- Variable rental markets fall while Trump increases tariffs on the EU, Mexico and Canada
- The concerns that the highest import costs heat inflation and weigh on growth are affecting investors appetite due to shares.
- Goolsbee of the Fed warned on Friday that the highest tariffs question additional fees.
Wall Street is expected to open the week with the same negative tone that closed the previous one. Trump’s threat to impose tariffs of 30% on Europe and Mexico and 35% on Canada, three of its main commercial partners, crushed the appetite for the risk and sent down the majority of the stock market rates.
The Dow Jones industrial average shows the greatest fall, with the future of the Djia lowering 0.63% during the early European session. The futures of the S&P 500 index fall 0.33% while the futures of the Nasdaq technological index record losses of 0.22%.
The new tariff threats weigh on appetite for risk
These tariffs are higher than the tariffs of 20% taxes to the EU on April 2, day of liberation, or the taxes of 25% announced for Canada and Mexico. The reaction of the affected countries, however, has been contained so far. Investors are still optimistic that trade agreements are still possible, which limits the avevers risk reaction.
The concerns that the highest prices in imports hot inflation and can cause interruptions in the supply chain are affecting the appetite of investors for imports before the publication of the US Consumer Price Index, programmed for Tuesday, which could offer more information about the monetary policy plans of the Federal Reserve.
The market is discounting two rates cuts in the second half of the year, the first of them in September, but the solid employment figures from the USA.
On Friday, the president of the Fed of Chicago, Austan Goolsbee, warned that the new round of tariffs would confuse the perspectives on inflation and raise additional challenges so that those responsible for policies support the cuts of fees that the US president is asking.
Dow Jones – Frequently Questions
The Dow Jones Industrial Avenge, one of the oldest stock market indexes in the world, consists of the 30 most negotiated values in the United States. The index is weighted by the price instead of capitalization. It is calculated by adding the prices of the values that compose it and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, also founder of the Wall Street Journal. In recent years it has been criticized for not being sufficiently representative, since it only follows 30 companies, unlike broader rates such as S&P 500.
There are many factors that promote the Dow Jones Industrial Average (DJIA) index. The main one is the added performance of the companies that compose it, revealed in the quarterly reports of business benefits. The American and world macroeconomic data also contribute, since they influence investor confidence. The level of interest rates, set by the Federal Reserve (FED), also influences the DJia, since it affects the cost of credit, on which many companies depend largely. Therefore, inflation can be a determining factor, as well as other parameters that influence the decisions of the Federal Reserve.
Dow’s theory is a method to identify the main trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Avenge (DJIA) and the Dow Jones Transportation Average (DJTA) and just follow the trends in which both move in the same direction. The volume is a confirmation criterion. The theory uses elements of maximum and minimum analysis. Dow’s theory raises three phases of the trend: accumulation, when intelligent money begins to buy or sell; Public participation, when the general public joins the trend; and distribution, when intelligent money abandons the trend.
There are several ways to operate with the DJ. One of them is to use ETF that allow investors to negotiate the DJ as a single value, instead of having to buy shares of the 30 companies that compose it. An outstanding example is the SPDR Dow Jones Industrial Avenge ETF (day). Future contracts on the DJ allow the specular operators about the future value of the index and the options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Investment funds allow investors to buy a part of a diversified portfolio of DJ values, which provides exposure to global index.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
