MARKET WRAPS

Shares in Europe were mostly lower as investors weighed the latest tariff developments and looked ahead to the Federal Reserve's next interest rate decision.

German stocks sank after the country's chancellor-in-waiting, Friedrich Merz, failed to get the support of a majority of lawmakers in the first round of voting.

Markets remain wary of a broadening of the trade war to include services as well as goods.

Meanwhile, the Fed will likely emphasize growing risks to the economic outlook at Wednesday's meeting.

Shares on the Move

Continental rose 3.5% after swinging to a net profit.

Philips was down 1.4% after cutting its profit margin forecast for 2025 on trade war concerns.

Vestas was up 6.3% after reporting an unexpected operating profit in the first quarter.

Economic Insight

The Fed is expected to hold interest rates steady, while recent solid U.S. jobs and ISM services data lessen prospects of rate cuts in the coming months, Deutsche Bank said.

"The stronger data saw markets pare back their expectations of near-term Fed rate cuts."

U.S. Markets:

Stock futures pointed to a lower open, with markets continuing to take stock after massive rebound in the previous week.

Forex:

The dollar traded steady.

Sterling rose, but could weaken if the Bank of England lowers its economic growth and inflation forecasts at Thursday's meeting, Commerzbank said.

The Swiss franc fell against the euro.

The currency has limited scope to fall further, even if the Swiss National Bank cut interest rates further after Monday's lower-than-expected inflation data, Commerzbank added.

Bonds:

The long end of the Bund curve was facing supply pressure from a syndicated tap of the August 2056 Bund, Commerzbank said.

"In Bunds, the announcement of the second and final syndication for this year, the 30-year Bund tap, is adding to the ultralong steepening bias."

U.K. gilts rose, tracking U.S. and eurozone peers as domestic markets reopened after a public holiday on Monday.

Energy:

Oil prices rose after tumbling in the previous session due to mounting concerns over a global supply glut.

This is likely a technical rebound, UniCredit said.

"The combination of increased output and softer global economic fundamentals offers little room for a meaningful price recovery in the near term."

Metals:

Gold futures rallied amid volatile trading, rising to near two-week highs on renewed risk-off sentiment.

This is a sign the market remains unconvinced the risks around the trade war have subsided, ANZ said.

EMEA HEADLINES

DoorDash Buys Deliveroo for $3.86 Billion

DoorDash struck a deal to acquire British food-delivery company Deliveroo for around 2.9 billion pounds ($3.86 billion) following an initial approach last month, in a move aimed at increasing DoorDash's global presence.

San Francisco-based DoorDash plans to pay shareholders 180 pence in cash for each share they hold. That represents a premium of around 44% over Deliveroo's closing price of 125 pence on April 4, prior to DoorDash's offer letter.

UBS to Pay $511 Million to Settle Credit Suisse U.S. Tax Case

UBS Group agreed to pay $511 million to settle a yearslong U.S. probe into violations by Credit Suisse of an earlier agreement with the Justice Department over American clients who evaded taxes.

The Swiss bank, which acquired Credit Suisse in 2023, and the Justice Department said Monday that Credit Suisse Services AG pleaded guilty to tax crimes and entered into a separate nonprosecution agreement related to conduct in Singapore on behalf of U.S. taxpayers.

Current U.S. Tariff Situation 'Not Acceptable,' EU Trade Official Says

The U.S. could collect more than $100 billion from the European Union if new White House investigations into trade in goods like pharmaceutical products and semiconductors result in yet more tariffs, the EU's top trade negotiator said.

"The situation as such is not acceptable," Maros Sefcovic, European Commissioner for trade, said during a debate in Strasbourg, France, on Tuesday.

French Industry Produced More Ahead of Tariffs

France's industrial sector continued to book rising output, capping a positive start to a year that could nevertheless darken if U.S. President Trump's trade tariffs bite into demand.

Production from French factories and other industry increased 0.2% in March from a month earlier, in line with economists' estimates, figures from the country's statistics agency showed Tuesday. Following a 1% rise a month earlier, March's increase helps reverse a monthslong streak of decline in the sector's output.

GLOBAL NEWS

Global Markets Are Mixed; U.S. Stock Futures Lower

Global stock markets are mixed while U.S. stock futures are lower after declines on Wall Street Monday, as fresh optimism on trade deals from Treasury Secretary Scott Bessent was weighed against President Trump's comments over the weekend calling for 100% tariffs on movies made overseas.

The dollar was steady ahead of the Federal Reserve interest-rate decision on Wednesday, while Treasury yields rose.

Fed Confronts Lose-Lose Scenario Amid Haphazard Tariff Rollout

The haphazard rollout of President Trump's tariff policy threatens to put the Federal Reserve in a lose-lose scenario: Navigate a recession or manage a period of stagflation.

How the Fed negotiates tricky communications around these trade-offs will be front and center at officials' two-day policy meeting this week.

Current U.S. Tariff Situation 'Not Acceptable,' EU Trade Official Says

The U.S. could collect more than $100 billion from the European Union if new White House investigations into trade in goods like pharmaceutical products and semiconductors result in yet more tariffs, the EU's top trade negotiator said.

"The situation as such is not acceptable," Maros Sefcovic, European Commissioner for trade, said during a debate in Strasbourg, France, on Tuesday.

China Services Sector Gauge Slips to Seven-Month Low Amid Trade Spat

A private gauge of China's services sector signaled that activity slowed in April, falling to a seven-month low as U.S. President Trump's hefty tariffs fueled trade tensions and hurt new orders and market sentiment.

The Caixin services purchasing managers index dropped to 50.7 last month from 51.9 in March, Caixin Media Co. and S&P Global said Tuesday. It was the weakest showing since September, when Beijing rolled out a series of stimulus measures to help reinvigorate the economy.

Trump Administration Cuts Off New Federal Grants to Harvard

The Trump administration won't provide Harvard University with any new federal grants, Education Secretary Linda McMahon told the school Monday in the latest escalation of the continuing battle between the government and the country's most prominent university.

In a scathing letter sent to Harvard President Alan Garber and posted on social media, McMahon took aim at Harvard's students, its academic rigor and its faculty, ultimately accusing the university of violating federal law and losing its privilege to partner with the federal government.

U.S. to Pay $1,000 to Migrants Who Self-Deport

The Trump administration plans to begin paying immigrants in the country illegally a stipend of $1,000 to self-deport, the Department of Homeland Security said Monday.

The administration has set up a mobile app that migrants can use to make departure plans. The app provides assistance in booking flights whose costs the government would cover in addition to facilitating payment of the stipend.

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(END) Dow Jones Newswires

May 06, 2025 05:03 ET (09:03 GMT)

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