US futures rise, shrugging off Trump’s chip levies

Synopsis

US stock futures edged higher despite President Trump's threat of a 100% tariff on chip imports, with exemptions for companies relocating production to the US. The tariff announcement injected volatility, overshadowing positive sentiment fueled by expectations of a Federal Reserve rate cut. Trump also plans meetings with Putin and Zelenskiy while imposing tariffs on Indian goods.

US stock futures climbed in early trading Thursday, largely looking past President Donald Trump’s threat of a 100% tariff on chip imports.

Contracts for the S&P 500 and Nasdaq 100 rose 0.2% in early Asian trading, erasing brief losses. Trump said he would impose a 100% levy on imports of semiconductors, but will provide exemption for companies moving production back to the US. Shares in Nvidia Corp. and Apple Inc. rose in after-hours trading while those for Broadcom Inc fell. The dollar weakened and equity-index futures pointed to declines in Asia.

The latest tariff salvo injected fresh volatility into an otherwise bullish day on Wall Street that lifted US stocks and short-dated Treasuries, in part on firming expectations for a Federal Reserve rate cut next month.

“While trade uncertainty and elevated valuations could be a modest headwind for equities in the near term, investors can consider ways to manage volatility while positioning for longer-term gains,” said Mark Haefele at UBS Global Wealth Management.

Trump said the US would charge “a tariff of approximately 100% on chips and semiconductors,” late Wednesday in the US. He added “but if you’re building in the United States of America, there’s no charge.” The comments came as Apple Chief Executive Officer Tim Cook unveiled a $100 billion US investment plan alongside Trump in the Oval Office.

Meanwhile, Fed San Francisco President Mary Daly said policymakers will probably need to adjust rates in coming months to prevent further weakness in the labor market. Her Minneapolis counterpart Neel Kashkari said an economic slowdown may make a rate cut appropriate in the near term.

Separately, Trump may nominate a temporary Fed governor to fill a soon-to-be vacant seat on the central bank’s board, according to people familiar with the discussions.

In Asia, data set for release includes trade for Australia and China, inflation expectations in New Zealand and industrial production in Malaysia. Later Thursday, the Bank of England is expected to cut interest rates.

In geopolitical news, Trump told European allies he’s planning to meet with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy as soon as next week in another bid to bring peace between the two countries.

The US also imposed an additional 25% tariff on Indian goods, effectively doubling the rate announced days earlier, over its ongoing purchases of Russian energy. Oil prices fell Wednesday.

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