driving global markets

By Jamie McGeever, Reuters Open Interest Markets Columnist

The S&P 500 and Nasdaq touched new highs on Friday before cooling off following a report that U.S. President Donald Trump is pushing for a minimum 15-20% tariff on goods from Europe.

But Wall Street and most global benchmark indices rose on the week, as upbeat U.S. economic data more than compensated for the heightened trade uncertainty and Trump ramping up his verbal attacks on Fed Chair Jerome Powell.

Yet another choppy and event-filled trading week ended on a more subdued note on Friday, with trade and the Trump administration's hefty tariffs on major trading partners again at the forefront of investors' minds.

Trump's call for a minimum 15-20% tariffs on imports from the European Union, as reported by the Financial Times, is a reminder that global trade tensions are still alive and could yet hit growth and fuel inflation.

Elsewhere in the global trade war, Trump's deepening spat with Brazil will be worth monitoring next week, while Treasury Secretary Scott Bessent is in Japan this weekend.

Economists at ratings agency Fitch on Friday raised their projected effective U.S. tariff rate to 19.4% from 14.1%. There's still a great deal of uncertainty over who will end up eating the tariffs, but leveies of that magnitude will not be cost-free.

As well as trade, investors' focus next week will turn to U.S. corporate earnings, with more than a fifth of the S&P 500 companies reporting and the European Central Bank's policy decision.

I'd love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social.

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This Week's Key Market Moves

The S&P 500, Nasdaq and MSCI All Country indices all hit record highs on Friday.
Investors bet big on Big Tech. S&P 500's technology index rose 2% on the week, bringing post-Liberation Day gains to 55%.
Japan's yen fell to its weakest level since April 2 Liberation Day, coming within 1 yen of 150.00 per dollar.
Bitcoin hit a new high above $123,000 but fell 1% on the week, maybe not a huge shock after spiking 9% the week before.
Platinum extended its remarkable run, rising another 2% to a fresh 11-year high. It's up over 50% in two months.

Weekend Reads

Here are some of the best things I read, watched and listened to this week:

Chart of the Week

Following Friday's latest Japanese inflation data and ahead of Sunday's potentially crucial upper house election, it's worth reminding ourselves of how much of an outlier Japanese interest rates are in real terms.

The Bank of Japan's inflation-adjusted policy rate is almost -3%. The BOJ wants to continue raising rates, but it's not so simple.

Sunday's election could pave the way for a wave of public spending and tax cuts, putting the developed world's worst public finances under even more strain and weakening the yen further.

Yet long bond yields are already the highest on record. Raising rates and driving bond yields even higher could have a negative impact on growth. Maybe a very serious impact.

Policymakers are in a bind.

What could move markets on Monday?

Japanese market reaction to upper house election
Taiwan CPI inflation (June)
New Zealand CPI inflation (Q2)
Canada PPI inflation (June)

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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