The Stock Market Rises After Trump Delays Tariffs

U.S. stock-index futures rose during early Asian trading hours on Monday, following President Donald Trump’s announcement that he would postpone the implementation of steep tariffs on European goods. Futures tied to the S&P 500 increased by about 0.9%, while those tracking the Nasdaq 100 climbed roughly 1%.

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The bounce followed Trump’s decision to extend the deadline for a proposed 50% tariff on European Union imports from June 1 to July 9. This move helped offset some of the market declines seen on Friday, when Trump initially revealed the tariff plan.

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Before Trump’s postponement, Asian equity futures had been under pressure, mirroring Friday’s losses on Wall Street. Contracts linked to Japanese, Australian, and Hong Kong stock markets were all in negative territory as investors reacted to the growing uncertainty around U.S.-EU trade relations.

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Meanwhile, the U.S. dollar regained some strength in response to Trump’s updated stance on tariffs. On Friday, the dollar index had dropped to its lowest level since December 2023. But by early Monday in Asia, the greenback showed signs of recovery. In contrast, the yen and Swiss franc—currencies that had benefited from Friday’s risk-off sentiment—gave back some of their gains as investor nerves settled slightly.

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The broader market response highlights the deep uncertainty tied to Trump’s unpredictable policy moves. His Friday threats weren’t limited to Europe. Trump also warned of a potential 25% tariff on smartphones, targeting companies like Apple Inc. and Samsung Electronics Co. unless they relocate their manufacturing operations to the U.S.

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On the bond front, U.S. Treasuries finished Friday largely unchanged, a quiet end to a week marked by surging yields. Investors had grown increasingly concerned over the budgetary impact of Trump’s latest legislative proposals, which include new rounds of tax cuts. However, with markets closed on Monday for a holiday, bond traders were left digesting recent volatility.

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Looking ahead, investors are focused on key inflation data due later in the week. The Federal Reserve’s preferred measure—the core personal consumption expenditures (PCE) price index, which excludes food and energy—is scheduled for release on Friday. Economists expect the April figure to show a modest 0.1% increase, based on current forecasts. The reading could help shape expectations for future Fed policy decisions, particularly as central bankers continue to assess inflation’s trajectory.

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Capital Economics weighed in on Trump’s tariff threats, suggesting that the proposed 50% duties on European goods may be more of a negotiating strategy than a concrete plan.

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The research firm believes it’s unlikely that such steep tariffs will be implemented in the long term. “At this stage, we are not inclined to change our working assumption that tariffs on the EU will ultimately settle around 10%,” Capital Economics said in a note. “But this underlines that there are risks and that the road to an agreement could be rocky.”

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In the commodities market, both oil and gold were stable in early Monday trading. Gold prices edged slightly lower after a strong rally on Friday, when they surged 1.9% to about $3,357 per ounce on increased safe-haven demand. Oil also held steady following recent gains, with traders monitoring geopolitical tensions and global supply trends.

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Several important data releases are on the horizon in Asia. Singapore is expected to report its latest industrial production figures, while Hong Kong’s trade data is also due. South Korea may release its retail sales numbers at any point during the week, potentially offering further insights into regional economic activity.

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In a separate development with global trade implications, reports emerged of growing port congestion in northern Europe and other major shipping centers. Analysts warned that escalating trade tensions, especially those involving tariffs, could lead to maritime disruptions and rising shipping costs worldwide. These developments underline how tariff policies can ripple far beyond the goods directly affected.

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Finally, Trump added another twist to the market narrative by announcing a surprise partnership between United States Steel Corp. and Japan’s Nippon Steel Corp. on Friday. The president claimed the deal would ensure that U.S. Steel remains rooted in the United States, though he provided few concrete details. Still, the announcement caught investors off guard and sent U.S. Steel shares soaring by 21.2%, reflecting a mix of optimism and confusion about what the tie-up actually entails.

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Overall, Monday’s early trading activity underscores how sensitive global markets remain to Trump’s policy announcements, especially those related to trade. While his decision to delay the European tariff hike brought temporary relief, investors are bracing for further volatility as negotiations unfold and more economic data rolls in.

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