U.S. Stock Futures Plunge on Escalating Trade War Fears
U.S. stock index futures plummeted on Monday as concerns over a potential trade war and its global economic impact roiled markets worldwide.
Trump Imposes Tariffs on Mexico, Canada, and China
Over the weekend, President Donald Trump imposed tariffs of 25% on imports from Mexico and Canada, and 10% on those from China. This move has sparked fears of retaliatory measures and disruption to global trade.
Market Reaction
* The iShares MSCI Mexico ETF lost 2.4% in premarket trading.
* The ETF tracking Canada dropped 2.8%.
* Dow E-minis were down 1.32% at 04:11 a.m. ET.
* S&P 500 E-minis were down 1.55%.
* Nasdaq 100 E-minis were down 1.86%.
* Russell 2000 smallcaps index futures slumped over 2%.
Chip and Auto Stocks Fall
Most chip stocks declined, with Nvidia losing 3% and Broadcom falling 3.4%. Legacy automakers Ford and General Motors dropped 4.1% and 6.7%, respectively.
Trump Warns of Europe Tariffs
Trump has threatened to impose tariffs on Europe as well, leading to a 1.4% decline in the pan-European STOXX 600 index.
Analysts Forecast Reduced Earnings
Goldman Sachs estimates that sustained tariffs could reduce S&P 500 earnings per share (EPS) growth by 2%-3%. Morgan Stanley also anticipates pressure on U.S. equities.
Earnings Season Continues
Earnings reports are expected from prominent companies this week, including Alphabet, AMD, PayPal, and Eli Lilly. Over 75% of S&P 500 companies reporting so far have exceeded analyst estimates.
Cryptocurrency Stocks Decline
Cryptocurrency and blockchain-related stocks tumbled as bitcoin prices plunged. Coinbase dropped 5.7%, MicroStrategy fell 5.2%, and the ProShares Bitcoin ETF lost 5.6%.