0102 GMT November 18, 2019
Washington says it will impose a five-percent tariff on Mexican goods beginning June 10, which would then rise steadily to 25 percent until illegal immigration across the countries’ border is stopped. Trump tweeted the decision late Thursday, catching markets by surprise, Reuters reported.
The S&P 500 dropped 1.3 percent, bringing its loss for May to 6.6 percent, equivalent to about $1.6 trillion of its market capitalization, according to Refinitiv’s Datastream.
MSCI’s gauge of stocks across the globe shed 0.8 percent, bringing its monthly loss to 6.2 percent, equivalent to over $2 trillion, according to Datastream
“The more that we worry about additional tariffs being laid on when we haven’t even resolved the initial tariff issues we’re having with China, it’s just negative overall for global markets,” warned Saira Malik, the head of global equities at Nuveen, a global investment manager with almost a trillion dollars under management.
Japan’s Nikkei index and MSCI’s Asia Pacific index, ex Japan, each tumbled almost eight percent in May, underscoring the region’s sensitivity to global trade.
The pan-European STOXX 600 index lost 0.8 percent on Friday and ended down 5.7 percent for the month, its deepest monthly drop since January 2016.
“The latest tariff threat with Mexico was quite unexpected, as we’ve been hearing how well discussions have been going with both Canada and Mexico,” Ryan Detrick, senior market strategist for LPL Financial, wrote in an email.
“The big question at the end of the day though is can we really fight two trade wars at the same time?”