Stock Futures Soar, Yields Rise After Trump Extends Deadline For EU Tariffs

US equity futures surged and European stocks climbed after President Donald Trump extended a deadline on aggressive euro area tariffs, reinforcing the pattern of leaving markets guessing and flip-flopping by making trade threats before backtracking, all in keeping with the gamebook established during the Trump 1.0 trade wars.  With US cash markets closed for Memorial Day, US equity futures jumped 1.2% and Nasdaq 100 futures surged 1.4%, erasing all of Friday’s losses.

A gauge of the dollar hovered near its lowest level in almost two years. Cash Treasuries didn’t trade due to holidays in the UK and US but futures dipped, indicating a 10Y yield about 4.53%

Trump’s decision to extend the deadline came after a phone call with European Commission President Ursula von der Leyen. Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date on which Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end. 

Trump’s tariff threats on Friday also included a 25% levy on smartphones if companies including Apple Inc. and Samsung Electronics Co. failed to move production to the US.

Even as the Big Beautiful Bill is now stuck in the Senate where any changes threaten to undo its razor thin passage in the House, the trade war has made a return as the major risk driver once again after concerns about Trump’s proposed tax cuts, and their impact on the US deficit, churned markets much of last week. Trump’s whiplash moves have increased uncertainty in markets and his broadside against Europe on Friday, followed by a backtrack, was a stark reminder of the president’s volatile policy making. 

“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. “This morning’s confirmation of such expectations reinforces the so-called ‘Trump Pattern,’ which is increasingly seen as a successful strategy for risk-tolerant investors.”

“One thing that is starting to concern us a bit is the fact that the rebounds that follow these selloffs are losing strength as we go on,” said Frederic Rozier, a portfolio manager at Mirabaud France. “We can sense investor fatigue about this back-and-forth and there’s a risk sentiment will erode as markets run in circles on tariffs. The only thing we know is that even if there’s an agreement, there will be a cost for European stocks.”

Europe’s Stoxx 600 index also erased Friday’s losses sparked by Trump’s threat of 50% tariffs on the European Union. The US President later said he had agreed to delay the date for the levies to July 9 from June 1. Among individual movers in Europe, Thyssenkrupp AG jumped more than 7% after a report that the firms chief executive plans to turn it into a holding company, allowing it to cut overhead costs as it divests further units. Volvo Car AB climbed as much as 4.8% after announcing plans to eliminate around 7% of its global workforce to cut costs and protect profits.

Earlier in the session, Asian equities were steady as weakness in China offset gains in Japan and South Korea. The MSCI Asia Pacific Index traded little changed after rising as much as 0.4%. Japanese firms Sony Group and Tokyo Electron were the biggest boosts to the gauge, while Chinese shares including Tencent and BYD were among the biggest drags. A broad sense of optimism buoyed markets in the region after President Donald Trump delayed duties on EU imports. Benchmarks in Japan got a lift as the country’s chief tariff negotiator indicated plans to resolve talks with the US before a G-7 meeting in June. Trump’s nod of a partnership between Nippon Steel and US Steel also helped sentiment. Shares in Korea led gains in the region, while Indian gauges also gained. That’s helped the regional measure remain on pace for its best close since October.

The trade tensions and weak demand for US assets are showing up in the dollar. Bloomberg’s dollar spot index was track for its lowest close since July 2023, while the greenback is at or approaching key levels against a host of currencies including the euro, Britsh pound, yen and Swiss franc.
Enthusiasm has faded for the world’s reserve currency this year. Speculative traders remained bearish on the dollar but trimmed their positioning to $12.4 billion in the week ending May 20 from $16.5 billion in the week prior, according to CFTC data reported Friday. 

A key event this week will be Nvidia Corp.’s results on Wednesday. The chip-making giant is seen as a bellwether for so called growth stocks and the sustainability of the artificial intelligence boom. It’s outlook will be crucial given macro risks and tariff uncertainty.

Investors are also gearing up for the Federal Reserve’s preferred inflation measure, the US personal consumption expenditures price index excluding food and energy, which will be released Friday. The April reading is forecast to rise 0.1% based on consensus expectations.

Elsewhere, signs of port congestion in northern Europe and other hubs suggests trade wars could lead to maritime disruptions around the world, increasing shipping rates.

Trump on Friday announced a partnership between US Steel and Japan’s Nippon Steel Corp., shocking markets with an agreement he said would keep the once-iconic American firm in the US, but otherwise providing no specifics. Nippon Steel shares jumped as much as 7.4% in Tokyo, while shares in US Steel rose 21% Friday.