A look at the day ahead in European and global markets by Kevin Buckland
And so it begins.
Trump took to his Truth Social platform late Monday to threaten 25% tariffs on Mexico and Canada if they don’t better control their borders, and additional tariffs on China.
Asian investors still sipping their morning coffee suddenly rushed to hit the sell button, sending the Mexican peso down more than 2% against the dollar at one point and Japan’s Nikkei nearly 2% lower. Automakers were notable losers. Toyota fell almost 3% and Nissan almost 5%.
Most markets in Asia have regained some calm by midday, but pan-European STOXX 50 futures are still pointing down about 1%, with traders wary that Europe could soon be in Trump’s crosshairs to stand.
The episode brings back uncomfortable memories for markets that have grown accustomed to reacting to planned events such as Fed policy announcements and monthly payroll reports during Joe Biden’s term as president. Now, investors should brace for market-moving messages from Trump at any time, as they did during his first term.
One analyst joked that it was time to consider downloading Trump’s Truth Social app since X, formerly known as Twitter, is no longer the new president’s platform of choice.
But going by Trump’s first term, social media posts and reality have not always aligned. There is still some way to go before Trump is sworn in again in January, meaning sentiment on Mexico, Canada and other tariff targets could change.
Ultimately, Trump has often said, he is all about making deals.
There is little on the calendar in Europe to distract from Trump’s post, apart from a few speakers from central banks across the region.
Huw Pill, chief economist of the Bank of England, will answer questions in the House of Lords about Britain’s economic health, or lack thereof.
ECB board member Elizabeth McCaul speaks in Frankfurt and colleague Mario Centeno presents the Bank of Portugal’s financial stability report.
Riksbank Deputy Governor Anna Seim attends a seminar in Stockholm and Bank of Finland Governor Olli Rehn answers questions in parliament.
Later in the day, the Fed will release the minutes of its early November meeting, during which it cut rates by a quarter point, following the first super-sized half-point cut of the current easing campaign in September.
Key developments that could impact the markets on Tuesday:
– BoE’s Pill in the upper house
– ECB’s McCaul and Centeno speaking at separate events
– Seim from the Riksbank speaks
– Rehn from the Bank of Finland in parliament