Trump’s Tariff Threats Hit Peso, Automakers Slide in Asia

Donald Trump’s tariff threats on Mexico, Canada, and China caused the Mexican peso to drop over 2% and Asian automaker stocks to tumble, with Toyota falling nearly 3% and Nissan dropping 5%. European markets are poised to open lower, with STOXX 50 futures pointing to a 1% decline as investors brace for potential tariff impacts on Europe. Meanwhile, key central bank officials in Europe and the Fed minutes are expected to provide further insights into monetary policy and economic stability.

Equities

The FTSE 100 rose 0.4% on Monday, reaching its highest close in over a month, buoyed by a global market rally following Scott Bessent’s nomination as US Treasury Secretary. Miners contributed significantly to gains, with Glencore, Anglo American, and Rio Tinto rising between 1.3% and 2.4% as copper prices rebounded. However, energy companies such as BP and Shell edged lower due to falling crude prices, while precious metals miners declined by 2% following a drop in gold prices.

Kingfisher fell sharply, losing 13.2% after warning of a £45 million hit to profits due to tax changes in the UK and France. The retailer cited slow growth and weak consumer sentiment as ongoing challenges. ITV shares surged 8.6% on reports of potential takeover interest led by CVC Capital Partners.

In the US, Wall Street indices closed higher, with the Dow Jones rising 0.99%, the S&P 500 up 0.3%, and the Nasdaq adding 0.27%. The small-cap Russell 2000 index reached a record high, benefiting from falling Treasury yields. Real estate stocks climbed, and the Housing Index gained 4.5%, supported by lower interest rates.

Amazon rose 2.2%, leading consumer discretionary stocks, while Bath & Body Works jumped 16.5% after raising its full-year profit forecast. Macy’s dropped 2.2% after delaying its third-quarter results due to an accounting issue.

Barclays raised its S&P 500 forecast for 2025, while Deutsche Bank set a target of 7,000 points by year-end 2025. Volume on US exchanges reached 16.69 billion shares, above the 20-day average of 14.93 billion.

Forex & Commodities

The US dollar strengthened following President-elect Donald Trump’s pledge to impose tariffs on imports from Mexico, Canada, and China. The dollar gained over 2% against the Mexican peso and reached a four-and-a-half-year high against the Canadian dollar. It also climbed to its strongest level since late July against the Chinese yuan. The Australian dollar fell to a three-month low of $0.64335 before stabilising slightly, while the New Zealand dollar briefly touched a one-year low before recovering.

Gold prices held steady at $2,624.41 per ounce, recovering from earlier losses that saw it drop to a one-week low. US gold futures rose 0.2% to $2,624.70, with investors weighing Trump’s tariff announcements and ongoing Federal Reserve discussions. Minneapolis Fed President Neel Kashkari signalled openness to another rate cut in December, with market expectations for a 25-basis-point cut at 55.9%, according to the CME FedWatch Tool.

Oil prices fell sharply amid reports of progress toward a ceasefire between Israel and Lebanon. Brent crude dropped $2.16 to $73.01 per barrel, while West Texas Intermediate crude slid $2.30 to $68.94 per barrel. The declines follow last week’s strong gains after geopolitical tensions involving Russia. OPEC+ is set to discuss maintaining current production cuts at its December meeting.