Hello. I'm Quentin Webb, here with your Monday update. It's a new week, a new month in the markets-and perhaps the dawn of a new era of trade wars.
Global markets swooned in response to the Trump administration's weekend move to levy tariffs on goods from Mexico and Canada, plus an extra 10% tariff on imports from China.
The dollar and oil surged, while stock futures and global equity markets sold off. Wall Street's "fear gauge," the VIX volatility index, leapt higher and bitcoin sank. Markets had finished a bumpy month broadly higher on Friday.
Follow our live coverage throughout the day for the latest news affecting markets.
Keep reading for much more on tariffs, including a big-picture view from The Wall Street Journal's chief economics commentator, Greg Ip .
Live Markets Snapshot Data refreshes every time you open this email. CONTENT FROM: Goldman Sachs U.S. GDP will grow 2.5% in 2025, outperforming consensus forecasts
According to Goldman Sachs Research, the U.S. economy is poised to beat expectations in 2025. Here's why: dimming inflation, easing recession fears, and labor market rebalancing all contribute to the market optimism. Read the U.S. Macro Outlook.
Read more.
Stocks to Watch
General Motors and Ford: The auto stocks suffered notable premarket declines, with GM falling more than 6% premarket. Tesla shares dropped 3% ahead of the open. The auto industry is potentially the most vulnerable sector to the 25% tariffs on Mexican and Canadian imports the White House announced over the weekend.
Volkswagen; Stellantis; Toyota; Nissan: Global auto stocks slid from Frankfurt to Tokyo. Many of the companies manufacture cars in Mexico or Canada and export them to the U.S.
Constellation Brands: Shares fell about 6% premarket as investors considered the implication of President Trump's Mexico tariffs on the importer of Modelo and Corona beers.
Lululemon: The Vancouver-based company's shares fell in light volume premarket. Its workout gear could be subject to tariffs.
MicroStrategy: Shares of the software company-turned-bitcoin buyer fell 5% premarket, as investors dumped riskier assets including cryptocurrencies. Coinbase shares dropped, as did those of online brokerage Robinhood.
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Trump's Tariffs Usher In New Trade Wars. The Ultimate Goal Remains Unclear.
By Greg Ip
Until the moment when President Trump announced 25% near-universal tariffs on Canada and Mexico, many on Wall Street, in Washington and in foreign capitals doubted he would. They didn't see how the changes served the U.S. economic, political or strategic interest.
That Trump did so anyway shows just how profoundly he is rewriting the source code of U.S. economic relations. The postwar bipartisan consensus that the U.S. prospers by fostering cooperation and integration with allies and neighbors is gone.
In its place looms the prospect of continuous trade war driven not by traditional alliances and ideology, but the priorities of the day. The winner is the one who can inflict, and withstand, the most economic pain.
What comes next is highly uncertain because Trump's motives are difficult to discern. He justified the tariffs, plus a 10% tariff on China, as a way to stop the flow of fentanyl and illegal migrants. Howard Lutnick, Trump's commerce-secretary nominee, last week said Canada and Mexico "are acting swiftly" on those concerns, implying a resolution could come quickly. The tariffs are to take effect Tuesday.
Keep reading .
More on Tariffs China is preparing an opening bid for trade talks with Trump. What Beijing is prepared to offer is chiefly focused on returning to a previous trade deal that didn't work out. That is likely to intensify debates in Washington over how to negotiate with China. How the U.S.-Canada-Mexico tariffs will work-and what products are targeted. Uncertainty surrounds the trade war touched off by Trump's tariffs. But some of the basics are taking shape . Why putting tariffs before tax cuts has spooked almost everyone. Placing levies on imports from Canadian crude oil to Mexican avocados has rattled investors, economists and some lawmakers , who are all wondering: What exactly is the goal? The tariffs have given U.S. steelmakers a green light to lift prices. Manufacturers anticipate higher costs for steel and aluminum .
Follow our live blog for the lastest on how the investors are reacting to the tariff moves, and how policy could affect global autos , U.S. farmers , manufacturing companies , the restaurant industry , and more. Charting the Markets
Why inflation back down at 3% isn't good enough: Even this rate of price pressures could feed consumer frustration, workplace friction and an inflationary psychology .
Prediction markets are offering a wild array of betting contracts and testing the limits of what they can get away with. Polymarket, the unregulated offshore prediction market, has listed contracts related to the Los Angeles wildfires and Israel's war with Hamas.
Intel has burned cash for three straight years as it pursues an ambitious turnaround plan. It aims to catch up in manufacturing technology, build a foundry business that makes chips for other companies, and stem market-share losses to rivals like Nvidia and AMD .
Must Reads
Wall Street is nervous about Scott Bessent's funding plans. The prospect of increased borrowing has spooked bond investors in recent months. One major concern: how the government, under President Trump's new treasury secretary, will execute that borrowing .
AI is Wall Street's modern gold rush. Here's how investors are placing their bets. The financing bonanza echoes previous booms around fiber-optic cable and fracking.
Moscow has $2 billion stuck at JPMorgan. The U.S. isn't sure what to do with it. The money was frozen after payments alarmed Justice Department investigators who found Russia and Turkey used a nuclear project to sidestep U.S. sanctions .
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About Us
We want to be the first place you go to get ready for the opening bell every day. This edition of the newsletter was written by Quentin Webb ( [quentin.webb@wsj.com]) in London.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
February 03, 2025 06:27 ET (11:27 GMT)
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