9:12 AM · 3 February 2025

Wall Street pressured by risk-off amid US tariffs📉US100 loses 1.9%; US2000 down 2.5%, Bitcoin defends $95k

The risk of a trade war between the U.S. and its main trading partners, such as Canada, Mexico, and China, is putting pressure on U.S. equities. The primary concern is the fear of a prolonged period of restrictive Federal Reserve policy, as tariffs could lead to higher inflation and increased inflation expectations.

According to Fed model estimates, the current tariff measures may raise the Personal Consumption Expenditures (PCE) price index by 0.7 percentage points while weakening U.S. GDP by 1.2 percentage points in a baseline scenario - if the US trade partners will respond with the same tariffs. Such dynamics could increase pressure on U.S. consumers, reducing the likelihood of a soft landing.

Of course, uncertainties remain, and Trump’s announced tariffs could still serve as negotiation tools and may even be rolled back. However, following Canada’s retaliatory 25% tariffs, China has also announced that will provide countermeasures. The US500, US100, US30 and US2000 lose 1.5%, 1.8%, 1.3% and 2.5% respectively.

US100 (H1 interval)

Futures on Nasdaq 100 (US100) are losing almost 2.2% and opened the week by a large bearish price gap. Levels between 20600 and 21000 are major support for bulls. Current US tariff rate will increase tomorrow from 3% to 10.7%.level. The US 2-year treasury yields are up almost 0.4 p.p, today, and US dollar (USDIDX) surges almost 1%.

 

Source: xStation5

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