Equities
European markets and North American futures rose on Monday after U.S. President Donald Trump extended his threatened deadline for 50-per-cent tariffs on EU goods, marking a temporary reprieve in his erratic trade policy.
Trading was expected to be thin with markets in the United States and Britain closed due to public holidays, though Wall Street futures were up.
TSX futures pointed to a higher open.
Investors were digesting news from Sunday that Trump agreed to extend his deadline for trade talks with the EU until July 9, from the June 1 deadline he set on Friday, after European Commission President Ursula von der Leyen said the bloc needed more time to “reach a good deal.”
Friday’s comments were a reminder of Trump and the administration’s unpredictable and seemingly incoherent policies and decision-making, Commerzbank said in a note.
Analysts have pointed out that investors are shifting their money out of the U.S. to Europe and Asia as they price in a possible U.S. recession and a consequent global slowdown.
“Now, a really toxic cocktail is mixed for the U.S. consisting of (1) rising risk premium to hold U.S. assets, (2) global investors’ move towards increased portfolio diversification, and (3) an increased homeland focus,” said a note from SEB Research adding that they expected the dollar to lose value while U.S. interest rates could rise further.
Overseas, the pan-European STOXX 600 was up 0.86 per cent in afternoon trading. Germany’s DAX gained 1.43 per cent and France’s CAC 40 increased 0.99 per cent.
In Asia, Japan’s Nikkei closed 1 per cent higher, while Hong Kong’s Hang Seng lost 1.35 per cent.
Commodities
Oil prices steadied as trade concerns eased after Trump’s extension of the EU tariff negotiation deadline.
Brent crude futures were unchanged at US$64.78 a barrel while U.S. West Texas Intermediate crude slipped 4 US cents to US$61.49 a barrel.
Both contracts had traded higher earlier in the session after Trump’s announcement on EU trade negotiations.
In other commodities, spot gold slipped 0.8 per cent at US$3,332.04 an ounce.
Currencies and bonds
The Canadian dollar strengthened against its U.S. counterpart.
The day range on the loonie was 72.76 US cents to 73.06 US cents in early trading. The Canadian dollar was up about 0.76 per cent against the greenback over the past month.
The U.S. dollar index, which weighs the greenback against a group of currencies, lost 0.03 per cent to 99.08.
Analysts said the “Sell America” narrative is still dominant.
“It still is largely a ‘sell dollar story’,” said Christopher Wong, currency strategist at OCBC.
“The policy unpredictability surrounding Trump’s tariffs and of course, the erosion of the U.S. exceptionalism, this could potentially still undermine sentiment and the confidence in the medium term.”
The euro gained 0.1 per cent to US$1.1376, after hitting a one-month high against the U.S. dollar. The British pound increased 0.12 per cent to US$1.3554.
Economic news
U.S. markets closed (Memorial Day)
(8:30 a.m. ET) Canadian construction investment for March.
(8:30 a.m. ET) Canadian manufacturing sales for March.
With Reuters and The Canadian Press