Wall Street Futures Drop as Tariff Policy Bites

Wall Street futures are lower on Monday morning with President Trump pushing American retailers to absorb rising costs and pressuring China to increase consumption. US Treasury Secretary Bessent signalled stricter trade partner prioritisation and reaffirmed the 13% effective tariff rate, coinciding with Moody’s US downgrade over a $3–$5 trillion debt-linked tax plan. China retail sales missed expectations, further highlighting weak domestic demand and undermining hopes of a shift from an export-driven model.

Equities

The FTSE 100 rose 0.6% on Friday to close at its highest level in nearly two months, supported by easing global trade tensions and optimism around further agreements. The index posted a 1% gain for the week. The FTSE 250 also added 0.6%, extending its weekly advance to 1.7%, marking its seventh consecutive weekly gain.
Among UK companies, AstraZeneca climbed 1.9%, helping to lift the healthcare sub-index by 1.7%. BP rose 1.2% as energy shares tracked firmer oil prices. St James’s Place added 2.1% after J.P. Morgan increased its price target on the wealth manager. On the downside, Future PLC dropped 10.3%, the steepest fall in the midcap index, after warning it would take a more cautious approach for the second half of the year. Workspace Group fell 6.4% after flagging a £7 million trading profit headwind.
In the US, the S&P 500 rose 0.7% on Friday, the Dow Jones added 0.78%, and the Nasdaq gained 0.52%, all closing the week higher after a strong start fuelled by the temporary truce in the US-China trade dispute. The Nasdaq led with a weekly gain of 7.2%, followed by the S&P 500 at 5.3% and the Dow at 3.4%. However, major equity ETFs tracking the S&P 500 and Nasdaq fell around 1% in after-hours trade, reacting to Moody’s decision to downgrade the US credit rating due to rising debt and interest costs.
UnitedHealth Group led gains on the S&P 500, jumping 6.4% after recovering from eight straight days of losses, despite ongoing concerns following reports of a criminal investigation. Applied Materials fell 5.3% after missing second-quarter revenue estimates. Charter Communications gained 1.8% after announcing a $21.9 billion deal to acquire privately-held Cox Communications. Verizon rose 1.7% after the FCC approved its $20 billion acquisition of Frontier Communications, conditional on the end of its diversity and inclusion programmes.

Forex & Commodities

The US dollar edged lower at the start of the week, slipping to a one-week low of 144.80 yen, following Moody’s downgrade of the United States’ sovereign credit rating. The move, citing concerns over a $36 trillion national debt, weakened confidence in the greenback and contributed to its 0.3% drop against a basket of peers. The dollar also declined 0.2% to 0.8358 against the Swiss franc, while sterling made modest gains, rising 0.1% to $1.3297.
The Australian dollar rose slightly to $0.6413, recovering after three straight days of losses. Markets are widely expecting the Reserve Bank of Australia to cut interest rates by 25 basis points on Tuesday, which would lower the cash rate from 4.10%. Investors will be watching the RBA's guidance closely, particularly after last week’s strong domestic employment data. New Zealand’s kiwi dollar also firmed, climbing 0.2% to $0.5890.
Gold prices gained ground amid increased safe-haven demand, lifted by the weaker dollar and heightened trade policy uncertainty. Spot gold rose 0.4% to $3,216.29 an ounce, while US gold futures climbed 1% to $3,219.20. The rally follows last week’s sharp decline in gold, its worst weekly performance since November, which came as markets responded to optimism around a US-China trade pause.
Brent crude slipped 0.5% to $65.06 a barrel, and US West Texas Intermediate dropped 0.4% to $62.23, with traders reacting to the Moody’s downgrade and softer-than-expected Chinese industrial output and retail sales data. Despite a recent 90-day tariff truce between Beijing and Washington, concerns persist over the durability of the agreement and the outlook for Chinese demand. In the US, oil rigs in operation declined to 473, the lowest level since January, reflecting tighter producer spending.