US-Mexico tariffs and markets
Welcome to the last day of May. It's been a lousy month in markets. From two of my favorite market data geeks, CNN Business' Christine Romans and David Goldman:
The Dow is on track to close lower this week — for the sixth week in a row. That would be the worst losing streak since summer 2011.
With one day left, the Dow has fallen 5.35% in May. The last time stocks fell in May was in 2012, when the Dow fell 6.21%. It’s the worst month since December, when the Dow fell 8.66%. Remember December?
The US Chamber of Commerce, the most powerful business lobby in Washington, wasted no time responding to President Donald Trump's threatened tariffs on Mexican imports.
Neil Bradley, the chamber's chief policy officer:
“Imposing tariffs on goods from Mexico is exactly the wrong move. These tariffs will be paid by American families and businesses without doing a thing to solve the very real problems at the border. Instead, Congress and the president need to work together to address the serious problems at the border.”
Shares in global automakers slumped sharply on Friday after President Donald Trump said he would impose a 5% tariff on goods from Mexico, a move that could affect a huge number of vehicle exports.
Companies including Volkswagen, Fiat Chrysler, Nissan, Kia, Toyota, Mazda and Honda have plants in Mexico, which produce cars for export markets including the United States. US automakers Ford and General Motors also have factories in Mexico.
Shares in Mazda (MZDAF) plunged more than 7% in Japan. Nissan's (NSANF) stock dropped over 5%, while Honda (HMC) dipped 4% and Toyota (TM) shed nearly 3%. Volkswagen stock plunged 3.6% in Frankfurt and Fiat Chrysler gave up nearly 5% in Milan.
According to Goldman Sachs, the United States imports roughly $93 billion of goods related to autos each year from Mexico. That's by far the most valuable category shipped north from Mexico.
A tariff threat from President Donald Trump is roiling markets again.
US stock futures and global stock markets, including shares of Asian and European automakers, tumbled Friday after President Donald Trump said the United States will impose a 5% tariff on all Mexican imports.
- Japan's Nikkei slumped 1.6%, while South Korea's KOSPI was mostly flat. Markets in Europe also opened lower. Britain's FTSE 100 index fell 0.9%. Stocks in Germany shed 1.7%, and in France they dipped 1.3%.
- Stock futures indicated that those losses would extend to the US. The Dow is poised to fall 260 points, or 1%, when markets open. The S&P 500 is tracking similar losses, while the Nasdaq could drop 1.3%.
- The Mexican peso is down more than 3% against the US dollar.
US markets finished modestly higher yesterday, recovering a small portion of the week's losses. But despite the gains, all three major indexes are still down on the week.
The Dow is on track for its sixth consecutive weekly decline, its longest streak of that kind since June 2011.
A tough week for US retailers drags on.
- Gap (GPS) shares are down more than 13% in premarket trading after the company reported plunging sales on Thursday. Even its Old Navy brand, which is typically a strong performer, had a disappointing start to the year, with sales down 1%.
- Big box retailers and dollar stores are the lone bright spots. Profits at Costco (COST) beat expectations.
- Dollar General (DG) said sales are strong and customer traffic is up.
New data could provide more information. US personal income and personal spending data for April comes out at 8:30 a.m. ET today.
And a final read of the University of Michigan's consumer sentiment index for May hits at 10 a.m. ET.
Crude oil prices are on track for their first monthly loss of the year.
Brent crude oil, the global benchmark, dropped 3.5% today to $64.52 on new global trade fears. US oil fell more than 2.5% to $55.16.