Jamie Spencer
Volatility rattled American assets on Monday as stocks extended their three-week decline to nearly 10%, driven by escalating trade tensions with Canada. The Canadian dollar weakened after President Donald Trump threatened additional tariffs.
Markets React to Trade War Concerns
Stocks fell as investors weighed the economic impact of Trump’s trade policies. The S&P 500 dropped 1%, extending its slide from record highs to almost 10%. The Nasdaq 100 declined 0.6%, while the Dow Jones Industrial Average lost 1.4%. Global markets followed suit, with the MSCI World Index falling 1%.
The CBOE Volatility Index (VIX), often called Wall Street’s “fear gauge,” surged toward levels last seen during the August 5 market crash, which was triggered by recession fears.
Trump Targets Canada with New Tariffs
Trump announced a tariff hike on Canadian steel and aluminum to 50% in response to Ontario’s decision to increase taxes on electricity exported to the U.S. In retaliation, Canadian Prime Minister Designate Mark Carney vowed to maintain tariffs until the U.S. commits to “free and fair trade.”
Key Economic Events This Week
- Wednesday: Bank of Canada rate decision, U.S. Consumer Price Index (CPI) release
- Thursday: Eurozone industrial production, U.S. Producer Price Index (PPI), initial jobless claims
- Friday: University of Michigan consumer sentiment report
Market Movements
Stocks
- S&P 500: -1%
- Nasdaq 100: -0.6%
- Dow Jones Industrial Average: -1.4%
- MSCI World Index: -1%
Currencies
- Bloomberg Dollar Spot Index: -0.4%
- Euro: +0.9% ($1.0930)
- British Pound: +0.5% ($1.2945)
- Japanese Yen: Unchanged (147.20 per dollar)
Bonds
- U.S. 10-Year Treasury Yield: +3 bps (4.24%)
- Germany’s 10-Year Yield: +6 bps (2.90%)
- Britain’s 10-Year Yield: +3 bps (4.67%)
Commodities
- WTI Crude Oil: +0.4% ($66.27 per barrel)
- Spot Gold: +1% ($2,918.08 per ounce)
Looking Ahead
With ongoing tariff battles and economic uncertainty, investors remain cautious about market stability. The coming economic data releases will be closely watched for indications of inflation trends and consumer sentiment.
