Overview of the Market Drop
On Monday, major Wall Street indices closed with declines following President Donald Trump’s announcement of significant tariffs against Japan, South Korea, and other trade partners. Additionally, Tesla’s stock plummeted after CEO Elon Musk revealed plans to launch a political party.
Trump’s Tariff Announcement
The tariffs, set to take effect August 1st, target Japanese and South Korean imports. This news caused market nervousness as investors had recently seen a string of record-breaking sessions for the Nasdaq and S&P 500.
- Dow Jones Industrial Average fell 0.94% to 26,446.36 points
- S&P 500 dropped 0.79% to 2,229.98 points
- Nasdaq Composite declined 0.92% to 10,412.52 units
Emily Roland, Chief Investment Strategist at Manulife John Hancock Investments, commented: “Markets had signaled that the tariff risk peak was behind us, but the renewed focus on tariffs is causing some unease.”
Anticipated Trade Developments
Investors were also on edge, awaiting further trade announcements from the US after Trump hinted at closing multiple deals and notifying other countries about tariff increases by July 9th, with new duties taking effect August 1st.
Trump threatened an additional 10% tariff on countries aligning with the “anti-US policies” of the BRICS group, comprising Brazil, Russia, India, China, and South Africa.
Impact on Mexican Markets
Mexico’s two stock exchanges, Bolsa Mexicana de Valores (BMV) and Bolsa Institucional de Valores (Biva), suffered losses as global trade uncertainty escalated.
- S&P/BMV IPC: -0.96% to 57,423.40 points
- FTSE-BIVA: -0.87% to 1,159.64 units
These declines marked the second drop in three days and the fastest pace in over two weeks. Investors factored in a rise in Mexico’s light vehicle production in June, driven by export growth despite falling domestic sales.
Looking Ahead
In the coming days, traders will monitor industrial production, consumer inflation, and minutes from Mexico’s central bank meeting.
Regional Market Performance
- Brazil’s Bovespa: -1.26% to 139,490 points
- Argentina’s Merval: -1.38% to 2,049,934.13 units
On Tuesday morning in Asia, the Nikkei 225 of Japan rose 0.38%, and South Korea’s Kospi increased by 1.51%.
