Lingering Concerns Over Trump's Tariff Threats... New York Stock Exchange Opens Lower

Korea Economic Daily

Summary

President Trump announced that US stock markets opened lower as he signaled new tariffs against BRICS.
The announcement of American Party by Elon Musk led Tesla stock to plunge 8%, driving tech stocks downward.
Despite heavy selling from major investors, Bitcoin only experienced a slight decline alongside dollar strength.

Tesla Plummets 8% on Musk's Announcement of Forming a Third Party

Dollar Strengthens Amid New Tariffs Targeting BRICS

As the deadline for mutual tariff suspension approaches, President Trump of the United States has issued a new tariff threat targeting BRICS. On the 7th (local time), US stock markets started trading with a slight decline.

As of 10:20 a.m. Eastern Standard Time, the S&P 500 index was down 0.42%, the NASDAQ fell 0.54%, and the Dow Jones Industrial Average dropped 0.46%.

Tesla shares plunged more than 8% to $289, leading the decline in tech stocks. Following Elon Musk's announcement of forming a new political party, the American Party, investor sell-offs increased.

The 10-year US Treasury yield rose by 2 basis points (1bp=0.01%) to 4.36%, while the 2-year government bond rate remained largely unchanged at 3.88.

President Trump warned, "We will impose an additional 10% tariff on all countries siding with the anti-American policies of BRICS," resulting in a stronger dollar and a decline in emerging market currencies. Bloomberg Dollar Spot Index rose 0.4% on the day. The Japanese Yen fell 0.8% against the dollar, recording 145.69 yen per dollar.

Over the weekend, despite signs that so-called 'Bitcoin whales,' who made large purchases in Bitcoin's early days, were transferring and selling Bitcoin to other crypto wallets, Bitcoin only dropped 0.2% to $108,513.29.

The 90-day tariff reduction period expires on the 9th, and President Trump announced he would send unilateral tariff notifications to several countries starting today.

The US's main trading partners rushed over the weekend to move forward with trade agreements or to request additional time. Treasury Secretary Scott Besant stated that countries failing to reach an agreement by Wednesday would have a 3-week extension option for negotiations.

Seth Carpenter of Morgan Stanley commented, "A short-term 'deal' in trade negotiations will be limited in scope and leaves a lot of questions."

In an interview with CNBC, Besant stated that there would be several trade-related announcements over the next 48 hours and expressed hope that negotiations between representatives of the US and China, the two largest economies, would move forward within a few weeks.

Contributing journalist Jung-ah Kim kja@hankyung.com