Daily Fundamental Analysis: Markets are Mixed as Trump Delays 50% Tariffs on Europe

Key Takeaways

• Trump extends the deadline for the 50% tariff on Europe till 9 July.
• The U.S. Dollar falls against major currencies. DXY falls again to its 2023 low
• Eyes on core PCE numbers coming this Friday.

As the tariff drama continues, President Donald Trump on Sunday announced the extension of the 50% tariff deadline for the EU to July 9 following a call with European Commission President von der Leyen.

Initially planning a June 1 deadline, Trump changed course after von der Leyen requested more time for negotiations. She emphasized the importance of US-EU trade relations and Europe’s commitment to swift talks.

This follows Trump’s earlier moves of imposing 20% tariffs on the EU, reducing them to 10% in April, before proposing a 50% rate. Prior to the extension, Trump had expressed frustration with EU negotiations.

On Friday, the S&P 500 fell 0.7%, the NASDAQ Composite fell 1%, and the Dow Jones Industrial Average fell 0.6%.

NVIDIA is scheduled to report Q1 earnings Wednesday, focusing on continued AI demand momentum. Despite new China sales restrictions from the Trump administration, strong AI demand from major customers is expected to boost earnings.

Asian markets were mixed Monday following Trump’s EU tariff delay announcement. Japan’s Nikkei 225 rose 0.86%, Topix gained 0.46%. South Korea’s Kospi and Kosdaq climbed 1.15% and 1.38% respectively. Hong Kong’s Hang Seng dropped 1%. While Australia’s S&P/ASX 200 remained mostly flat.

In the Forex market, the U.S. dollar continued to decline against major currencies as the dollar index fell below 99.00 in today’s trading. the EURUSD broke above the 1.1400 resistance level and the GBPUSD reached its highest level since early 2022.

Market movement today might be slow due to the bank holiday in the UK and the U.S.

Major economic date coming this week include the CPI numbers from Australia and the interest rate decision from New Zealand both on Wednesday. On Friday, we are expecting GDP numbers from Canada to come at 0.2%. Core Personal Consumption Expenditure numbers ( the Fed’s preferred inflation gauge) is scheduled on Friday as well. Analyst expect core PCE to rise to 0.1% on a monthly basis.

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