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Hello and welcome to our slippery coverage of the global economy, financial markets, the eurozone and businesses.
Donald Trump has been under intense pressure in recent days, after Special Investigator Robert Mueller had explained that he was not convinced that the US President had not committed a crime obstructing justice What better way to distract than to drop a glitzy commercial advertisement?
In an evening that took investors by surprise, Trump tweeted that he would impose a 5% tariff on all Mexican imports, gradually increasing up to 25%, unless Illegal immigration to the United States continues.
Donald J. Trump
(@RealDonaldTrump)On June 10, the United States will impose a 5% tariff on all goods coming into our country from Mexico, until irregular migrants arrive in Mexico and in our country, STOP. The tariff will increase gradually until the problem of illegal immigration is solved, ..
Donald J. Trump
(@RealDonaldTrump)…. when will the rates be removed? Details of the White House to follow.
Michael Hewson, Chief Market Analyst at CMC Markets, said:
This surprise announcement, which comes as a result of the recent USMCA trade agreement [US Mexico Canada agreement], was completely unexpected and could well reverse the deal as a whole.
It is also much more difficult for countries to believe the United States in trade negotiations if their president can so easily launch a grenade in the path of an agreement already reached.
Investors reacted to the move with a flight to safety. Futures in the European stock markets show a strong downturn when the market is open.
The return on benchmark sovereign bonds, which moves in the opposite direction of prices, fell sharply as investors rushed to buy the safe haven badets. The yield on the 10-year US loan fell to 2.17%, its lowest level since September 2017.
Japanese indices fell, with Topix and Nikkei 225 decreasing by 1.3% and 1.7% respectively. Major Japanese automakers manufacture one-third of their vehicles in Mexico, according to Reuters. Mazda shares fell 7%, while Toyota fell 3%.
The Chinese stock market, however, avoided the worst of the fall, the CSI 300, which tracks the shares of Shanghai and Shenzhen, fell by only 0.2%. This relatively mild decline occurred despite the PMI figures suggesting that Chinese manufacturing under contract in May faster than economists had expected.
UK, Legal & General announced today that it will sell its property and casualty business to Allianz in Germany to focus on its core retirement savings business. The transaction will bring L & G £ 242 million.
L & # 39; s calendar
- 9:00 BST: final estimate of Italian GDP growth rate (first quarter)
- 9:30 BST: Consumer Credit of the Bank of England (April)
- 9:30 am BST: Mortgage Approvals from Bank of England (April)
- TSB: Inflation rate in Italy (May)
- 13h (Paris time): inflation rate in Germany (May)
- 13h BST: Indian GDP growth rate (first quarter)
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