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Yahoo
24 minutes ago
- Yahoo
Europe Inc swerves Trump trade war 'hurricane' but laments higher tariffs
LONDON (Reuters) -European companies were left wondering on Monday whether to cheer a hard-won U.S. trade deal or lament a still sharp jump in tariffs versus those in place before President Donald Trump's second term. A day earlier, European leaders heralded a framework trade deal with the United States that would impose a 15% import tariff on most EU goods, averting a spiralling battle between two allies which account for almost a third of global trade. Although the deal is better than the 30% rate threatened by Trump and will bring clarity for European makers of cars, planes and chemicals, the 15% baseline tariff is well above initial hopes of a zero-for-zero agreement. It is also higher than the U.S. import tariff rate last year of around 2.5%. "Those who expect a hurricane are grateful for a storm," said Wolfgang Große Entrup, head of the German Chemical Industry Association VCI, calling for more talks to reduce tariffs that he said were "too high" for Europe's chemical industry. "Further escalation has been avoided. Nevertheless, the price is high for both sides. European exports are losing competitiveness. U.S. customers are paying the tariffs." The deal, which also includes $600 billion of EU investments in the United States and $750 billion of EU purchases of U.S. energy over Trump's second term, includes some exemptions, even if details are still to be ironed out. Carmakers Volkswagen and Stellantis, among others, will face the 15% tariff, down from 25% under the global levy imposed by Trump in April. Stellantis shares rose 3.5% and car parts maker Valeo was up 4.7% in early trade. German pharma group Merck KGaA gained 2.9%. Aircraft and aircraft parts will be exempt - good news for French planemaker Airbus - as will certain chemicals, some generic drugs, semiconductor equipment, some farm products, natural resources and critical raw materials. Shares in the world's biggest chip maker ASML rose more than 4%, among the biggest gainers on the pan-European STOXX 600 index. STILL TO BE NEGOTIATED Dutch brewer Heineken cheered the deal, with CEO Dolf van den Brink welcoming the certainty it brought. The world's No.2 brewer sends beer, especially its namesake lager, to the U.S. from Europe and Mexico, and has also suffered from the indirect effect on consumer confidence in important markets like Brazil. The rate on spirits that could impact firms such as Diageo, Pernod Ricard and LVMH, is still being negotiated though. "It seems that in coming days there could be negotiations for certain agricultural products, zero for zero, which is what the European and U.S. sectors have been calling for," said Jose Luis Benitez, director of the Spanish Wine Federation. Benitez added that a 15% rate could put Europe at a disadvantage versus other wine exporting regions subject to 10% tariffs. "If there are any exceptions, we hope that the (European) Commission understands that wine should be one of them." Lamberto Frescobaldi, the president of Italian wine body UIV, said on Sunday that 15% tariffs on wine would result in a loss of 317 million euros ($372.63 million) over the next 12 months, though the group was waiting to see the final deal text. Others said that the agreement- which followed on the heels of a similar one with Japan - helped bring greater clarity for company leaders, but still threatened to make European firms less competitive. "While this agreement puts an end to uncertainty, it poses a significant threat to the competitiveness of the French cosmetics industry," said Emmanuel Guichard, secretary general of French cosmetics association FEBEA, which counts L'Oreal, LVMH and Clarins among its members. ($1 = 0.8507 euros)
News24
27 minutes ago
- News24
Markets boosted after EU, US strike trade deal
Stock markets rose in Europe and Asia on Monday after the European Union and United States hammered out a deal to avert a potentially damaging trade war. News of the deal, announced by US president Donald Trump and European Commission head Ursula von der Leyen on Sunday, followed a series of US trade agreements last week, including with Japan, and comes ahead of a new round of China-US talks. Investors were also gearing up for a busy week of data, central bank decisions and earnings from some of the world's biggest companies. Trump and von der Leyen announced at his golf resort in Scotland that a baseline tariff of 15 percent would be levied on EU exports to the United States. "We've reached a deal. It's a good deal for everybody. This is probably the biggest deal ever reached in any capacity," Trump said, adding that the levies would apply across the board, including for Europe's crucial automobile sector, pharmaceuticals and semiconductors. Brussels also agreed to purchase "$750 billion worth of energy" from the United States, as well as make $600 billion in additional investments. "It's a good deal," von der Leyen said. "It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic." Equities built on their recent rally, fanned by relief that countries were reaching deals with Washington. Paris rose one percent, with Frankfurt and London also tracking gains in Hong Kong, Shanghai, Sydney, Seoul, Wellington, Taipei and Jakarta. Tokyo fell for a second day, having soared about five percent on Wednesday and Thursday in reaction to Japan's US deal. Singapore, Manila and Mumbai were also lower. The broad gains came after another record day for the S&P 500 and Nasdaq on Wall Street. "The news flow from both the extension with China and the agreement with the EU is clearly market-friendly, and should put further upside potential into the euro... and should also put renewed upside into EU equities," said Chris Weston at Pepperstone. Traders are gearing up for a packed week, with a delegation including US Treasury Secretary Scott Bessent holding fresh trade talks with a Chinese team headed by Vice Premier He Lifeng in Stockholm. While in April both countries imposed tariffs that reached triple-digits, US duties this year have temporarily been lowered to 30 percent and China's countermeasures slashed to 10 percent. The 90-day truce, instituted after talks in Geneva in May, is set to expire on August 12. China said it was seeking "mutual respect and reciprocity" in the talks. Also on the agenda are earnings from tech titans Amazon, Apple, Meta and Microsoft, as well as data on US economic growth and jobs. The Federal Reserve's latest policy meeting is expected to conclude with officials standing pat on interest rates, though investors are keen to see what their views are on the outlook for the rest of the year in light of Trump's tariffs and recent trade deals. "We think the data supports a Fed on hold in July, but absent a significant upside surprise in the upcoming inflation data, September could be a 'live' meeting for a resumption of rate cuts, especially if economic activity data and possibly overwhelming political pressure force the Fed's hand," said Michael Krautzberger at Allianz. The Bank of Japan is also forecast to hold off on any big moves on borrowing costs. By mid-morning, the JSE's All-Share index was flat, with Valterra down more than 2% after releasing its results.
Yahoo
an hour ago
- Yahoo
Oil prices rise as US-EU deal lifts trade optimism
Oil (BZ=F, CL=F) Oil prices climbed in early European trading on Monday following a trade agreement between the United States and the European Union, easing fears of escalating transatlantic trade tensions ahead of a key tariff deadline. Brent (BZ=F) crude futures gained 0.9% to trade at $69.04 per barrel, at the time of writing, while West Texas Intermediate (CL=F) futures climbed by 0.8% to $65.70 a barrel. The modest gains came after Washington and Brussels struck a last-minute trade pact on Sunday, ahead of US president Donald Trump's 1 August deadline for a new round of tariffs on EU imports. Under the agreement, most European goods will now face a 15% import tariff, half the rate initially proposed by the US administration. Read more: FTSE 100 LIVE: Markets higher as EU agrees 15% tariff in US trade deal The agreement, which averts a broader trade conflict between two economies that together account for nearly a third of global trade, helped support sentiment in financial markets, including oil. "With the risk of a prolonged trade war and the importance of the August tariff deadlines being steadily defused, markets have responded positively," IG markets analyst Tony Sycamore said in a note. The deal also raised hopes of further de-escalation in global trade tensions, including a potential extension of the current tariff pause between Washington and Beijing. However, gains in crude prices were tempered by investor caution ahead of a meeting of the Opec+ alliance on Monday. The group is expected to review the pace at which it is easing supply curbs implemented during the pandemic-induced downturn. Gold (GC=F) Gold prices were muted on Monday morning, as the trade agreement between the US and the EU boosted investor confidence and dampened demand for the traditional safe haven asset. Gold futures were flat at $3,335.90 per ounce, at the time of writing, while spot gold advanced 0.1% to $3,341.97 per ounce. The precious metal lost some of its appeal as markets digested news of a new transatlantic trade deal that helped ease tensions between Washington and Brussels. The agreement has lifted broader market sentiment, weighing on gold, which tends to perform best during periods of heightened uncertainty. Stocks: Create your watchlist and portfolio Analysts noted that progress toward a trade truce lowered uncertainty, drawing funds into equities and reducing bullion's attraction. Gold's gains were further capped by investor caution ahead of a closely watched US Federal Reserve policy decision due later this week. The central bank is widely expected to leave its benchmark interest rate unchanged in the 4.25%-4.50% range when its two-day meeting concludes on Wednesday. "In the short term, we don't expect gold to experience wild swings. Investors are turning their focus to a pivotal week for US monetary policy and economic data," Jigar Trivedi, senior commodity analyst at Reliance Securities, told Reuters. Pound (GBPUSD=X, GBPEUR=X) The pound held flat against the US dollar on Monday morning, trading at $1.3424, as a quiet UK data calendar left the currency largely directionless and vulnerable to broader dollar moves ahead of a crucial week for US economic releases and Federal Reserve policy. The US dollar index ( which measures the greenback against a basket of six currencies, was higher at 97.88. Tuesday is set to bring the latest US job openings figures and consumer confidence data. While job openings are forecast to have declined in June, sentiment is expected to have improved in July, a combination that could generate mixed signals for the dollar. Wednesday's calendar features the first estimate of second-quarter US GDP growth and the Fed's interest rate decision. A strong GDP reading, coupled with continued resistance to near-term rate cuts, could provide fresh momentum for the dollar. Read more: How to get the best currency exchange deal for your holiday money Thursday sees the release of the core PCE price index, the Federal Reserve's preferred inflation gauge. A rise in June's figure, as anticipated, would likely bolster the greenback further. However, Friday's non-farm payrolls report may temper the rally. The July data is expected to show a sharp slowdown in employment growth and a slight uptick in the unemployment rate from 4.1% to 4.2%, a figure that could put some downward pressure on the dollar. Elsewhere in currencies, the pound pushed higher against the euro. Sterling was up 0.3% against the single currency to trade at €1.1473 at the time of writing. In equities, the FTSE 100 (^FTSE) was in the green this morning, up 0.3% to 9,148 points. For more details, on market movements check our live coverage here.
