S&P 500 Futures Fall 2% as Trump Tariffs Hit

S&P 500 futures dropped 2% on Monday after President Donald Trump confirmed tariffs on Canada, Mexico, and China, covering $1.3 trillion in imports. European markets looked set for deeper losses, with STOXX 50 futures down 2.4% after Trump stated that tariffs on the EU will "definitely happen." Meanwhile, China’s markets remained closed, but Hong Kong stocks held up better than regional peers as investors anticipated Beijing’s response.

Equities

Britain’s FTSE 100 closed at a record high on Friday, rising 0.3% to 8,692.84 and marking its best month in over two years with a 6.1% gain in January. The mid-cap FTSE 250 added 0.6%, ending the month 0.8% higher. Investors are looking ahead to the Bank of England’s rate decision next week, with markets fully pricing in three quarter-point rate cuts by the end of 2025.

Smiths Group surged 10.8% to an all-time high after announcing plans to spin off its Detection business. The move follows pressure from US activist investor Engine Capital. In the sector rankings, aerospace and defence stocks led the day with a 1.5% rise, while precious metal miners slipped 1.2% after sharp gains in the previous session. House price growth in the UK slowed in January, rising by just 0.1%.

Wall Street ended lower on Friday after the White House announced that President Donald Trump will implement tariffs of 25% on Canadian and Mexican imports and 10% on Chinese goods. The Dow Jones Industrial Average fell 0.8%, the S&P 500 lost 0.5%, and the Nasdaq dropped 0.3%. Despite the day’s losses, the Dow rose 4.7% in January, while the S&P 500 and Nasdaq gained 2.7% and 1.6%, respectively.

Apple dipped 0.7% after initially rising on upbeat executive comments following its earnings report. Chevron dropped 4.6% after missing fourth-quarter earnings estimates, while Exxon Mobil fell 2.5% after its own quarterly report.

Investors are watching for further developments on tariffs, with Trump stating after the close that additional measures related to oil and gas may be introduced around mid-February.

Forex & Commodities

The US dollar surged as markets reacted to President Donald Trump’s new tariffs on Canada, Mexico, and China. The Mexican peso fell 2.7% to its lowest level in nearly three years at 21.2583 per dollar, while the Canadian dollar dropped to C$1.4755, a level last seen in 2003. The euro declined 2.3% to $1.0125 before recovering slightly to $1.02325, its weakest level since November 2022. Sterling fell 1% to $1.2264, while the Swiss franc weakened to 0.9210 per dollar, its lowest since May. The Japanese yen held firmer, trading at 155.59 per dollar.

Gold dropped 0.6% to $2,784.30 per ounce after reaching a record $2,817.23 on Friday. US gold futures fell 0.7% to $2,815.20. While tariffs often boost safe-haven demand, a stronger dollar and expectations of fewer Federal Reserve rate cuts have pressured prices. Citi predicts further escalation could push gold to $3,000 per ounce. Silver fell 1.3% to $30.91, platinum declined 1.5% to $963.10, and palladium lost 0.5% to $1,003.34.

Oil prices rose on concerns about supply disruptions following the tariffs. Brent crude climbed 0.96% to $76.40 per barrel after hitting $77.34, while US West Texas Intermediate crude increased 1.88% to $73.89, having reached a session high of $75.18. The US has imposed a 10% tariff on Canadian energy imports and 25% on those from Mexico. US gasoline futures rose 2.66% to $2.1136 per gallon, with concerns that tariffs on heavier crude could squeeze refinery margins.