US Equities Rally on Trade Relief and Tech Momentum
Global financial markets advanced on Tuesday after US President Donald Trump postponed the planned 50% tariff increase on European imports until July 9, alleviating fears of escalating trade tensions. This development sparked a sharp rally in US equities, with both the S&P 500 and Nasdaq rising over 2%, led by strong gains in the technology and consumer discretionary sectors. Small-cap shares also saw robust advances.
Investor sentiment improved, pushing US Treasury yields lower, while the US dollar strengthened against major currencies such as the euro and yen, supported by the trade announcement and comments from Japanese authorities regarding bond issuance.
European Markets Gain as Sentiment and Trade Hopes Improve
European stocks rose modestly, buoyed by improving consumer confidence data from Germany and the Eurozone, alongside optimism from delayed US tariffs. The defence sector hit record highs, with Airbus, Rheinmetall, Leonardo, and BAE Systems all climbing more than 2% amid renewed geopolitical tensions.
Investors continue to watch US-EU trade talks closely, as potential volatility looms. In the US, strong earnings from communication services and healthcare firms further lifted sentiment. Focus is now on Nvidia’s earnings, which are expected to provide insights into the impact of export restrictions to China.
Asian Equities Mixed as Nvidia Results Loom
Markets in Japan, South Korea, and Taiwan posted solid gains, driven by buying in chipmakers and AI-related stocks ahead of Nvidia’s report. However, Chinese markets lagged, pressured by weak earnings from PDD Holdings, persistent deflation concerns, and soft consumer spending. While Xiaomi delivered strong results, it was not enough to counter the broader drag.
Market Focus: Nvidia, Retail Earnings, and Fed Minutes
US equity futures held steady overnight as traders awaited results from Nvidia and major US retailers. These earnings are expected to provide insight into both technology sector health and consumer demand. Meanwhile, attention is also on the FOMC minutes, which could offer clues about the Federal Reserve’s future monetary policy.
Dollar Gains and Oil Prices Climb on Supply Worries
The US Dollar Index rose to around 99.7, supported by rising consumer confidence and easing trade fears. The EUR/USD rate hovered near 1.1310, as currency markets reacted to instability in Japan’s bond market and cautious statements from the Minneapolis Fed.
Oil prices advanced in Asian trading amid concerns about potential sanctions on Russia, a Chevron export ban on Venezuelan crude, and stalled US-Iran nuclear talks. These developments stoked fears of supply disruptions ahead of this week’s key OPEC+ meeting.
Equities on the Move: Corporate Highlights
- Apple will launch a new dedicated gaming app later this year to replace Game Center. The platform will unify game access, achievements, social features, and aggressively promote Apple Arcade, as the company strengthens its push into the $200 billion global gaming industry.
- Block Inc will integrate bitcoin payments via the Lightning Network into its Square platform starting in late 2025, enabling merchants to accept fast, low-cost BTC transactions. This aligns with Block’s strategy to drive bitcoin adoption through products like Bitkey and Proto.
- TSMC plans to open a design centre in Munich in Q3 2025, supporting European clients building high-performance, energy-efficient chips for AI, automotive, and industrial uses. This complements its €10 billion ESMC facility in Dresden, built with Infineon, NXP, and Bosch.
- Eli Lilly is acquiring SiteOne Therapeutics in a deal worth up to $1 billion, gaining STC-004, a Phase 2-ready non-opioid pain therapy targeting Nav1.8. This could offer non-addictive chronic pain relief, expanding Lilly’s neuroscience pipeline beyond diabetes and cancer.
- Salesforce will acquire Informatica for approximately $8 billion, marking its largest deal since Slack (2021). The acquisition will enhance Salesforce’s AI and data management capabilities and is expected to boost operating margins from the second year.
- UniCredit has submitted concessions to the EU for its Banco BPM acquisition, with the European Commission’s preliminary ruling due by June 19. However, CEO Andrea Orcel warned the deal hinges on Italian government conditions, which UniCredit is challenging in court.
- PDD Holdings reported a 47% drop in Q1 net profit, citing fierce domestic competition, sluggish consumption, global trade uncertainty, and revenue missing analyst estimates. Its US-listed shares fell over 14%.
- Morgan Stanley analysts said a 25% US tariff on iPhones likely won’t drive Apple to reshore production, as domestic manufacturing would take years and cost billions, making US-made iPhones ~35% more expensive. Any FY26 earnings hit is expected to be offset by further US investments.
- Piper Sandler initiated coverage of SoundHound AI with an Overweight rating and a $12 price target, citing strengths in voice AI, and growth potential in quick-service restaurants and customer service. However, challenges in the auto segment remain due to production headwinds.
What to Watch: Key Data and Events
Investors will monitor earnings from Nvidia, Salesforce, and Hewlett-Packard, as well as macro releases including the Richmond Fed Manufacturing Index and FOMC meeting minutes, both of which could influence the direction of US monetary policy and economic sentiment.
Markets continue to exhibit cautious optimism as the delay in US tariffs on European goods reduces near-term trade risks. Strong sector earnings and resilient economic data support a moderate growth outlook for 2025, though geopolitical tensions and monetary policy signals remain key drivers of potential volatility.
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