Dollar Rises as Tariff Pressure Weighs on Yen, Won

The US dollar extended gains overnight, supported by pressure on the Japanese yen and South Korean won following President Trump’s tariff notices to 14 countries, including 25% duties on Japan and South Korea. Asian stock indices rose modestly after Trump said the 1 August deadline was “firm, but not 100% firm,” giving markets room for optimism. In Europe, equity futures point lower, elsewhere Goldman Sachs upgraded its S&P 500 return forecast, citing likely Fed rate cuts and strength in large-cap US stocks.

Equities

The FTSE 100 fell 0.2% on Monday, weighed down by losses in oil and gas stocks following a disappointing update from Shell. The FTSE 250 slipped 0.1%. Shell shares dropped 2.9% after the company warned that second-quarter earnings would be hit by weaker performance in its integrated gas division and losses in its chemicals and products unit.

BP shares fell 2%, despite recent strength in oil prices. Currys led losses on the FTSE 250, falling 5% after RBC downgraded the stock to “sector perform”, citing sensitivity to macroeconomic headwinds. Ferrexpo slipped 1.5% after the Ukraine-focused miner reported a 40% decline in second-quarter iron ore production.

In the US, the S&P 500 dropped 0.8%, the Nasdaq fell 0.9%, and the Dow lost 0.9%, following the latest wave of tariff announcements from President Trump.

The administration confirmed that 25% tariffs will be imposed on imports from Japan and South Korea from 1 August, and added new tariff plans for Malaysia, Kazakhstan, South Africa, Laos and Myanmar. Trump also threatened an additional 10% duty on countries aligning with the BRICS group.

Tesla shares fell 6.8%, the biggest one-day drop since early June, after CEO Elon Musk announced the launch of a new political party called the "America Party", fuelling concern about distractions from the company's core business. Tesla ended the day at its lowest level since 5 June and was the largest drag on the S&P 500.

WNS Holdings jumped 14.3% after Capgemini agreed to acquire the outsourcing firm for $3.3 billion in cash.

Forex & Commodities

The US dollar firmed on Tuesday, holding recent gains after President Donald Trump issued tariff notices to 14 trading partners, including Japan and South Korea, with 25% duties scheduled to take effect from 1 August.

The dollar edged up 0.1% to 145.88 yen, near a two-week high, while the euro advanced 0.3% to $1.1744. The Australian dollar strengthened 0.8% to $0.6541 following the Reserve Bank of Australia's decision to hold its policy rate steady at 3.85%, defying expectations for a cut.

Gold prices were marginally softer, with spot gold slipping 0.1% to $3,331.85 per ounce. The strength in Treasury yields, with 10-year notes trading near a two-week high, limited gains in the non-yielding metal, although gold continues to draw underlying support from tariff uncertainty. Silver held at $36.75.

Oil prices eased after Monday’s nearly 2% gain. Brent crude declined 0.3% to $69.36 a barrel, while US West Texas Intermediate slipped 0.4% to $67.66. This followed OPEC+’s decision to raise production by 548,000 barrels per day in August, largely led by Saudi Arabia.