Europe: Shares stumble on Trump's new tariff threat
EUROPEAN shares began June on a dour note as markets grappled with US President Donald Trump's new tariff plans that threatened to reignite a fresh wave of global trade tensions.
The continent-wide Stoxx 600 slipped 0.14 per cent to 547.92 on Monday, after recording about a 4 per cent gain in May.
Late on Friday, Trump said he planned to increase tariffs on imported steel and aluminium to 50 per cent from 25 per cent, to which the European Union said it was prepared to retaliate.
Steel companies as ArcelorMittal and Aperam pared some losses and closed marginally lower.
The automobile sector, however, bore the brunt of the trade jitters, falling 2.1 per cent, the most among sectors.
Milan-listed Stellantis was down 5 per cent. Mercedes-Benz, BMW and Volkswagen fell between 1.9 per cent and 2.7 per cent.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Even Luxury stocks, reliant on global exports dropped, with the broader gauge was down 0.8 per cent.
An index measuring volatility in the market climbed 4.3 per cent - at a one-week high.
'The market was definitely in what we would call risk off mode,' said Steve Sosnick, chief market analyst at Interactive Brokers.
'But each piece of rhetoric is having less of an effect than the prior ones because markets have mostly learned to shrug it off. Yet it cannot be shrugged off entirely.'
Data-wise, European manufacturing moved closer to stabilisation in May, according to HCOB Eurozone PMI data.
However, Europe's largest economy, Germany, remained the weakest performer among the big euro zone members with a PMI of 48.3.
Germany's DAX closed 0.3 per cent lower.
Oil stocks outperformed, with the sector jumping 1.4 per cent, as crude prices surged after Opec+ announced a smaller-than-feared production increase for July.
Some of the UK's defence manufacturers gained after the news that Britain will expand its nuclear-powered attack submarine fleet.
Babcock International Group and QinetiQ Group advanced 8.2 per cent and 4.5 per cent respectively.
In Poland, stocks were flat. Opposition candidate Karol Nawrocki narrowly won the presidential election, dealing a significant blow to the centrist government's pro-European agenda.
Media stocks such as France's Publicis Groupe and WPP fell 3.8 per cent and 2.8 per cent respectively. The Wall Street Journal reported that Meta Platforms aimed to fully automate ad creation with AI by the end of next year.
Among other stocks, Sanofi agreed to buy US-based Blueprint Medicines Corporation, paying US$129 per share, representing an equity value of approximately US$9.1 billion.
Shares in the French pharma group fell 1.8 per cent.
This week, all eyes will be on the European Central Bank's interest rates on Thursday, with money market traders are almost fully pricing in a quarter-point cut.
Insights from ECB President Christine Lagarde are due at 1730 GMT. REUTERS
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
13 minutes ago
- Straits Times
From triumph to Trump: S. Korea President Lee Jae-myung starts term with full plate
South Korean new President Lee Jae-myung (centre) and his wife Kim Hye-kyung after attending the Presidential Inauguration at the National Assembly in Seoul, on June 4. PHOTO: EPA-EFE – Freshly minted South Korea President Lee Jae-myung has hit the ground running, just hours after winning the snap election of June 3. And among the many urgent matters awaiting him is to get the attention of his American counterpart Donald Trump. Officials from Washington and Seoul are hurrying to set up a congratulatory phone call between Mr Trump and Mr Lee to happen as early as June 5, which would, hopefully, serve as a precursor to a face-to-face meeting in the near future. Local media reported that the two possible windows for a Trump-Lee meeting could be at the Group of Seven Summit in Canada from June 15-17, and the Nato summit set for June 24-25 in the Netherlands, both of which South Korea has been invited to attend. Mr Lee's first day in office on June 4 coincides with Washington's deadline for trading partners to submit their 'best proposals' to the table, ahead of the July 9 expiry of the 90-day pause on reciprocal tariffs. The doubling of steel and aluminium tariffs from 25 per cent to 50 per cent by the United States also took effect from June 4, and South Korea was among the countries hit. Speaking on a radio show on the eve of the election, Mr Lee had expressed confidence that he and his team would be able to reach 'compromise and adjustment in a way that benefits both sides' with the US , even putting aside his dignity when speaking to Mr Trump, if need be . 'If that is the way powerful countries operate, we must overcome it. If it's necessary, I'll even crawl under (Mr Trump's) legs. What's the big deal?' he quipped. Mr Lee, a former human rights lawyer, was sworn into office at 9am (10am in Singapore) on June 4, barely five hours after the final vote tally gave him a 49.42 per cent mandate. His closest rival, former labour minister Kim Moon-soo, garnered 41.15 per cent. The snap election Mr Lee, 61, won was widely seen as a referendum of his disgraced predecessor Yoon Suk Yeol's failed self-coup of Dec 3, 2024. Yoon was subsequently stripped of his powers by the country's Constitutional Court and is now undergoing trial on insurrection charges. Mr Lee inherits a burning portfolio following six months of political chaos left by Yoon's short-lived martial law debacle. The new President has acknowledged that beyond the uphill task of healing a fractured and wounded nation, a key priority for him would be to regain the trust of its biggest ally, the US, and to iron out urgent trade issues. Data released on June 1 by the South Korean government have shown that the country's economy has started to slow down following Mr Trump's announcement of various tariffs since April 2 . South Korean exports fell 1.3 per cent from a year earlier, with steel exports, in particular, falling by 12.4 per cent. South Korea was the fourth-largest exporter of steel to the US last year. Amid the uncertainties, the Bank of Korea on May 29 slashed the country's economic growth forecast for 2025 to 0.8 per cent, from its previous estimate of 1.5 per cent. The previous administration had begun talks with its Washington counterpart in seeking a full exemption from or reduction in the proposed 25 per cent reciprocal tariffs on South Korea, in addition to reduction in sectoral tariffs on steel, automobile and other imports. The previous government had repeatedly stressed the final push had to be done by the new administration from June 4. Dr Victor Cha, who is Korea chair at the Washington-based think-tank Centre for Strategic and International Studies (CSIS), says the first contact between the two presidents is important, given how it has been 'six months where the Trump administration has been moving 100 miles per hour while South Korea's been stuck in neutral without a government'. Speaking at a CSIS podcast on June 3 to dissect the election results, Dr Cha added that any major decisions on tariff negotiations are likely to be made by Mr Trump himself, which further necessitates a summit meeting between the two presidents. Professor Leif-Eric Easley at Ewha Womans University shared a similar assessment, suggesting that Mr Lee and Mr Trump could bond over their 'political survivor' backgrounds, and move the South Korea-US alliance 'beyond threats of tariff hikes and troop reductions to urgently refocus on military deterrence, economic security and coordinated diplomacy'. A recent Wall Street Journal report on May 22 about the US plans to reduce its military presence in South Korea had sparked fears about what it means for Washington's security commitments in the troubled Korean peninsula. There had also been concerns that South Korea, under Mr Lee's liberal-leaning stewardship, might worsen matters if it pivots towards China at the expense of the South Korea-US alliance and the US-Japan-South Korea trilateral partnership. Mr Lee had been perceived as 'pro-China' for his previous xie-xie gaffe where he had suggested in March 2024 that South Korea remain a neutral party in the cross-strait tensions between China and Taiwan. In the run-up to the country's general election in 2024, in an attempt to disparage then President Yoon's tightening alliance with the US and Japan, which had invited criticism from China, Mr Lee had said that Seoul could avoid antagonising Beijing further, especially over Taiwan Strait tensions, by simply saying xie xie, or 'thanks' in Mandarin, to China and Taiwan. But the new President has repeatedly sought to dispel such a notion. In his inaugural address on June 4, Mr Lee emphasised that he would seek a 'pragmatic' approach to diplomacy, and 'turn the crisis of global economic and security shifts into opportunities to maximise national interests'. He also pledged to strengthen the US-South Korea alliance, bolster the US-South Korea-Japan trilateral partnership, while improving relations with both China and North Korea, which he described as being in the 'worst state' because of the last administration. Mr Lee has since appointed Mr Wi Sung-lac, a former diplomat well-versed in Russia and North Korea affairs, as his national security adviser. Mr Wi, who is behind Mr Lee's 'pragmatic diplomacy' approach, spoke to foreign media at a briefing on May 28, where he gave the assurance that the South Korea-US alliance remains the 'cornerstone' of the President's diplomacy vision. 'Mr Lee aims to restore the trust for the alliance, which has been damaged by the unlawful martial law incident, and to deepen the ROK-US relations into a future-oriented strategic alliance,' he said, referring to the Republic of Korea, the official name of South Kore a. Pointing out that the advancement of North Korea's nuclear and missile capabilities is something that cannot be neglected, Mr Wi said Mr Lee's government will also seek to 'strategically engage' China and Russia to cooperate on the stability of the Korean peninsula. Dr Lee Seong-Hyon, a senior fellow at the Washington-based George H.W. Bush Foundation for US-China Relations, told The Straits Times that the new Lee administration's foreign policy directions bear watching. 'Today's North Korea differs from past iterations, as does China,' said Dr Lee. 'South Korea's domestic turmoil over the past six months may have created an inward focus that underestimates these seismic geopolitical shifts, so simply reverting to old foreign policy paradigms may prove inadequate when major powers are redrawing their grand strategies.' Wendy Teo is The Straits Times' South Korea correspondent, based in Seoul. She covers issues concerning the two Koreas. Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
26 minutes ago
- Straits Times
UAE seeks U.S. trade deal to roll back Trump's steel and aluminium tariffs
The United States and the United Arab Emirates have agreed to start negotiations for a potential bilateral trade agreement that could ease tariffs on the Gulf state's steel and aluminium industry, according to four people familiar with the matter. Emirati officials discussed the possibility of a trade agreement with U.S. counterparts during President Donald Trump's two-day visit to Abu Dhabi last month, the sources said. The Office of the U.S. Trade Representative did not respond to a request for comment. Neither did Emirati officials. Like other nations, the UAE has been hit by Trump's 10% baseline tariff on its exports to the United States. But its steel and aluminium products have also been hit by a 25% tariff that the Trump administration is now doubling to 50%. While the UAE is a major oil producer, its steel and aluminium products are significant non-oil exports. In 2024, the UAE was the second-largest steel and aluminium exporter to the U.S., accounting for 8% of total U.S. consumption, data shows. In Abu Dhabi, Emirati officials highlighted to U.S. counterparts comprehensive trade deals that it had signed with other countries over the past three years, the sources said. The UAE was capable of moving quickly on trade talks, Emirati officials told their U.S. counterparts, they said. The Gulf state has signed bilateral trade deals, known as Comprehensive Economic Partnership Agreements, with several countries since 2022, including India, Turkey and Australia. The pact with India was negotiated in just 88 days. The sources said that U.S. officials had responded positively, although it was unclear when talks would start. Two of the sources said Washington was likely to negotiate a limited deal that would fall short of a comprehensive free trade pact. However, they said any agreement, if reached, would likely still be called a Comprehensive Economic Partnership Agreement (CEPA), the same branding as the UAE's other trade deals. The UAE is Washington's biggest trade partner in the Middle East, according to the Gulf state's foreign ministry. Bilateral trade in 2024 was valued at $34.4 billion, according to U.S. trade data, with the U.S. enjoying a $19.4 billion surplus. The Gulf state, which is reliant on the U.S. security umbrella, has pledged to invest $1.4 trillion in the U.S. over the next decade. Its sovereign wealth funds, including Abu Dhabi's $330-billion Mubadala, are already big U.S. investors, and Trump and his family have business interests in the UAE. The UAE is influential in the region and hosts American soldiers on its bases. It is also negotiating a free trade agreement with the European Union. Gulf states Oman and Bahrain have bilateral free trade agreements with the U.S. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.
CNA
an hour ago
- CNA
Most emerging market currencies set to hold on to gains: Reuters poll
BENGALURU/JOHANNESBURG : Most emerging market currencies will hold the gains they have made this year or extend them against a retreating dollar in the next six months as traders ditch the U.S. exceptionalism trade that fuelled the greenback's dream run, a Reuters poll of FX strategists found. At the start of the year, emerging market currencies looked set for a rough ride on expectations of U.S. economic strength and delayed Federal Reserve interest rate cuts as well as trade tensions. But they have since defied expectations as U.S. President Donald Trump's broader-than-expected but erratically implemented tariff together with a deteriorating fiscal outlook have sparked a flight from the dollar and U.S. assets. That is expected to continue, with more than half the currencies polled forecast to trade in tight ranges or gain, while the rest were expected to give back only a small portion of this year's strong gains, according to a May 30–June 4 poll of more than 50 foreign exchange strategists. "The path of least resistance is a mildly weaker dollar at the moment," said Christopher Turner, head of FX strategy at ING. "We think (the decline) will be sort of modest and gradual and that should keep the mindset for investors to buy EM currencies on dips and that's kind of what we're seeing at the moment." Separately, the dollar has become a preferred funding currency as Trump's trade war fuels recession fears and outflows from U.S. assets. The EM carry trade - borrowing in low-yielding currencies to invest in higher-yielding EM ones - has long attracted investors chasing returns. High-yielders like the South African rand and Brazilian real are up around 6.0 per cent and 10.0 per cent respectively this year. The real was predicted to lose only about 2.0 per cent, while the rand is likely to trade in a tight range over the next six months. "I think the trend for emerging market currency outperformance can continue in the second half of this year, but there are downside risks to be wary of as well," said Lee Hardman, senior currency economist at MUFG, referring to trade disruption and the potential hit to global growth. The Turkish lira, the weakest-performing emerging market currency so far this year, is projected to soften by another 8.0 per cent from 39 per dollar to 42.8/dollar over the next six months. In Asia, the heavily managed Chinese yuan is expected to stay rangebound despite widespread concerns about weak demand in its economy, and a standoff with Washington over tariff policy and export controls. The Indian rupee, Korean won and Thai baht are all expected to gain just less than 1 per cent by the end of November, pointing to steady but modest appreciation. "The big risk we see short-term for emerging market currencies is the risk of a turnaround in dollar sentiment," said Nick Rees, head of Macro Research at Monex Europe. "We do expect longer-term depreciation, but by the same token, we think the dollar looks too cheap on a fundamentals basis right now," added Rees.
