European equity markets opened higher Monday, buoyed by growing optimism over potential trade agreements as the July 9 deadline for U.S. tariffs approaches. By early trading at 07:05 GMT, Germany’s DAX index had gained 0.5%, France’s CAC 40 edged up 0.2%, and the UK’s FTSE 100 rose modestly by 0.1%.
Trade Optimism Drives Market Confidence
Investor sentiment was lifted following positive cues from Asia-Pacific markets overnight and last week’s confirmation that the U.S. and China finalized a trade agreement reflecting terms agreed upon in Geneva last month. Meanwhile, Canada’s announcement to repeal its Digital Services Tax (DST) paved the way for renewed trade and security talks with the U.S., aiming for a deal by July 21.
Canada’s Finance Minister François-Philippe Champagne confirmed that the government will stop collecting the DST after June 30 and introduce legislation to abolish the tax that primarily targeted major multinational tech companies. Washington had regarded the DST as a key barrier to broader trade negotiations.
Closer to home, sources reported that European Commission President Ursula von der Leyen expressed confidence during a private EU summit that a trade deal with the U.S. could be finalized before the July 9 tariff deadline. Without an agreement, the U.S. plans to impose a 50% tariff on nearly all EU exports, while Europe stands ready with retaliatory measures.
German Retail Sales Highlight Consumer Pressure
Monday’s data revealed a 1.6% drop in German retail sales for May compared to April, underscoring ongoing consumer challenges in Europe’s largest economy amid trade uncertainties. Concurrently, China’s manufacturing sector contracted in June but at a slower pace than anticipated, as exporters grapple with weak global demand and persistent U.S. tariffs.
Japan also reported slower-than-expected factory output growth in May, largely attributed to the impact of American tariffs on automobile imports.
European investors are also awaiting inflation figures from Germany and Italy following a decline in eurozone inflation to 1.9% year-on-year in May, below the European Central Bank’s 2% target. Despite a 25 basis-point rate cut in June, ECB President Christine Lagarde suggested that the easing cycle might be nearing its conclusion.
Corporate Update and Commodity Markets
In corporate news, asset manager Polar Capital (LSE:POLR) announced a 27% rise in core operating profits for the fiscal year ending March 31, driven by a 17% increase in assets under management and higher net management fees.
On the commodity front, crude oil prices slipped amid reduced geopolitical tensions in the Middle East and anticipation of a further output increase by OPEC+ in August. At 03:05 ET, Brent crude futures fell 0.4% to $66.53 per barrel, while U.S. West Texas Intermediate crude declined 0.6% to $65.12 per barrel.
Last week saw both benchmarks record their largest weekly drops since March 2023, though they are poised to close June with over 5% gains for a second consecutive month. OPEC+ members are scheduled to meet on July 6, where another production hike—marking the fifth monthly increase since April—is widely expected.
Leave a Reply