Stocks in Europe anticipated to start slightly up at market opening
Oil prices dipped in Asian trade following OPEC+'s decision to increase production in September, reflecting a slight downturn in the energy sector.
Elsewhere, the U.S. Trade Representative, Jamieson Greer, confirmed that the latest round of tariffs is "pretty much set" and unlikely to change. This announcement has left businesses and investors bracing for the potential impact on U.S. trade relations.
The European economic calendar is light this week, with PMI data from the EU and the UK taking centre stage. However, concerns over President Trump's new import tariffs have weighed heavily on European stocks, causing a slump in the pan-European STOXX 600 index by 1.9 percent – the worst session since April.
The latest jobs report shows a significant slowdown in job creation, with nonfarm payrolls expanding by 73,000 in July, far below the expected 110,000 jobs. This weakening labor market trend is further underscored by the jobless rate inching up to 4.2 percent.
Across the Atlantic, U.S. stocks tumbled on Friday, with the Dow dropping 1.2 percent, the S&P 500 falling 1.6 percent (the biggest single-day loss since April 21), and the tech-heavy Nasdaq Composite giving up 2.2 percent. The upside may remain capped amid heightened worries about inflation and the U.S. economic outlook.
The new tariffs are increasing prices on imported goods, with companies like Warren Buffett's Berkshire Hathaway reporting delays in orders and shipments due to U.S. tariffs in the second quarter.
Looking ahead, European stocks may open on a positive note on Monday. Across the Atlantic, reports on factory orders, service sector activity, jobless claims, speeches by Federal Reserve officials may provide additional clues on the Fed's interest rate path.
Prominent U.S. companies such as Walt Disney, Warner Bros. Discovery Inc., McDonald's, and Uber are set to unveil their quarterly earnings this week. Gold remains little changed, gaining the most in two months on Friday due to traders' increased bets on imminent Federal Reserve rate cuts.
[1] The latest U.S. tariffs on European exports, set at a 15% ceiling as part of the 2025 US-EU trade deal, are expected to raise costs for European exporters and have sparked concerns over reduced EU competitiveness and potential dampening of European growth.
[2] These tariffs contribute to a broader increase in U.S. effective tariff rates to nearly 20%, the highest since the early 20th century, which in turn raises overall price levels by about 2.1% in the short run and reduces household real income by thousands of dollars annually.
[3] The tariffs threaten to lower U.S. GDP growth by 0.5 percentage points annually through 2026 and depress employment by over half a million jobs, effects that resonate internationally through trade and investment channels.
[4] However, the deal includes large European investments into the U.S. ($600 billion projected) and increased European purchases of U.S. energy ($750 billion through 2028), which could somewhat offset negative impacts by stimulating transatlantic commerce.
[5] Despite this, the deal is seen as a mixed outcome that still leaves many uncertainties, potential trade frictions, and adjustment costs for businesses and markets on both sides.
[1] The unexpected increase in U.S. tariffs on European exports, reaching a 15% ceiling as part of the 2025 US-EU trade deal, has caused concern among European businesses, as it could increase costs and potentially reduce European competitiveness, impacting growth.
[2] Furthermore, these tariffs contribute to a broader hike in U.S. effective tariff rates, which might escalate overall price levels by approximately 2.1% in the short run and decrease household real income significantly annually.
