U.S. stock futures point to slightly higher Wall Street opening despite China tariffs hike

U.S. stock futures experienced a rollercoaster ride on Friday, initially dipping into the red after China’s announcement of raising tariffs on U.S. imports to 125% from 84%. This move by Beijing is the latest development in the ongoing trade war between the two economic powerhouses. In response, President Trump increased U.S. levies on imports from China to 145%.

Despite the initial negative reaction, S&P 500 futures were up 0.25%, Dow Jones Industrial Average futures had climbed 0.19%, and Nasdaq composite futures were 0.22% higher as of 7:40 a.m. EDT. However, the markets were showing signs of heading lower again.

The global stock markets reacted to Beijing’s tariff announcement with mixed results. Japan and some European markets saw declines, while others remained stable. Tokyo’s benchmark index initially plummeted over 5% but managed to recover slightly, closing 3% lower at 33,585.58.

China’s decision to raise tariffs to 125% aligns with the existing U.S. tariffs, excluding an earlier 20% increase imposed weeks ago. A Finance Ministry spokesman from China stated that the escalating tariff numbers were more of a symbolic gesture rather than having significant economic implications. The statement also emphasized China’s readiness to counter any further infringements on its interests by the U.S.

The bond market also experienced volatility, with the 10-year Treasury yield reaching 4.40%. Market fluctuations have been impacting bond prices, leading to a rise in Treasury yields due to increased selling pressure. The bond market often serves as a check on economic policies deemed imprudent by investors, as seen in previous political shifts like the short tenure of the UK’s Liz Truss in 2022.

President Trump’s decision to delay higher tariffs against multiple countries for 90 days was influenced by concerns raised by the bond market. The 10-year Treasury yield surged to nearly 4.50% before settling back down to 4.30% following positive inflation reports.

In European trading, Germany’s DAX and France’s CAC 40 experienced losses, while the UK’s FTSE 100 gained momentum with a 0.5% increase. South Korea’s Kospi and Australia’s S&P/ASX 200 saw declines, reflecting the global uncertainty surrounding the trade war.

Amidst the trade tensions, China’s efforts to strengthen alliances with other countries and ramp up countermeasures against U.S. tariffs have been evident. Chinese President Xi Jinping’s diplomatic meetings and upcoming visits to Southeast Asian nations signify China’s strategy to form a united front against President Trump’s trade policies.

On Wall Street, the previous day saw significant losses, with the S&P 500, Dow Jones Industrial Average, and Nasdaq composite all experiencing declines. Investors viewed President Trump’s tariff delay as a temporary measure, leading to a market correction and loss of earlier gains.

Overall, the trade war between the U.S. and China continues to impact global markets, with uncertainty and volatility prevailing across various sectors. Investors are closely monitoring developments and adapting their strategies to navigate the evolving economic landscape.