Business ( Europe Brief News): ASX expected to open higher as global markets rally following U.S. President Trump’s delay on proposed tariffs, easing investor concerns on trade tensions.
Following President Donald Trump‘s extension of a deadline on punitive euro area tariffs, European equities rose in tandem with US share futures, continuing his trend of leaving markets guessing by threatening trade and then reversing course.
Trump’s threat of 50% tariffs on the European Union erased Friday’s losses on the Stoxx Europe 600 index. Later, the US president said that he has consented to delay the taxes from June 1 to July 9. The Paris CAC 40 increased 1.3% to 7,830.99, while Germany’s DAX gained 1.7% to 24,020.48.
Britain had a bank holiday, which meant that markets were closed. Futures for the S&P 500 and the Nasdaq 100 rose more than 1% despite Wall Street being closed for the Memorial Day vacation. A US dollar indicator was close to its lowest point in over two years.
According to futures at 4.57am AEST, the Australian share market is expected to advance by 19 points, or 0.2%, at the opening. On Monday, the ASX gained 0.1 percent.
On Monday, the Australian dollar reached six-month highs, but it fell overnight. At 5:11 a.m. AEST, it was down 0.1% to 64.83 US cents.
Following all of last week’s market turbulence due to worries about Trump’s proposed tax cuts and their effect on the US budget, the tariff war has once again emerged as the primary driver. Markets are now more uncertain as a result of Trump’s rash decisions, and his diatribe against Europe on Friday, followed by a retraction, served as a clear reminder of the president’s unpredictable policymaking.
“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.
“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.”
Following a phone conversation with Ursula von der Leyen, president of the European Commission, Trump decided to extend the deadline.
In a post on X earlier Sunday, von der Leyen, the director of the EU’s executive branch, stated that while “Europe is ready to advance talks swiftly and decisively,” “a good deal” will require “time until July 9.” Trump’s 90-day halt on his so-called reciprocal tariffs was initially scheduled to expire on that day.
“One thing that is starting to concern us a bit is the fact that the rebounds that follow these selloffs are losing strength as we go on,”
said Frederic Rozier, a portfolio manager at Mirabaud France.
“We can sense investor fatigue about this back-and-forth and there’s a risk sentiment will erode as markets run in circles on tariffs. The only thing we know is that even if there’s an agreement, there will be a cost for European stocks.”
Trump threatened to impose 25% tariffs on smartphones on Friday if firms like Apple and Samsung did not shift their manufacturing to the United States.
Thyssenkrupp AG, one of the European individual movers, surged more than 8% following news that the company’s CEO intends to convert it into a holding company, which will enable it to reduce overhead expenses as it sells off more units.
After revealing plans to lay off about 7% of its global personnel in order to reduce expenses and preserve earnings, Volvo Car AB saw a 4.9% increase in value.
The dollar is reflecting the trade tensions and the low demand for US assets.
The dollar is at or near crucial levels compared to a variety of currencies, including the euro, British pound, yen, and Swiss franc. Meanwhile, Bloomberg’s dollar spot index was headed for its lowest finish since July 2023.
This year, interest in the global reserve currency has waned. According to CFTC statistics released Friday, speculative traders reduced their positioning to $US12.4 billion ($19.1 billion) in the week ending May 20 from $US16.5 billion in the week before, although they remained bearish on the dollar.
Nvidia’s earnings on Wednesday will be a significant event this week. The massive chip manufacturer is regarded as a predictor of the longevity of the artificial intelligence boom and so-called growth stocks. In light of macro risks and tariff uncertainty, its prognosis will be critical.
Investors are also preparing for Friday’s release of the US personal consumption expenditures price index, which excludes food and energy and is the Federal Reserve’s favored inflation indicator. According to consensus, the April reading is expected to increase by 0.1%.
Trade disputes may cause global marine disruptions that raise shipping costs, according to indications of port congestion in northern Europe and other regions.
How will the ASX react to the global stock rise on Trump’s tariff delay?
Following President Trump’s decision to postpone the planned 50% tariffs on European Union goods until July 9, 2025, the ASX is anticipated to respond favorably but mildly to the worldwide stock increase.
Immediate trade tensions have decreased as a result of this tariff deferral, which has improved market mood globally, particularly in Australia.
Following the announcement, the S&P/ASX 200, which is specifically represented by it, saw a modest uptick of about 0.1%, indicating cautious optimism in the face of persistent trade policy uncertainty.
Even while the tariff postponement lowers short-term risks, market players are nonetheless cautious because of the possibility of other tariff threats, like those aimed at smartphone manufacturers, and the general volatility associated with changes in U.S. trade policy.
