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Global Markets Rebound on Fed Cut Odds as New U.S. Tariffs Loom

Futures rallied with markets pricing in an 80 percent chance of a September Fed rate cut ahead of Thursday’s implementation of new U.S. tariffs

People walk in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, Aug. 1, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)
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Overview

  • President Trump signed an executive order reimposing tariffs ranging from 10 percent to 41 percent on imports from Canada, Brazil, India and Taiwan, which will take effect this Thursday.
  • The U.S. economy added only 73,000 jobs in July and saw unemployment tick up to 4.2 percent, fueling recession concerns and prompting Trump to dismiss BLS commissioner Erika McEntarfer.
  • U.S. equity futures climbed on Monday as investors increased bets on a Federal Reserve rate cut in September to roughly 80 percent, according to the CME FedWatch tool.
  • The S&P 500 and Nasdaq 100 fell as much as 2.7 percent and 3.9 percent respectively from recent record highs before recovering some losses on stronger Fed-cut odds.
  • Traders remain on edge over elevated market volatility driven by trade policy shocks, weakening labor data and political interference in statistical agencies.