Update Equities: Trump's unpredictability keeps the markets on edge
Just as the tariff turmoil seemed to be easing, US President Donald Trump made headlines again. Last Friday, he announced plans to impose a 50% tariff on imports from the EU starting June 1. Trump claimed these higher tariffs are necessary to ramp up negotiations, as the trade talks are ‘going nowhere.’ On his social media platform, Truth Social, he accused the EU of being 'very difficult to deal with.' European markets declined, ending five weeks of gains.
However, Trump's plan to impose higher tariffs on Europe didn't last long. On Sunday, after a conversation with European Commission President Ursula von der Leyen, he postponed the higher tariffs until 9 July.
This news helped European equities rebound Monday morning into positive territory. Yet, the uncertainty regarding the tariffs remains and is perceived to be higher. Trump could still make new moves despite the 90-day pause. If the higher 50% tariffs are implemented, many European countries could be pushed into a recession. The most exposed countries are Germany, Italy and possibly Ireland, if US and EU trade measures were to include pharmaceutical products or services. In retaliation, Europe is expected to respond by doubling the scope of the already planned countermeasures on US goods. This currently amounts to EUR 130 billion. US markets had a delayed start to the week due to Memorial Day, opening on Tuesday with a slight recovery.
Apple investors are also dealing with Trump, as he threatened to impose a 25% tariff on iPhones unless Apple relocates its production to the US. This announcement caused Apple shares to drop more than 3% on Friday.
As the earnings season is coming to an end, there was relatively little company news reported. However, major tech names like Nvidia and Salesforce are set to report earnings this week. For Nvidia, the expectation is a 66% increase in sales to USD 43.3 billion, lower than the 78% sales growth reported in the fourth quarter of 2024. Last month, Nvidia warned of a USD 5.5 billion write-down. This is due to US export requirements impacting the H20 chips intended for the Chinese market. Due to Ascension Day, this Global Weekly has been published earlier. The quarterly results of Nvidia and Salesforce will be discussed in the Global Weekly next week.