EMEA Morning Briefing: EU's Trade Chief Heads to Washington

Dow Jones
Jul 01

MARKET WRAPS

Watch For:

Manufacturing PMIs for eurozone, France, Germany, U.K.; EU inflation; Germany unemployment; trading updates for Sainsburys, Ryanair, Sodexo

Opening Call:

European stock futures were mixed after Asia stocks broadly were flat. The dollar and Treasurys were flat, while gold rose and oil fell.

Equities:

European equity futures were mixed as the European Union's top trade official heads to Washington this week for talks as Brussels' officials race to secure a deal before a key deadline expires next week.

The Fed chair Jerome Powell will also speak Tuesday morning at the European Central Bank's Forum on Central Banking in Sintra, Portugal, as the White House steps up plans to replace him and fractures inside the Fed become harder to ignore.

President Trump threatened to impose 50% tariffs on EU goods in May, before holding off and agreeing to let talks continue until July 9.

Sefcovic said he's seeking a fair deal for both sides after receiving a draft proposal from the U.S.

"The 9th of July is around the corner, so for me it's always a good sign when we can move from the exchange of views into the drafting process," he said.

Forex:

The U.S. dollar was flat as the U.S. economy is likely to slow in coming quarters amid high policy uncertainty, but corporations "are going to be able to weather this uncertainty very well," Morgan Stanley's Vishal Khanduja said.

He is optimistic about corporate debt, saying U.S. companies have healthy balance sheets--that means investors can pick up extra yield without adding so much risk.

He is overweight corporate and securitized credit and has also added non-dollar positions. Khanduja likes bonds backed by non-agency mortgages, data centers and marquee hotels, he said.

"We are overweight financials versus non-financials and we have a slight preference for European financials versus U.S. financials," he added.

Bonds:

Economists at Goldman Sachs bumped up their forecast for when the Fed will resume cutting interest rates, projecting the central bank will ease policy in September, rather than staying on hold until December as previously forecast.

Tariffs so far aren't pushing up inflation as much as initially expected, and the labor market seems to be cooling, the Goldman team noted.

A handful of possible scenarios could lead the Fed to cut in September, Goldman suggests: "We think the odds of a cut in September are somewhat above 50% because we see several routes to get there--underwhelming tariff effects, larger disinflationary offsets, and either genuine labor market softness or a scare from month-to-month volatility," they said.

Energy:

Oil edged lower amid concerns over rising supply from OPEC+.

"The market is now concerned that the OPEC+ alliance will continue with its accelerated rate of output increases," said ANZ Research analysts.

"Key members are said to be open to considering another" 411,000 barrels per day increase for August, the analysts said.

Metals:

Gold edged higher, underpinned by Fed rate-cut hopes.

"The metal could find support amid subdued yields and dovish expectations," said Kudotrade's Konstantinos Chrysikos in an email.

"Markets expect three rate cuts in the U.S. during the second half of the year, which could support non-yielding assets like gold," said the head of Customer Relationship Management says.

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Copper edged higher as easing trade concerns and positive economic data boosted sentiment across industrial commodities, ANZ Research analysts wrote.

Better-than-expected economic data in China eased hopes of further stimulus measures, they said. The official manufacturing purchasing managers index for June continued to indicate a contraction but edged up to 49.7 from May's 49.5.

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Iron ore prices were lower amid weaker fundamentals. The demand of iron ore remains resilient, while not driving prices higher as significantly as market expectations, Southwest Futures analysts wrote.

Overall fundamentals are weaker, they said. Iron ore inventories remain the same level as last year, they added.

   
 
 

TODAY'S TOP HEADLINES

Powell Speaks in Europe as Trump Piles Pressure on Fed

Jerome Powell will try to project stability without worsening the fight over Federal Reserve independence at a gathering sometimes referred to as the European equivalent of the central bank's Jackson Hole economic conference.

The Fed chair will speak Tuesday morning at the European Central Bank's Forum on Central Banking in Sintra, Portugal, as the White House steps up plans to replace him and fractures inside the Fed become harder to ignore.

   
 
 

Canada Loads First Ever LNG Cargo to Asia

Canada has shipped its inaugural cargo of liquefied natural gas, kicking off operations at its first large-scale LNG export facility.

The Asia-bound cargo was loaded from the LNG Canada export facility in Kitimat, British Columbia.

   
 
 

EU Trade Chief Plans Trip to Washington as Tariff Deadline Looms

The European Union's top trade official will head to Washington this week for talks as Brussels' officials race to secure a deal before a key deadline expires next week.

Maros Sefcovic told reporters on Monday that he'll travel to the U.S. and seek meetings with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick.

   
 
 

For Iran's Nuclear Program, a Month Is Longer Than It Sounds

The furious debate over whether U.S. strikes obliterated Iran's nuclear program or only delayed its progress toward being able to build a nuclear weapon by a few months skips over a key component in the equation: Iran's political calculation.

If Iran were to make the decision to build a nuclear weapon, it would be betting that it can complete the job and establish deterrence before the U.S. and Israel intervene-through military action, economic pressure or diplomacy-to stop it.

   
 
 

ECB's New Strategy Emphasizes 'Forceful' Responses to Inflation Shifts

The European Central Bank said it will respond in a "forceful or persistent" manner to big swings in inflation, reflecting the lessons learned from the postpandemic price surge in its latest strategy review.

In common with other central banks, the ECB was criticized for being too slow to respond to a pickup in inflation in 2021 when the annual rate peaked at above 10% by late 2022.

   
 
 

Amazon Is on the Cusp of Using More Robots Than Humans in Its Warehouses

The automation of Amazon.com facilities is approaching a new milestone: There will soon be as many robots as humans.

The e-commerce giant, which has spent years automating tasks previously done by humans in its facilities, has deployed more than one million robots in those workplaces, Amazon said. That is the most it has ever had and near the count of human workers at the facilities.

   
 
 

Goldman's stock surges to another record, as the 'big winner' of Fed's stress tests

Bank stocks finished a strong first half of the year on Monday on the heels of a fresh bill of health in the U.S. Federal Reserve's annual stress test.

Monday marked the first regular trading day after the U.S. Federal Reserve said the U.S. banking system would remain sound in the face of a simulated recession, after its review of bank balance sheets.

   
 
 

Write to singaporeeditors@dowjones.com

   
 
 

Expected Major Events for Tuesday

00:01/IRL: Jun Ireland Manufacturing PMI

04:30/NED: May Retail turnover

04:30/NED: Jun Flash Estimate CPI

05:00/NED: Jun Netherlands Manufacturing PMI

06:00/UK: Jun Nationwide House Price Index

06:30/SWI: May Retail Sales

06:30/HUN: May Trade Balance

07:00/POL: Jun Poland Manufacturing PMI

07:00/TUR: Jun Turkey Manufacturing PMI

07:15/SPN: Jun Spain Manufacturing PMI

07:30/CZE: Jun Czech Republic Manufacturing PMI

07:30/SWI: Jun procure.ch Purchasing Managers' Index

07:45/ITA: Jun Italy Manufacturing PMI

07:50/FRA: Jun France Manufacturing PMI

07:55/GER: Jun Labour market statistics (incl unemployment)

07:55/GER: Jun Germany Manufacturing PMI

08:00/EU: Jun Eurozone Manufacturing PMI

08:00/GRE: Jun Greece Manufacturing PMI

08:30/UK: Jun S&P Global UK Manufacturing PMI

09:00/CYP: May Retail trade

09:00/EU: Jun Flash Estimate euro area inflation

10:00/POR: May Retail trade

10:00/POR: May Industrial production index

16:59/AUT: Jun Unemployment figures

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This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

July 01, 2025 00:07 ET (04:07 GMT)

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