European stock markets commenced Friday’s trading session with a slight downturn, as a renewed wave of caution swept through investor sentiment following a US court’s decision to temporarily reinstate President Donald Trump’s widespread tariffs.
Despite this immediate pressure, the benchmark pan-European index remained on track for a robust monthly gain.
As of 0711 GMT, the continent-wide STOXX 600 index was down 0.1%.
This dip was primarily attributed to the temporary reinstatement of the most sweeping of President Trump’s tariffs, a development that occurred just a day after a different US court had ordered an immediate block on them.
This legal seesaw has reintroduced a significant element of uncertainty into the global trade landscape.
However, looking at the broader monthly picture, the benchmark STOXX 600 was still poised for its first monthly advance in three months, having gained 3.8% so far.
This resilience has been built on a period of easing trade tensions earlier in the month and recent US fiscal concerns, which had prompted some investors to diversify away from American assets.
Economic data and sectoral moves in focus
On the economic data front, figures released on Friday showed that German retail sales fell by 1.1% in April compared with the previous month, indicating some weakness in Europe’s largest economy.
Investors are also keenly awaiting Germany’s May inflation figures, due later in the day, as these could provide crucial clues regarding the European Central Bank’s upcoming policy decision next week.
Sectoral performance was mixed in early trading. Basic resources stocks were the biggest drag on the STOXX 600, falling 0.9%, largely due to lower copper prices.
Conversely, the real estate sector offered some support to the main index, rising by 0.8%.
In corporate news, British insurer and asset manager M&G saw its shares jump by an impressive 8.2%.
This surge followed the announcement that Japanese life insurer Dai-Ichi Life Holdings will acquire a 15% stake in M&G as part of a strategic deal, signaling confidence in the UK-based firm.
US markets absorb fresh tariff uncertainty
The renewed uncertainty surrounding US tariffs also cast a shadow over Wall Street. US stock futures edged lower as markets digested the implications of a federal appeals court decision on Thursday to temporarily pause a trade court ruling that had, just the day before, blocked many of President Trump’s tariffs as illegal.
This pause grants the appeals court time to consider the case, with the Trump administration required to file its briefings by June 9.
Futures attached to the Dow Jones Industrial Average slipped 0.1%, while futures for the benchmark S&P 500 fell 0.2%. Futures linked to the tech-heavy Nasdaq 100 dropped 0.3%.
The White House has indicated its preparedness to take the tariff dispute to the Supreme Court if necessary.
In the interim, it is reportedly exploring alternative methods to implement President Trump’s tariffs without relying on emergency powers, the use of which was central to the initial court’s decision to block them.
Later on Friday, Wall Street’s attention will shift to the April reading of the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index.
Market participants will be highly focused on any indications that tariffs might be putting upward pressure on inflation, although many analysts do not expect the levies to significantly impact the data until the following month.
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