Markets brace for key economic data as trade tensions and Trump's EU tariff reprieve test investor sentiment

US markets are set to test President Donald Trump’s announcement to delay a threatened 50 per cent tariff on European Union goods until July 9.

Earlier, European stock markets rallied on Monday after US President Donald Trump postponed his threat to impose 50 per cent tariffs on European Union goods, pushing the deadline to July 9 to allow more time for negotiations. Trump had roiled markets late last week by warning that the steep duties could take effect from June 1, citing a lack of progress in trade talks with the EU.

On Sunday, Trump eased investor concerns by announcing he would delay the tariffs after a "very nice call" with European Commission President Ursula von der Leyen. According to Trump, von der Leyen said she “wants to get down to serious negotiations.” In response, von der Leyen pledged to move “swiftly” to reach a deal.

Following the news, the Paris CAC 40 index rose 1.2 per cent in midday trading, and Germany’s DAX gained 1.7 per cent, reflecting market optimism. While London and Wall Street remained closed for holidays, US futures climbed, although most Asian markets struggled to maintain gains.

Analysts pointed to growing investor anxiety over the unpredictability of US trade policy. “The stock market seems to dance to Trump’s tune: first a threat, then a pullback, quickly followed by a rebound as speculative investors anticipate a concession,” said Jochen Stanzl, chief market analyst at CMC Markets. “This morning’s confirmation of such expectations reinforces the so-called ‘Trump Pattern’, which is increasingly seen as a successful strategy for risk-tolerant investors,” he added.

Meanwhile, the US dollar remained under pressure following last week's drop. Concerns are also mounting over Trump’s fiscal strategy, particularly after long-term US Treasury yields surged last week. Investors fear that tax cuts and spending plans approved by the House could balloon the national debt.

Markets are also bracing for key economic data this week. The Federal Reserve’s meeting minutes, due Wednesday, and Friday’s release of the US personal consumption expenditures index — the Fed’s preferred inflation measure — are likely to provide clues on the central bank’s policy outlook. These key events are expected to shape investor sentiment and the broader economic narrative moving forward.

In corporate news, Samsung shares edged up 1 per cent in Seoul, despite being among the smartphone makers threatened with new US tariffs . In Tokyo, Nippon Steel saw a sharp rally, rising as much as 7.4 per cent before closing 2.1 per cent higher. This came after Trump voiced support for the Japanese firm's proposed $14.9 billion acquisition of US Steel, a deal he claimed would keep the US Steel headquarters in Pittsburgh and generate 70,000 jobs along with $14 billion in economic value. However, neither the White House nor the companies involved have released formal details of this proposed partnership.

In currency markets, the euro rose to $1.1384, the pound edged up to $1.3563, and the dollar gained slightly to 142.84 yen. The euro/pound exchange dipped slightly to 83.93 pence.