European markets bounce back on easing trade tension

General market commentary

European equity markets closed higher on Monday, buoyed by President Donald Trump’s decision to delay the threatened 50% tariffs on European Union goods from June 1 to July 9, which eased immediate trade tensions and lifted investor sentiment. The pan-European Stoxx 600 index rose about 1%, with notable gains in the automotive sector, while Germany’s DAX and France’s CAC 40 advanced 1.8% and 1.3% respectively. Meanwhile, UK markets remained closed for a public holiday.

In contrast, U.S. markets were closed on Monday for Memorial Day, resulting in thin trading and no fresh price action, but futures for major U.S. indexes surged over 1% in early trading on optimism from the tariff delay. Investors now await key economic data and earnings reports later in the week amid ongoing concerns about trade relations and inflation pressures.

Latest market and economic update

Asian markets were mostly flat to slightly lower on Tuesday as investors remained cautious amid ongoing concerns about potential new U.S. trade tariffs. Japan’s Nikkei dipped 0.3% after the Bank of Japan hinted at possible rate hikes, while South Korea’s KOSPI fell 0.5% due to weakness in chipmakers, and Chinese and Hong Kong markets showed mixed, modest declines.

US equity futures rose sharply on Monday night following President Trump’s announcement to delay the 50% tariffs on European Union goods from June 1 to July 9. Dow futures gained about 1.1%, S&P 500 futures increased around 1.2%, and Nasdaq 100 futures led with a rise near1.4%, reflecting relief over eased trade tensions.

European equities closed sharply higher on Monday after the US delayed imposing 50% tariffs on the EU, easing trade tensions and boosting investor sentiment. The Eurozone’s STOXX 50 rose 1.3% to 5,397, while the broader STOXX 600 gained 1%, led by strong rebounds in export-heavy sectors and major automakers such as Stellantis, Volkswagen, and BMW.

The US dollar traded at five-week lows on Tuesday, with the dollar index holding below 99 amid mounting concerns over the US fiscal outlook and erratic trade policies. The euro strengthened to a one-month high of 1.1394, as the postponement of steep tariffs on EU imports and rising debt fears weighed on the greenback.

Oil prices were mostly steady this morning as investors awaited a key OPEC+ meeting, now moved to May 31, where a likely production increase of 411,000 barrels per day for July is expected to be decided. Prices were supported by U.S. President Donald Trump’s extension of the deadline for tariffs on the European Union, while concerns over fresh sanctions on Russia added to uncertainty.

China’s industrial profits accelerated in April, rising 3.0% month-on-month and 1.4% year-on-year for the January-April period, reflecting the positive impact of recent government stimulus. However, challenges remain as state-owned enterprises saw profits decline, global uncertainties persist, and sectors like autos face intense price competition, highlighting the fragile nature of the recovery.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Tesla’s European sales nearly halved in April, dropping 49% year-on-year to 7,261 units, as the company struggles with an ageing model lineup, rising competition from European and Chinese EV makers, and a boycott linked to CEO Elon Musk. Despite overall battery electric vehicle sales in Europe growing by over 27%, Tesla’s market share fell from 1.3% to 0.7%.

Shares in Chinese automakers BYD, Geely, and Nio fell sharply on Monday after BYD announced new price cuts and incentives on over 20 models, intensifying the ongoing price war in the electric vehicle market. The industry faces heavy losses, supply chain pressures, and unsustainable price reductions that threaten product quality and supplier stability.

Pony.ai has partnered with Dubai’s RTA to deploy robotaxi services, aiming for 25% of the city’s travel to be autonomous by 2030. The company plans to begin mass production of its seventh-generation robotaxis in late 2025 and expand its global fleet through partnerships with major automakers.

Trump Media & Technology Group denied reports it plans to raise $3 billion for cryptocurrency investments, calling the Financial Times story and sources unreliable. The FT had reported TMTG aims to secure $2 billion in equity and $1 billion via convertible bonds to fund crypto purchases, but the company offered no further comment.

Upcoming data and events

Markets are today focused on a slate of key economic data, including US durable goods orders, housing figures, and consumer confidence, which will provide insight into underlying economic strength. In Europe, attention turns to France’s EU-harmonised CPI and the euro area’s Economic Confidence Index for May, both of which will help gauge inflation trends and business sentiment across the bloc.

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