European stocks and U.S. futures slipped on Thursday as investors turned their attention back to an uncertain economic outlook. This comes after a mild rally on Wednesday when softer-than-expected U.S. inflation data weighed on the market. Stocks fell in Asia, reversing initial gains, while gold climbed to within $10 of its record peak.
The safe-haven yen also ticked up. On Wednesday, the pan-European STOXX 600 index dipped slightly in early trading after rising 0.81%. Germany’s DAX was down 0.62%.
Futures pointed to a lower start for Wall Street at the open, with S&P 500 futures losing 0.54% and Nasdaq futures off 0.78%. In Asia, Hong Kong’s Hang Seng fell 0.58%, and Japan’s Nikkei gave up gains of as much as 1.4% to last trade 0.1% lower. Global stocks have stumbled, led by U.S. equities, in recent weeks.
This is due to U.S. President Trump’s stop-start tariff policies, which have caused uncertainty and worries about growth among companies and investors. The beaten-down U.S. tech shares led a rebound on Wall Street on Wednesday after data showed U.S. consumer prices rose at the slowest pace since October last month. The inflation figures were closely watched following a recent run of softer economic data.
However, they ultimately did not capture the impact of Trump’s tariff campaign. Investors will watch U.S. producer price data, which is due later today.
Markets shift on economic uncertainty
“Trump tariffs and U.S. growth concerns are still driving markets,” said Mohit Kumar, chief European economist at Jefferies. Beyond the growth and inflation impact of tariffs, they create uncertainty, which is negative for investment and the outlook of any company involved in cross-border trades. We believe tariffs are not an inflation story but a growth story.”
Trump’s increased tariffs on all U.S. steel and aluminum imports took effect on Wednesday.
This steps up a campaign to reorder global trade in favor of the U.S. and draws swift retaliation from Canada and Europe. Gold climbed for a third straight session to as high as $2,947, closing in on the record high from February 24 at $2,956.15. The U.S. S&P 500 is now down almost 5% for the year.
European stocks have fared better, supported by governments’ plans for significant spending on defense and a potential Ukraine peace deal. They are up around 6.6% despite slipping in recent weeks. This still strikes me as a market that simply cannot hold onto any gains at the moment, which should be a big old red flag for any potential dip buyers out there,” said Michael Brown, senior research strategist at Pepperstone.
The yen strengthened about 0.3% to 147.83 per dollar, bolstered by bets on Bank of Japan rate hikes and investors seeking a haven. The euro edged 0.1% lower to $1.0879, retreating further from a five-month high of $1.0947 on Tuesday. U.S. Treasury yields held broadly steady, with the 10-year yield flat at 4.318% after rising over the two previous sessions.
Crude oil ticked higher after rallying on Wednesday. Brent futures rose 0.3% to $71.15 a barrel.
Image Credits: Photo by Austin Distel on Unsplash
