US futures hold up for now but tariffs threat remains

• S&P 500 futures +1.4%
• Nasdaq futures +1.1%
• Dow futures +1.7%

While there is a suggestion that market players are holding out some optimism for Trump to start making deals, the threat of him just letting the world burn in the meantime is still very much alive. There’s only 24 hours left before the tariffs come into effect and by the look of things, it is only Japan that is likely to settle upon something – at least for now.

As for the rest of the world, there will be at the minimum some short-term mess and pain to deal with from Trump’s tariffs. At best, that may only persist for a few more days/weeks as negotiations lead to some compromise. At worst though, this continues and the global economy is rocked hard in the months ahead.

The fake news on the 90-day tariffs pause yesterday shows how strong the risk appetite among dip buyers can be. But we’re not likely to see that again, at least in a realistic way, so it sort of rules out any instantaneous switch in the risk mood.

That means risk trades will have to gradually look for some form of stabilisation perhaps. And that might not be an easy thing when the best one can hope for is to just stare at the screens in hopes for negotiations and deals to be struck.

In the meantime, the longer the tariffs run their course will just mean more pain for the global economy as a whole. That especially if US-China trade tensions continue to escalate further as well.

The bottom line is that while there is some reprieve so far today, we’re not close to a major turning point yet as there are still so many uncertainties that need resolving.

This article was written by Justin Low at www.forexlive.com.