A look at the day ahead in European and global markets from
Wayne Cole.
It's been a blessedly quiet start to the week, with
President Trump more engrossed on his disappointment with
Russia, than his trade war. In this case, silence is golden, as
the White House's communication on trade has been a lot more
noise than signal.
Thus, Agriculture Secretary Rollins tells TV they are
speaking with China every day, likely news to Beijing. Then
Treasury Secretary Scott Bessent says he has not discussed
tariffs with Chinese officials and doesn't know if Trump talked
to Xi, as he claimed.
Apparently the White House plan is to have trade talks with
six different nations every week until Trump's July 9 deadline
on tariffs. Perhaps somewhat optimistic, given it takes on
average 18 months just to set the terms of a deal, and longer to
actually pass one.
For now, markets are assuming they've seen peak tariff and
Trump will be forced to lower levies on China, particularly
after major U.S. retailers last week warned him their shelves
would otherwise soon empty.
Analysts at Barclays reckon a likely outcome will be 60%
tariffs on China, 10% on everyone else and sectoral levies
remaining at 25%, with exceptions. Even that, they note, would
be worse than their worst-case scenario heading into 2025.
Maybe one reason Asian shares are just marginally firmer so
far today, while Wall St futures are down around 0.5% even as
analysts are generally upbeat about looming earnings.
About 180 S&P 500 companies representing more than 40% of
the index's market value report this week, including mega-caps
Apple ( AAPL ), Microsoft ( MSFT ), Amazon ( AMZN ) and Meta
Platforms ( META ). Clearly, there will be intense interest in
Apple's ( AAPL ) outlook for iPhone sales and the impact of tariffs on
its sprawling supply chains.
As for data, euro zone and U.S. inflation reports this week
are expected to be dovish for policy, as is the Q1 U.S. GDP
report where a surge in imports, notably of gold, will bias down
the headline number. Even excluding gold, the Atlanta Fed GDPNow
measure tips GDP to drop 0.4% annualised.
The payrolls numbers on Friday are more timely and should
help refine wagers for a June rate cut from the Fed, currently
put at around 63%.
Key developments that could influence markets on Monday:
- Appearances by ECB Vice-President Luis de Guindos and Bank
of Finland Governor Olli Rehn
- Dallas Fed manufacturing survey
(Editing by Jacqueline Wong)