For the past week, at least, the U.S. stock market has managed look past — if not outright ignore — looming trade tensions with our biggest trading partners. The Dow has risen in four out of its past five trading days, bolstered by highly impressive U.S. labor numbers both from yesterday’s Initial Jobless Claims and last week’s non-farm payroll report from the Bureau of Labor Statistics (BLS).
However, as the latest G7 summit convenes in Quebec, Canada today, those tensions are now front and center: market futures are all down ahead of today’s opening bell, following a morose trading day in both Asian and European markets. Trade tariffs the U.S. has imposed on Canada, its biggest trading partner, along with President Trump’s resistance to honor past agreements such as the Paris Climate Accord look to dominate headlines this morning.
French President Emmanuel Macron took a blithe view of Trump’s participation, or lack thereof, in these issues and others, such as the Iran nuclear deal. He suggested the G7 (Group of 7 countries representing some of the largest economies in the world: the U.S., U.K., Japan, Germany, Canada, Italy and France) may as well be called G6, which itself he said was “a true international force.”
Regardless where any of us stand politically on these matters, it is undeniably having a negative affect thus far on markets across the globe. More tensions than solutions are expected this weekend, especially where the U.S. is concerned. The president this morning, in an impromptu press conference with his waiting helicopter, blades whirring in the background, took a similarly blithe view, saying, “When it all comes down, we’ll all be in love again.”
Where the concerns lie within the U.S. markets seem to be in exactly the places the U.S. has performed so strongly of late: economic growth and full employment. While trade negotiations are part of everyone’s presidency, Trump is characteristically doing things his own way, seemingly arbitrarily slapping steel and aluminum tariffs on our biggest trading partner, Canada, while forging out unexpected and rather particular deals with China, the trading partner Trump most railed against back on the campaign trail.
It’s perhaps worth reiterating that China is not in the G7. Neither is Russia, by the way, which is something Trump stated he’d like to see changed. Basically, there appears to be more important issues up in the air ahead of a major summit than at any time in recent history. Again, wherever any of us come down on any of this politically, what we are most definitely seeing this morning in uncertainty. And we all know how the market feels about that.