MW Trump said he would delay European Union tariffs until July 9. U.S. stock futures and Europe equities are rallying.

By Barbara Kollmeyer

U.S. stock futures and European equity markets climbed on Monday, after President Trump said he would delay the threat of 50% tariffs on the European Union until July to allow for negotiations.

In a Truth Social post on Sunday, Trump said he agreed to postpone the trading bloc's tariff hike from June 1 to July 9, after a phone call with European Commission President Ursula von der Leyen, who requested the extension. Trump announced an increase in those tariffs on Friday, driving losses for U.S. and Europe markets, with the S&P 500 SPX dropping 0.6%.

U.S. financial markets are closed Monday for the Memorial Day holiday, but futures markets indicated a strong open for Tuesday. Dow Jones Industrial Average futures (YM00) climbed 417 points, or 1%, to 42,088, S&P 500 futures (ES00) rose 66 points, or 1.1%, to 5,883. Nasdaq-100 futures (NQ00) jumped 259 points, or 1.2%, to 21,231.

The Stoxx Europe 600 index XX:SXXP rose 0.8%, reversing some of Friday's 0.9% drop, which marked the biggest one-day decline since April 9. The German DAX DX:DAX climbed 1.6% and the French CAC 40 index FR:PX1 1.3%, after Friday also marked the worst session for those indexes since April 9.

The euro $(EURUSD.FOREX)$ was up 0.4% against the dollar at $1.1414, and the yield on the 10-year German bund BX:TMBMKDE-10Y rose 3 basis points to 2.602%.

"The stock market seems to dance to Trump's tune: first a threat, then a pullback, quickly followed by a rebound as speculative investors anticipate a concession from the U.S. President," said Jochen Stanzl, chief market analyst at CMC Markets, in a note to clients.

"June is likely to be a turbulent month for the stock market, as the U.S. will be negotiating agreements with numerous partners worldwide to avoid reciprocal tariffs. Increased volatility is not out of the question if Trump intensifies pressure on other trading partners in a similar fashion," Stanzl said.

The trading bloc had faced a 10% tariff following a 90-day pause on Trump's "liberation day" tariffs, which he announced on April 2. Those tariffs, which were based on a simplistic formula, were blamed for a historic market selloff.

Von der Leyen said in an X post late Sunday that she had had a "good call" with Trump. "The E.U. and U.S. share the world's most consequential and close trade relationship. Europe is ready to advance talks swiftly and decisively. To reach a good deal, we would need the time until July 9," she said.

Read: Trump's new tariff threats may shake stocks' rally as investors brace for a long, hot summer

European stocks have been drawing more attention from Wall Street and investors this year, with the Stoxx Europe 600 up 8.3% versus a 1.3% drop for the S&P 500. Citigroup analysts warned clients on Friday that if a 50% tariff on European goods is followed through, the index could see a 7% to 8% fall from current levels.

They base that consensus analysts forecasts for 2025 European earnings per share (EPS) growth that have fallen from 7% pre-Liberation Day from around 2% currently. "This is broadly in line with our previous estimates of a 20% tariff hit to European earnings," said a team led by Beata Manthey.

Citi said EPS could fall another 5% to 6% to a negative 4% if 50% tariffs are implemented, which comes against the background of the market pricing in a 4% rise in EPS growth over the next 12 months.

Goldman Sachs economists led by Guillaume Jaisson said they are forecasting 0% growth for EU this year, and the new tariff threat from Trump would weigh heavily on growth.

"Flows into European equities have improved, but remain light overall. Recent months have seen renewed interest, especially from domestic investors. However, cumulative flows remain weak, and positioning by European investors is still relatively light," said Jaisson and his team.

-Barbara Kollmeyer

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May 26, 2025 03:36 ET (07:36 GMT)

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