U.S. stocks fell and Treasuries rose after the Trump administration said it will slap tariffs on goods from key trading partners.

The S&P 500 Index dropped for the second time in three days after Commerce Secretary Wilbur Ross said the U.S. will impose levies on steel and aluminum from the European Union, Mexico and Canada. Mexican and EU officials said they will retaliate. Stocks in Europe fell and the euro erased gains. The yield on 10-year Treasuries fell to 2.83 per cent, while the U.S. dollar turned higher.

Trade tensions looked set to boil over again Thursday as the Trump administration took action against key allies who said they will respond. The dispute shifted focus from ongoing political turmoil in Europe ahead of Friday’s jobs report that will bring clues of the Federal Reserve’s next policy move.

“We are going to be filled with tremendous uncertainty over the course of the summer,” David Ader, chief macro strategist at Informa Financial Intelligence, told Bloomberg Television. “I don’t see that at this point in time we have a big directional play. I see a lot of uncertainty, which results in a lot of volatility.”

In Asia, Hong Kong and Chinese stocks outperformed after China’s official factory gauge underscored robust growth despite ongoing trade tensions. The Indonesian rupiah led a broader emerging-market currency rally after Bank Indonesia raised the benchmark interest rate for a second time in less than two weeks on Wednesday and flagged more increases to counter a selloff in the nation’s currency and bonds.

These are some key events to watch this week:

The U.S. employment report for May is due Friday. It’s the last before the June Fed meeting. Automakers report May U.S. sales the same day. Also Friday: some onshore Chinese stocks join MSCI Inc.’s global indexes. On Saturday U.S. Secretary of Commerce Wilbur Ross will travel to Beijing for more talks with Vice Premier Liu He on topics including ZTE Corp. and trade.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.4 per cent as of 10:11 a.m. New York time. The Nasdaq Composite Index rose 0.1 per cent. The Stoxx Europe 600 Index fell 0.2 per cent. The MSCI Asia Pacific Index rose 1 per cent, the largest advance since March. The MSCI Emerging Market Index increased 0.8 per cent, the largest climb in three weeks.

Currencies

The Bloomberg Dollar Spot Index rose 0.1 per cent. The euro fell 0.1 per cent to $1.1653, the strongest in a week. The British pound was steady at $1.3293. The Japanese yen rose 0.4 per cent to 108.52 per dollar.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.83 per cent. Germany’s 10-year yield dipped four basis points to 0.34 per cent. Britain’s 10-year yield dropped two basis points to 1.236 per cent.

Commodities

West Texas Intermediate crude decreased 1.4 per cent to $67.26 a barrel. Gold advanced 0.2 per cent to $1,304.30 an ounce.