US Stock Futures Drop on Signs of Trade War Damage: Markets Wrap

By Pune Media On May 6, 2025

(Bloomberg) — Global stocks fell as a slew of corporate statements reinforced concerns about the trade war’s damaging impact on companies and the world economy.

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Contracts on the S&P 500 slipped 0.7%, while those on the Nasdaq 100 dropped 0.9%. Palantir Technologies Inc. fell about 8% in premarket trading after the software firm’s results failed to meet investors’ expectations, and analysts noted weakness in its international sales division. Ford Motor Co. dropped 2.3% after the carmaker pulled its financial guidance and flagged a total tariff impact of about $2.5 billion on 2025 earnings.

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In Europe, the Stoxx 600 benchmark snapped a 10-day run of gains to drop 0.5%, as companies such as Royal Philips NV and Vestas Wind Systems A/S warned of uncertainty fueled by trade tariffs.

The moves suggest that a recent burst of optimism fueled by some US trade concessions may already be fading. On Monday, the S&P 500 halted a nine-day rally that was its longest in about 20 years. While Ford’s warning served as a reminder that damage from the tariff war will become evident over the coming months, a run of firm economic data in recent days has caused traders to dial back bets on Federal Reserve interest-rate cuts.

Markets have already priced any short-term positives on this front and are bracing for the economic slowdown, said Mohit Kumar, chief economist and strategist at Jefferies International.

“Our view is to use the recent rally to reduce exposure to the US,” Kumar said in a client note. “We do see some slowdown in the economic data as we head toward June and the tariffs start to have an effect.”

Meanwhile, investors are also coming around to the view that the Fed won’t cut interest rates as early or as deeply as earlier anticipated. While it’s expected to leave interest rates on hold this week, money markets have pushed back the timing of the first reduction to July and see three cuts by year-end, rather than the four they had expected a week ago.

Bloomberg’s dollar index traded little changed, ceding an earlier modest gain. The gauge is down nearly 7% this year and data shows traders have been adding to bearish bets. The fallout is being felt worldwide, with wild swings in recent days across Asian currencies, while Hong Kong has ramped up sales of its local currency to protect its foreign-exchange peg.

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Meanwhile, the Bank of England is set to cut rates this week and may even pave the way for a series of back-to-back reductions in response to the trade war. The European Central Bank will also cut rates further, Governing Council member Yannis Stournaras, said.

Some of the main moves in markets:

Stocks

The Stoxx Europe 600 fell 0.5% as of 10:01 a.m. London time
S&P 500 futures fell 0.7%
Nasdaq 100 futures fell 0.9%
Futures on the Dow Jones Industrial Average fell 0.6%
The MSCI Asia Pacific Index rose 0.1%
The MSCI Emerging Markets Index was little changed

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $1.1327
The Japanese yen rose 0.4% to 143.13 per dollar
The offshore yuan fell 0.2% to 7.2159 per dollar
The British pound rose 0.1% to $1.3315

Cryptocurrencies

Bitcoin rose 0.1% to $94,348.26
Ether fell 0.4% to $1,800.97

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.36%
Germany’s 10-year yield advanced two basis points to 2.54%
Britain’s 10-year yield advanced five basis points to 4.55%

Commodities

Brent crude rose 2.4% to $61.65 a barrel
Spot gold rose 1.3% to $3,375.96 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Ruth Carson and Anand Krishnamoorthy.