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Talking Points:

  • Dow, S&P 500, Nasdaq all posted significant declines as tech weakness continues and trade wars threaten
  • Reports circulated that President Trump plans to meet with his trade team to discuss potential EU auto tariffs which would amount to a significant escalation in the US-EU trade war
  • The reports come a day after other outlets claim President Trump sees the threat of auto tariffs as a ‘successful negotiating tactic’

Dow Declines to Start the Week

The Dow Jones Industrial Average dove over 600 points on Monday as trade wars and tech weakness pressured markets. Trade concerns were heightened after Bloomberg reported that President Trump plans to meet with his trade team on Tuesday. Reportedly, the President wants to discuss a draft report on European auto tariffs. The announcement comes a day after Axios reported that President Trump sees the threat of auto tariffs as a “successful negotiating tactic.”

Dow Jones Price Chart Hourly, November 1st – November 12th (Chart 1)

Dow price chart trade war fears

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The tariffs would signal a significant escalation in the US trade war with the European Union. After a meeting between European Commission President Jean-Claude Juncker and President Trump in July resulted in an effective truce between the two trading partners, the front has been quiet. The pause allowed the Trump administration to focus on the USMCA and the US-China trade war.

Learn to trade around real-time news updates with our Introduction to Forex News Trading guide.

Ford, General Motors, Fiat Chrysler Price Chart 3 – Minute, November 12th (Chart 2)

ford, gm, fiat price chart on auto tariff news

After the report, automakers Fiat Chrysler (FCAU), General Motors (GM) and Ford (F) plunged to intraday lows on fears of retaliation and reduced foreign purchases. Alongside the Dow, the other US indexes were similarly in the red. Apple (AAPL) contributed meaningful losses for the Nasdaq which saw the tech-heavy index close down -2.98%.

NASDAQ Price Chart Hourly, November 1st – November 12th (Chart 3)

Nasdaq price chart on apple decline and auto tariffs

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Equities will now look for follow-up reports on the talks and other information regarding trade wars to drive price action. Due to the release time of the report, the immediate market reaction may have been somewhat controlled. Markets will likely weigh the threat and potential ramifications more thoroughly overnight which could prove bearish for equities tomorrow.

--Written by Peter Hanks, Junior Analyst for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX

Read more: FX Week Ahead: Q3’18 Japanese GDP, October UK & US CPI, Aussie Jobs

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