AP Image/Seth Wenig

What drove US markets to new overnight highs?

Peter Switzer
10 July 2025

We wake this morning to a sea of green from US indexes overnight after what could be described as good news on tariffs.

The Dow was up 217 points, closing out at a record high of 44,458 points, while the tech-heavy Nasdaq put on almost 200 points, rounding out the session at 20,611 points. As a result, our market is expected to open up 45 points higher at the start. The Aussie dollar is at 65.4 US cents.

So what's driving the move northwards?

Overnight, Donald Trump added a whole pile of other countries to his list. Now we’ve got the Philippines, Brunei, Moldova, Algeria, Iraq, Libya, and Sri Lanka. They’re all in the group now. Twenty-one countries have been slugged by Donald Trump with trade tariffs since his crusade began back in April on "Clobberation Day".

Trump announced a range of numbers set to be charged to these nations should they look to import and of their goods or materials for sale into the US market. Tariffs will range from between 20 and 40 percent. That is, unless they come up with Trump's favourite thing: a deal. And that’s one big reason why markets are up overnight.

If there's one thing markets hate more than anything, it's uncertainty. Now that the market can "price in" tariffs from these countries at a maximum rate of between 20-40%, many are comfortable today their bets as it were. The market was thinking, “Okay, these are the numbers we’re hearing, but he is going to be susceptible to renegotiation,” and these numbers could be smaller. Hence the rise to new highs overnight.

One tricky thing that still worries a market watchers, however, is the idea of "sector tariffs" Trump has recently latched onto.

Sector tariffs are taxes placed on imports from a specific industry — like copper or pharmaceuticals — regardless of which country they come from. They’re designed to protect domestic producers but can disrupt global supply chains and impact related stocks. Trump has specifically picked on copper as one target, floating the idea of a 50% tariff if you try to sell foreign copper into the US.

It makes me worry a little bit about pharmaceutical companies in particular, too. Since Clobberation Day, he's talked about pharmaceuticals and how they should be taxed differently. Trump has even reached out his hand to put pressure on Albo over Australia's pharmaceutical benefits scheme.

Trump has criticised Australia’s Pharmaceutical Benefits Scheme (PBS) because it negotiates lower drug prices, which he argues hurts big US pharmaceutical companies. His push is about getting “fairer” deals for American drug makers selling overseas.

So as markets react well to some certainty around tariffs, that’s probably something I’m worried about for the future.

But as we’re looking at the market right now, it looks like the overall feeling is that Donald Trump’s tariffs will not be as bad as they look — and that could be good for the stock market.

When you throw in lower interest rates, his “One Big Beautiful Bill,” which brings tax cuts as well as deregulation — and then you’ve got artificial intelligence, which was pretty important overnight for companies like Nvidia — it all adds up. Speaking of, Nvidia went to a new all-time high and is now worth $4 trillion.

Markets are moving — and for now, investors are seeing reasons to stay optimistic.

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