Author: gulftoday

Global markets climbed on Monday and the euro rallied after US President Donald Trump kicked his threat to slap 50% tariffs on European Union goods into July, marking another temporary trade policy reprieve.

MSCI’s broadest index of world shares rose 0.2%. The pan-European stocks index, last up .9%, recovered to where it was trading before Trump on Friday unexpectedly called for 50% tariffs on European goods, saying negotiations with the region had become too sluggish.

On Sunday, Trump reversed course, pushing the deadline for tariffs to July 9 from June 1, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.

Trump’s latest policy moves were a reminder to investors how quickly circumstances could change. Analysts have pointed out that investors are shifting their money out of US markets to Europe and Asia as they price in a possible US recession and a consequent global slowdown.

European stock markets rallied Monday after US President Donald Trump delayed 50-percent tariffs on the European Union until July 9 to give more time for negotiations.

Trump provided some relief Sunday by saying he was putting off the EU tariffs until July 9 after a “very nice call” with European Commission President Ursula von der Leyen, adding that officials will “rapidly get together and see if we can work something out”.

Von der Leyen vowed to move “swiftly” to reach a deal.

On Monday the Paris CAC 40 index closed 1.2 per cent higher while the Frankfurt gained 1.7 per cent.

London and Wall Street were closed for holidays, but US futures were higher while Asia struggled.

Analysts said the latest unexpected salvos from the White House highlighted the uncertain path investors are having to walk owing to the president’s volatile policy pivots.

“The stock market seems to dance to Trump’s tune: first a threat, then a pullback, quickly followed by a rebound as speculative investors anticipate a concession from the US president,” said Jochen Stanzl, chief market analyst at CMC Markets trading platform.

“This morning’s confirmation of such expectations reinforces the so-called ‘Trump Pattern’, which is increasingly seen as a successful strategy for risk-tolerant investors.” The dollar remained under pressure after dropping Friday.

Oil prices fluctuated and ended flat, with producers’ group OPEC+ expected this week to continue to raise production despite low prices, after pressure from Trump.

– Steel saga – Investors have also fretted over Trump’s economic policies, with US long-term government bond yields surging last week over concerns that his tax relief and spending cuts plan − which was approved by the House − will increase the US debt pile.

Traders are also looking ahead to Wednesday’s release of minutes from the Fed’s earlier May policy meeting, hoping for an idea about the central bank’s views on the economy.

That is followed by the Fed’s preferred measure of inflation − US personal consumption expenditures − on Friday.

In company news, shares in Seoul-listed Samsung rose almost one per cent despite Trump’s threat of tariffs on smartphone makers.

In Tokyo, Nippon Steel rallied as much as 7.4 per cent after Trump threw his support behind a new “partnership” between the Japanese firm and US Steel. It ended up 2.1 per cent. US Steel soared 21 per cent in New York on Friday.

In Europe, shares in steel giant ThyssenKrupp surged 8.7 per cent after the firm said it planned a major overhaul that will split the vast conglomerate into several standalone businesses.

Swedish carmaker Volvo rose more than two per cent after it announced it would cut 3,000 jobs as part of a $1.9 billion cost-cutting plan.

Separately, Canada’s main stock index surged on Monday, after US President Donald Trump extended the deadline for European Union trade talks, providing a brief respite to investor concerns over his erratic trade policies.

The Toronto Stock Exchange’s S&P/TSX composite index was up 0.6% at 25,024.83 points.

On Sunday, Trump backed away from his threat to impose 50% tariffs on EU imports to July 9 from June 1, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.

However, despite global market sentiment steadying after new trade deals with the UK and China earlier this month, Trump’s sweeping tariffs and pauses since April 2 continue to generate uncertainty among investors and companies.

Agencies

Global shares and Wall Street were higher on an easing in trade tensions between the world’s two largest economies, while the US dollar extended losses as benign US inflation data kept Federal Reserve rate cuts on the table.

Gold prices fell as the US-China trade truce dimmed bullion’s safe-haven appeal.

European stocks eased after four sessions of gains. Asian shares gained. MSCI’s gauge of stocks across the globe rose 2.24 points, or 0.26%, to 873.44.

As a truce in the tariff spat between China and the United States appeared to hit pause in the global trade war, investors have pushed global equities higher, although European shares took a breather on Wednesday.

“It’s all about the change in risk appetite,” said Lars Skovgaard, senior investment strategist at Danske Bank.

“I have a hard time seeing that we’ll go back to this extreme political noise,” he added.

On Wall Street, the Dow Jones Industrial Average rose 64.35 points, or 0.15%, to 42,204.78, the S&P 500 rose 2.26 points, or 0.04%, to 5,888.81 and the Nasdaq Composite rose 72.27 points, or 0.38%, to 19,082.35.

Europe’s STOXX 600 retreated after having jumped over 17% since its trough on April 9, the day US President Donald Trump announced he would be pausing most of the reciprocal tariffs on US trading partners.

MSCI’s broadest index of Asia-Pacific shares outside Japan closed higher by 1.56%, to 614.33, while Japan’s Nikkei fell 55.13 points, or 0.14%, to 38,128.13.

The broader Topix snapped a 13-day winning run, its longest streak in nearly 16 years.

Hong Kong’s Hang Seng index jumped, lifted by tech stocks after Chinese e-commerce retailer JD.com posted strong results. Tencent, China’s biggest tech company, posted a 13% rise in first-quarter revenue on Wednesday.

Focus this week will also be on earnings from Alibaba on Thursday.

Data on Tuesday showing softer-than-expected US consumer inflation also provided some relief to investors worried about the inflationary impact of US tariff policies, which had severely undercut expectations of near-term Fed rate cuts.

Though traders expect inflation to pick up as tariffs lift import costs, the uncertainty over the outlook remains as Washington moves ahead to strike deals with its trading partners.

“US tariffs on Chinese goods are still much higher than they were months ago,” said Wei He, China economist at Gavekal Research.

“There’s still plenty of uncertainty about the outlook.” Trump in an interview on Tuesday said he could see himself dealing directly with Chinese President Xi Jinping on details of a trade pact. His touted “potential deals” with India, Japan and South Korea are still pending.

ASSESSING TARIFF IMPACT The Fed has warned of rising economic uncertainty, signalling it is prepared to wait to assess the impact of US tariffs before moving to cut interest rates again. Fed Chair Jerome Powell is scheduled to give remarks on Thursday.

The US dollar, which has taken a beating recently on the back of the economic and policy uncertainty, fell 0.24% against a basket of currencies including the yen and the euro.

Global asset managers held their biggest underweight position in the dollar in 19 years in May, as Trump’s trade policy cut investor appetite for US assets, Bank of America’s global fund manager survey (FMS) showed on Tuesday.

The euro gained 0.25% to $1.1212.

US yields rose as investors weighed softer-than-expected April inflation data against expectations that tariffs will fuel higher prices in the coming months.

Eurozone yields meanwhile retreated.

The next major signal for US economic health is retail sales data for April due on Thursday. The same day, talks are planned between Ukraine and Russia in Istanbul with hopes of a ceasefire three years into the deadliest conflict in Europe since World War Two.

In commodities, rising US crude stockpiles pressured prices. Brent crude futures fell to $66.07 per barrel, down 0.84% on the day. US crude fell 0.91% to $63.09 a barrel Spot gold fell 1.96% to $3,183.69 an ounce.

Canada’s main stock index fell on Wednesday, after six straight sessions of gains, as investors took a breather while awaiting signals from ongoing trade developments.

The Toronto Stock Exchange’s S&P/TSX composite index was down 0.13% at 25,583.02 points after rising 2.6% in the past six sessions and hitting a three-month high last week.

Markets have been rising on trade optimism after a limited US-UK agreement and the United States and China pausing their fierce tariff dispute assuaged fears about a global economic slowdown.

Agencies