LONDON/SYDNEY, Feb 23 — Wall Street futures and the United States (US) dollar dropped on Monday as confusion over US trade policy revived the "sell America" trade, after President Donald Trump imposed a new 15 per cent tariff following the Supreme Court's ruling against his global levies.
Gold gained along with safe-haven currencies such as the Japanese yen and Swiss franc. European stock futures slipped as investors tried to gauge the implications for the world's major economies, while shares in Hong Kong jumped on the view that US tariffs on China could be reduced.
The US Supreme Court struck down Trump's emergency tariffs on Friday, leading the President to quickly announce a new 10 per cent rate on the rest of the world, only to then lift it to 15 per cent on Saturday.
"The tariff landscape is now more uncertain than before; uncertainty is not good news for any economy or market.
"Unless common sense prevails, we could be entering a circular process where new tariffs are announced, then potentially overturned, only for new tariffs to be announced, and we do the dance again," said NAB senior FX strategist Rodrigo Catril.
S&P 500 futures fell 0.2 per cent, and Nasdaq futures were down 0.4 per cent, after earlier dropping as much as one per cent.
US stock markets are also set to be tested later this week by earnings from Nvidia, which are sure to cause waves given that the chip designer accounts for almost eight per cent of the S&P 500 index.
The dollar fell 0.14 per cent versus the yen to 154.82, while the euro rose 0.16 per cent to US$1.1799.
The dollar also slid 0.22 per cent on the Swiss franc while gold climbed one per cent to US$5,153 an ounce, and silver rose 2.8 per cent to US$86.96 per ounce.
Average tariff rate drops
It was unclear when the new tariffs would be imposed, what might be excluded, and whether every country would be slapped with a 15 per cent tariff. Some, including the United Kingdom (UK) and Australia, had 10 per cent tariff rates under the former rules, while many Asian countries had higher rates.
The Yale Budget Lab said the overall average effective tariff rate would stand at 13.7 per cent after Trump's announcement on Saturday, down from 16 per cent — the highest since 1936 — before the Supreme Court's ruling.
It added that it expected the 15 per cent tariffs would expire after 150 days, following the 1974 Trade Act under which they were invoked. If so, the average rate would fall to 9.1 per cent.
Europe's STOXX 600 index fell 0.3 per cent, with Germany's DAX down 0.5 per cent and the UK's FTSE 100 roughly flat.
"Trump is Trump — he will not abandon his America First mantra and will keep pushing the limits as long as he is in power. (There) may be some relief for some European exporters, but the tough anti-Europe attitude of the Trump administration is not fading away," said Helsinki-based Evli's senior portfolio manager Tomas Hildebrandt.
Asian markets were mixed, but stocks broadly rose, with the MSCI Asia index, which excludes Japan, up 0.86 per cent.
Hong Kong's Hang Seng index rallied 2.53 per cent, partly due to expectations that China will face lower tariffs after the ruling. Goldman Sachs analysts noted that China could see a 6.6 percentage-point drop in its tariff rate.
Japan's Nikkei was shut for a holiday, but futures fell 0.24 per cent.
Brent crude oil prices slipped 0.6 per cent to US$71.31 a barrel, unwinding some of the gains made last week when Trump said the US could strike Iran amid a large-scale build-up of forces in the region. Further US-Iran talks are scheduled for Thursday.
Government bonds rose very slightly in the US and Europe, with the 10-year US Treasury yield down just under a basis point to 4.078 per cent. Yields move inversely to prices.
