Trump delays EU tariffs until 9th July

General market commentary

Equities pulled back last week after a strong two-month rally in the S&P 500, as a confluence of factors tempered investor optimism. Chief among these were renewed concerns over U.S. fiscal health following Moody’s downgrade of the U.S. credit rating, the final of the “Big Three” agencies to do so, alongside a weak 20-year Treasury auction and the passage of the “One Big Beautiful Bill” in the House, which proposes an extension of the 2017 tax cuts and could add nearly $3 trillion to the deficit over the next decade. The move reignited focus on the long-term trajectory of government debt, particularly with interest costs now at levels not seen since the early 1990s. As bond yields climbed, especially on the 30-year Treasury, which breached 5%, equities came under pressure, with the technology sector leading declines. A pullback in the dollar and lower demand at recent auctions suggest investors are reassessing the risk premium required for long-dated U.S. government debt.

Adding to market unease were escalating trade tensions, with former President Trump proposing 50% tariffs on the EU and a 25% levy on Apple, stirring fears of a renewed trade war. These threats, alongside an already precarious fiscal backdrop, weighed on risk sentiment. While major U.S. indices logged their fourth straight day of losses last Friday, bond markets saw some relief as yields dipped slightly on safe-haven buying. Despite the negative headlines, analysts suggest this may represent a pause rather than a reversal in the market’s broader uptrend, with historical precedent showing strong equity rallies often maintain momentum over the subsequent 12 months. In this context, investors are advised to remain diversified, consider opportunities in intermediate- and long-term bonds, and prepare for further volatility as fiscal and trade negotiations evolve.

Latest market and economic update

Asian equities were mixed on Monday, with technology shares, especially Apple suppliers in China, South Korea and Taiwan, falling after US President Trump threatened a 25% tariff on imported iPhones. Japanese shares outperformed, led by a nearly 4% gain in Nippon Steel after Trump expressed support for its proposed buyout of US Steel.

US equity futures rose late on Sunday after President Trump postponed a planned 50% tariff on the European Union until 9 July, following a call with European Commission President Ursula von der Leyen. US markets will nonetheless remain closed today for Memorial Day, following a turbulent week marked by sharp losses amid concerns over the fiscal outlook and rising trade tensions.

European shares closed sharply lower on Friday after President Trump proposed 50% tariffs on the EU, sparking fears of reduced export demand and potential retaliation. The Eurozone’s STOXX 50 fell 1.9% and the STOXX 600 declined, with autos, luxury and textile sectors leading losses, despite Germany’s Q1 GDP being revised up to 0.4% on strong manufacturing and exports.

The US dollar index fell below 99 on Monday, its lowest level in over a month, as the euro strengthened to 1.1407 following President Trump’s decision to delay 50% tariffs on the European Union. The dollar remains under pressure amid growing investor uncertainty over Trump’s shifting trade stance and fiscal policy signals.

Oil prices in Asia rose slightly this morning, after President Trump extended the deadline for his proposed 50% tariffs on the EU, easing trade concerns and supporting energy demand. However, gains were limited by oversupply worries ahead of the OPEC+ meeting and ongoing US-Iran nuclear talks that could affect global supply.

US President Donald Trump said on Sunday he is “absolutely” considering new sanctions against Russia following a deadly wave of missile and drone strikes in Ukraine that killed at least 12 people. The comments, marking a sharper tone towards President Putin, came after Trump revealed he had recently spoken with the Russian leader to push for a ceasefire.

Equities on the move

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

Nvidia is set to launch a lower-priced AI chip for China, using its new Blackwell architecture and GDDR7 memory, to comply with U.S. export restrictions and replace the banned H20 model. The move comes as its market share in China drops from 95% to 50%, with rising competition from Huawei and growing concern over the impact of continued U.S. curbs.

Shares of nuclear power companies rose on Friday, after President Trump signed orders to cut regulations and fast-track licences, boosting the industry amid rising US power demand from AI data centres and crypto mining. The orders also support uranium production, with mining and nuclear firms gaining as nuclear energy is seen as cleaner and more reliable than wind or solar.

The U.S. Justice Department has reached a non-prosecution agreement with Boeing over the fatal 737 MAX crashes that killed 346 people, allowing the company to avoid trial and criminal conviction, a move criticised by many victims' families. Boeing will pay over $1.1 billion in fines, compensation, and compliance improvements, but will no longer face independent oversight, prompting outrage from those seeking justice.

Salesforce has shown renewed interest in acquiring Informatica, with talks between the two companies resuming after previously breaking down in April 2024. While no final decision has been made, a deal could be announced as soon as this week, with other potential buyers like Cloud Software Group also expressing interest.

Wedbush Securities raised its 12-month price target on Tesla to a Street-high $500, highlighting the company’s strong growth potential driven by its autonomous vehicle and AI strategy. Analysts view Tesla as a leading AI player with a trillion-dollar opportunity in autonomy, forecasting the adoption of its full self-driving technology to transform the business and potentially double its market value to $2 trillion by 2026.

Deckers Outdoor Corporation faced several analyst downgrades, amid concerns over slowing growth at its key HOKA brand, margin pressures, and macroeconomic headwinds like tariffs and weaker consumer sentiment. Analysts cited HOKA’s deceleration, increased reliance on wholesale, and limited near-term catalysts, signalling a shift towards lower growth and more cautious valuations.

Bernstein analysts remain confident in Chipotle’s long-term growth, highlighting its strong pricing discipline, industry-leading restaurant-level margins, and potential for operational improvements as key strengths. Despite near-term challenges and a recent sales decline, they raised their price target to $65, arguing the market is underestimating Chipotle’s capacity for a sales rebound and sustained margin resilience.

Upcoming data and events

Markets face a busy week ahead with key events including Nvidia’s fiscal Q1 earnings report, the Federal Reserve’s preferred inflation data, and the release of FOMC meeting minutes. Globally, investors will focus on monetary policy decisions in South Korea and New Zealand, inflation updates from major European economies, and Q1 GDP figures from Turkey, India, Brazil, and Canada.

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