European shares softer as EU mulls US countermeasures; Big Tech in focus
The European Union is exploring a broader set of possible counter-measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.
Investors had been hoping for some progress in trade talks ahead of U.S. President Donald Trump's August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the EU.
The pan-European benchmark STOXX 600 index was down 0.2% as was the UK's blue-chip FTSE 100. The euro was 0.2% higher at $1.1652.
S&P 500 futures edged 0.2% higher, while Nasdaq futures were up 0.3%. U.S. indexes are already around record highs in anticipation of more solid quarterly earnings reports.
But tariff uncertainty is also casting a shadow over markets, with Trump's August 1 deadline fast approaching.
"Let's say that tariffs are pushed off again from August 1, which I think is the rosiest outcome at this point, then I don't think markets will spike another 10% higher. I'm thinking more that we get a grind higher for the rest of the year," said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson.
Markets, meanwhile, are gearing up for a host of big tech company results this week, including Google owner Alphabet , Tesla and IBM.
"They are going to be key for sentiment because frankly there's not a lot else to drive things," said Michael Brown, senior research strategist at Pepperstone.
"We saw the banks deliver decent results last week, so you'd certainly be looking for the big tech names to keep up with that to reinforce the bull case (for equities)," he said.
Investors also expect upbeat news for defence groups RTX , Lockheed Martin and General Dynamics. Higher government spending around the globe has seen the S&P 500 aerospace and defence sector rise 30% this year, while defence stocks in Europe have also hit record highs.
MARKETS UNFAZED BY JAPANESE POLITICS
The yen firmed on Monday as markets shrugged off the Japanese ruling coalition's defeat in upper house weekend elections.
Japan's ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba's grip on power ahead of the tariff deadline.
Ishiba vowed to stay on, which along with a market holiday, limited the reaction. The yen was 0.77% firmer at 147.655 to the dollar and up 0.5% against the euro .
"The loss was within the range of expectations, and actually the outlook was even more pessimistic," said Nissay Research Institute chief economist Tsuyoshi Ueno.
"In terms of negotiations with the U.S., it is easy to doubt whether a government with such a weak foundation is reliable as a negotiating partner," he added. "For the Bank of Japan, if there is political instability, it will be difficult to raise interest rates, and pressure on the yen will continue."
The BOJ still has a bias to raise rates further, but markets imply little chance of a move until late October.
Elsewhere, euro zone government bond yields eased ahead of euro zone PMI data and the ECB meeting later this week, at which it is expected to leave rates at 2% following a string of cuts.
The euro dipped 0.5% last week, moving off a recent near-four-year top of $1.1830. The dollar index was 0.3% lower at 98.11.
U.S. Treasury yields fell, leaving the yield on the benchmark 10-year note down 5.5 basis points at 4.3757%.
Most Federal Reserve policymakers, including Chair Jerome Powell, have indicated leaving U.S. rates unchanged right now is warranted in order to gauge the inflationary impact of tariffs.
Markets imply almost no chance of a move in July and place a chance of 61% on a September cut and an 80% chance for October.
Powell's reticence on rates has drawn the ire of Trump who threatened to fire the Fed chief, before backing down. The spectre of a potential political appointee who would seek to ease policy sharply has investors on edge.
In commodity markets, gold firmed 0.6% to $3,368 an ounce , with all the recent action in platinum, which last week hit its highest since August 2014.
Oil prices were caught between the prospect of increased supply from OPEC+ and the risk European Union sanctions against Russia over its war in Ukraine could curb its exports.
Brent eased 0.27% to $69.09 a barrel.
(Reporting by Wayne Cole in Sydney and Lucy Raitano in London; additional reporting by Naomi Rovnick in London; Editing by Shri Navaratnam, Amanda Cooper and Toby Chopra)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Khaleej Times
an hour ago
- Khaleej Times
Gold falls to near 3-week low as US-EU deal boosts risk appetite ahead of Fed meeting
Gold fell to a near three-week low on Monday as a U.S.-European Union trade accord lifted the dollar and risk sentiment, while investors awaited fresh cues on rate policy from this week's Federal Reserve meeting. Spot gold fell 0.6% to $3,316.03 per ounce as of 11:36 a.m. ET (1536 GMT), after touching its lowest level since July 9, earlier in the session. U.S. gold futures were down 0.7% at $3,313.2 per ounce. The U.S. dollar index rose to a one-week high, making bullion more expensive for overseas buyers. "I think the more trade announcements we get, the more the dollar increases. These tariff deals are dollar friendly, lowering the allure of gold and driving the sell-off amid a risk-on sentiment," said Marex analyst Edward Meir. A weekend deal between U.S. President Donald Trump and the European Commission imposed a 15% tariff on EU goods, half the rate initially threatened, easing fears of a broader trade war. That pact came on the heels of last week's U.S.-Japan agreement, while U.S. and Chinese officials will resume talks in Stockholm on Monday, aiming to extend their trade truce by another 90 days. However, a U.S. trade representative said no major breakthrough was expected with China, noting discussions would focus on monitoring and implementing existing commitments. "You're not seeing a huge move on the downside in gold because the deals could still prove to be either difficult to implement or unrealistic," said Meir. The U.S. Federal Reserve is expected to keep its benchmark rate in the 4.25%–4.50% range when its two-day meeting concludes on Wednesday. Markets, meanwhile, continue to price in a potential September rate reduction. Gold tends to do well in a low-interest-rate environment. Elsewhere, spot silver was down 0.1% at $38.12 per ounce and platinum fell 0.6% to $1,393.25, while palladium gained 2.1% to $1,245.52.
The National
an hour ago
- The National
EU-US tariff deal draws mixed reaction with French calling it 'submission'
US President Donald Trump's tariff deal with the European Union drew mixed reviews from the bloc's leaders, with some criticising the agreement that European Commission President Ursula von der Leyen struck. As part of the deal, the EU will pay a 15 per cent tariff on most goods, including cars, semiconductors and pharmaceuticals. The rate is half of what Mr Trump had previously threatened to impose on imports from the bloc. The EU also agreed to purchase billions of dollars worth of US energy and weapons as part of the deal which also involves no tariffs on US exports to Europe. The EU defended the deal on Monday. 'I'm 100 per cent sure that this deal is better than a trade war with the United States,' Reuters reported EU trade commissioner Maros Sefcovic as saying. Ms von der Leyen said it was the 'best we could get'. Other leaders across the bloc, however, were less enthusiastic. 'It is a dark day when an alliance of free peoples, united to affirm their values and defend their interests, resolves to submission,' French Prime Minister Francois Bayrou wrote on X. Hungarian Prime Minister Viktor Orban, who has a close relationship with Mr Trump, said the EU Commissioner did not stand a chance against the US President. 'It wasn't a deal that President Donald Trump made with Ursula von der Leyen. It was Donald Trump eating Ursula von der Leyen for breakfast,' he said on his podcast. The agreement was the latest announced by Washington in Mr Trump's attempts to reset the country's trade relations with its partners. As well as Japan, he announced deals with the UK and Vietnam, and has agreed to a truce with China under which the two economic powers will drastically lower tariffs on each other while negotiations continue. The EU-US agreement was similar to the one Mr Trump made with Japan, in which he set his so-called reciprocal tariffs at 15 per cent. Military dimensions "That was the template for this deal but that does not completely explain why the EU had to sign this deal,' Simon J Evenett, professor at IMD Business School in Lausanne, told The National. 'The principal reason the EU had to sign this deal is because of the continued US military support for Ukraine. That is the geopolitical overlay which created the imperative for the EU signing this deal. "Halving the tariff rate on the bloc would be an obvious attractive proposition for EU exporters, but we should be under no illusion about the importance of the military dimension here.' Together, the EU and US represent about 30 per cent of global trade in goods and services and 43 per cent of global gross domestic product, according to figures from the European Council and the Council of the EU. The EU and US trade in goods last year was valued at €867 billion ($1.01 trillion), with total transatlantic trade in goods and services valued at more than €1.68 trillion, the councils said. Leaders from Sweden and Denmark joined Mr Orban and Mr Bayrou in expressing disappointment with the agreement. Sweden's Minister for Foreign Trade Benjamin Dousa noted that the deal would bring the highest tariff rate on Europe in nearly eight decades. 'The agreement doesn't make anyone richer but it may be the least bad option," he said on X. "Increased tariffs are primarily paid by the country's own citizens, which is why most wealthy countries have lowered tariffs against the rest of the world over the past 100 years." Some members of the bloc, however, defended the deal for bringing some clarity to the trade tension between the US and EU. 'This agreement has succeeded in averting a trade conflict that would have hit the export-orientated German economy hard,' Reuters quoted German Chancellor Friedrich Merz as saying. Finland's Prime Minister Petteri Orpo also said the agreement brings 'much-needed predictability' to Finnish companies and the world economy. 'Work must continue to dismantle trade barriers. Only free transatlantic trade benefits both sides the most,' he wrote. Italian Prime Minister Giorgia Meloni, who also has a friendly relationship with Mr Trump, said she considers it 'positive that there is an agreement'. 'But if I don't see the details I am not able to judge it in the best way,' she said.
The National
2 hours ago
- The National
Sheikha Bodour becomes first honorary professor of UK's University of Leicester
Sheikha Bodour bint Sultan Al Qasimi has told of her mission to inspire others after receiving the first honorary professorship bestowed by the UK's University of Leicester. , who serves as president of the American University of Sharjah and is part of the emirate's ruling family, was recognised for her efforts to champion women's empowerment and child literacy, and to promote cultural development regionally and across the globe. The title of honorary professor was conferred at a ceremony held at the University of Leicester's School of Business. During her visit she spoke to students and faculty members, and took part in a discussion on museum studies and cultural sector research. 'This recognition from the University of Leicester is deeply meaningful to me,' said Sheikha Bodour. 'In Sharjah, we believe that education is one of the most powerful ways to build cultural bridges and foster mutual understanding. "It is through knowledge, inclusion and service to others that we create lasting impact. I hope this honour encourages others, especially young women, to believe in their ideas, claim their space and lead with purpose.' It is the latest notable achievement in a distinguished career dedicated to improving lives through learning and culture. She is the founder and chief executive of Kalimat Group, which has published more than 500 titles in over 15 countries, with a focus on socially conscious Arabic children's literature and inclusive storytelling. As head of the organisation she has delivered key literacy projects and helped to broaden access to reading resources in 31 countries. She also played a pivotal role in the UAE's accession to the Marrakesh Treaty to Facilitate Access to Published Works for Persons Who are Blind, Visually Impaired or Otherwise Print Disabled. She founded the Emirates Publishers' Association in 2009, which gained full membership of International Publishers' Association three years later. In 2020, she became the first woman in the Arab world to be appointed President of the IPA. Sheikha Bodour has also been a driving force behind sharing Sharjah's rich culture with the world. She served as ambassador for the successful Unesco World Heritage site bid for the Faya Palaeolandscape. The ancient desert location in central Sharjah features one of the world's oldest and most uninterrupted records of early human presence, dating back more than 210,000 years. The University of Leicester honour reflects her wider efforts to promote gender equity in higher education, ensuring increased representation of women in leadership roles. She spearheaded the establishment of the 'Her Highness Sheikha Jawaher bint Mohammed Al Qasimi Chair in Women's Leadership' at the American University of Sharjah, in collaboration with Nama Women Advancement Establishment – the UAE's first endowed chair dedicated to women's leadership and development. Under her leadership, the university has launched six new research centres in artificial intelligence, sustainability, and Arab and Islamic studies, while expanding scholarship support for students with disabilities and those from financially disadvantaged backgrounds.
