Global markets climbed on Monday and the euro rallied after US President Donald Trump kicked his threat to slap 50 per cent tariffs on European Union goods into July, marking another temporary trade policy reprieve.
MSCI’s broadest index of world shares rose 0.2 per cent while the pan-European stocks index Stoxx600 recovered to where it was trading before Mr Trump on Friday unexpectedly called for 50 per cent tariffs on European goods, saying negotiations with the region had become too sluggish.
On Sunday, Mr Trump reversed course, pushing the deadline for tariffs to July 9th from June 1st, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.
Trump’s latest policy moves were a reminder to investors how quickly circumstances could change. Analysts have pointed out that investors are shifting their money out of US markets to Europe and Asia as they price in a possible US recession and a consequent global slowdown.
Trading volumes on Monday were expected to be thinner than usual, given that markets in the United States and Britain were closed due to public holidays.
Dublin
AIB and Bank of Ireland led the recovery in Dublin, rising 2 per cent and 0.85 per cent. Another to benefit from the more optimistic tariff outlook was insulation maker Kingspan, which rose 1.9 per cent to €75.70. Hotel group Dalata also enjoyed an uplift, rising nearly 2 per cent to 1.8 per cent to €5.71.
Ryanair fell marginally to €23.73 but the company’s shares are up 25 per cent so far this year. Chief executive Michael O’Leary is in line for a €125 million bonus if the stock holds above €21 for 28 consecutive days. With shares above €21 since May 2nd. Results earlier this month at the airline showed profits at fell 16 per cent to €1.61 billion.
Europe
The tariff war has returned as the major driver once again after concerns about Mr Trump’s proposed tax cuts, and their impact on the US deficit, churned markets much of last week. Mr Trump’s whiplash moves have increased uncertainty in markets and his broadside against Europe on Friday, followed by a backtrack, was a stark reminder of the president’s volatile policymaking.
Among individual movers in Europe, Thyssenkrupp jumped more than 8 per cent after a report that the firms chief executive plans to turn it into a holding company, allowing it to cut overhead costs as it divests further units. Volvo Car climbed as much as 4.8 per cent (but fell back later) after announcing plans to eliminate around 7 per cent of its global workforce to cut costs and protect profits.
Analysts were mixed on the impact of Trump’s latest tariff threats.
“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 from the U.S. President,” 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.”
“One thing that is starting to concern us a bit is the fact that the rebounds that follow these selloffs are losing strength as we go on,” said Frederic Rozier, a portfolio manager at Mirabaud France. “We can sense investor fatigue about this back-and-forth and there’s a risk sentiment will erode as markets run in circles on tariffs. The only thing we know is that even if there’s an agreement, there will be a cost for European stocks.”
London
The UK market was closed.
New York
US markets were also closed for Memorial Day.
