US and European equity-index futures climbed along with Asian stocks on Monday as President Donald Trump extended a deadline on aggressive European tariffs as trade tensions whipsawed markets.
Contracts for the S&P 500, Nasdaq 100 advanced about 1% and those for the Euro Stoxx 50 jumped 1.5% after Trump said he had agreed to delay the date for a 50% tariff on goods from the European Union to July 9 from June 1. The dollar fluctuated after falling to its lowest level since December 2023. A gauge of Asian shares rose 0.2%.
Treasuries won’t be trading Monday due to the Memorial Day holiday in the US. Oil edged higher while gold slipped 0.4% on weak demand for haven assets.
Trump’s moves reflected the increasing uncertainty in markets, with his broadside against Europe on Friday a harsh reminder of the president’s volatile policy making. The tariff war has returned to the fore as the major driver of markets once again after concerns about Trump’s proposed tax cuts, and their impact on US deficit, churned markets much of last week.
“A clear pattern has emerged when it comes to Trump’s tariff strategy – hefty tariff threats soon followed by tariff pauses during which negotiations ensue,” said Tim Waterer, chief market analyst at KCM Trade in Sydney. “So investors are getting to know the Trump tariff playbook quite well, with his back-and-forth with the EU in this matter being the latest such example.”
Trump’s decision to extend the deadline came after a phone call with European Commission President Ursula von der Leyen.
Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
Trump’s tariff threats on Friday also included a 25% levy on smartphones if companies including Apple Inc. and Samsung Electronics Co. failed to move production to the US. Shares of Samsung edged down.
“Overall it’s good news on the day,” said Rodrigo Catril, a strategist at National Australia Bank in Sydney said about the delay. “But the constant threats don’t make for a good environment for investment and hiring decisions.”
To Capital Economics, Trump’s threat of a 50% tariff on the EU from June may well turn out to be a “negotiating tactic” and seems “very unlikely” to be where tariffs settle over the long run.
“At this stage, we are not inclined to change our working assumption that tariffs on the EU will ultimately settle around 10%, but this underlines that there are risks and that the road to an agreement could be rocky,” the firm said.
Investors are also gearing up for the Federal Reserve’s preferred inflation measure, the US personal consumption expenditures price index excluding food and energy, which will be released Friday. The April reading is forecast to rise 0.1% based on consensus expectations.
Elsewhere, signs of port congestion in northern Europe and other hubs suggests trade wars could lead to maritime disruptions around the world, increasing shipping rates.
Meanwhile, Japan’s chief trade negotiator Ryosei Akazawa indicated his aim to resolve tariff talks in time for a June meeting between Trump and Japan’s Prime Minister Shigeru Ishiba following the president’s surprise pivot to allow a partnership between two of the countries’ steelmakers.
Trump on Friday announced a partnership between United States Steel Corp. and Japan’s Nippon Steel Corp., shocking markets with an agreement he said would keep the once-iconic American firm in the US, but otherwise providing no specifics. Nippon Steel shares jumped as much as 7.4% in Tokyo, while shares in US Steel rose 21% Friday.
In commodities, oil gained and gold fell in early trading Monday. –BLOOMBERG
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