Deal or no deal? Stocks opened flat in a muted start to trading in Europe on Monday, amid concerns over trade talks between the US and the EU. US President Donald Trump is reportedly pushing for 15-20 per cent tariffs on the EU, which is racing to secure a deal before the 1 August implementation of 30 per cent tariffs on the bloc. 

The market fell on Trump’s comments on Friday, but as far as I can tell, the 15-20 per cent is a slap in the mid-point between the 10 per cent base rate and the 30 per cent bargaining rate, so it seems about right. The EU is also said to be preparing retaliatory measures of its own to deploy in the event of a no-deal scenario. US Commerce Secretary Howard Lutnick said he was “confident” about getting a deal done.

The FTSE 100 is hovering around the 9,000 level after breaching it for the first time last week. The Dow Jones was a little softer on Friday, but the S&P 500 and Nasdaq were basically unchanged. We do have a bit of a summer holiday vibe to the markets, while we need to watch bond yields – the US 30-year has shied away from the 5 per cent handle again. For the week as a whole, the Dow was down slightly while the S&P 500 and Nasdaq Composite rose 0.6 per cent and 1.5 per cent, respectively. Asian equities seemed to suffer little impact from Japan’s election, which saw the ruling party lose its majority in the upper house.

Earnings on Wall Street are beating the lowered expectations – 83 per cent beats so far, according to FactSet. This week is all about the big tech numbers, with Alphabet and Tesla. These will be important for maintaining the AI investment narrative underpinning much of the market’s strength of late.

Ryanair shares rose more than 6 per cent after posting a first quarter profit of €820mn, €100mn ahead of forecasts on higher fares and better cost control. Passenger numbers were up 4 per cent, but fares rose by a fifth. BP’s revival is building some momentum. Two days after revealing it’s selling its US onshore wind business, the oil giant has appointed a new chairman to replace much-maligned Helge Lund. 

Earnings this week

Compass Group: Post-Covid return-to-normal winner, the contract food business may see tailwinds from US payrolls continuing to surprise as 68 per cent of group revenues are from the US. Lloyds: Shares of the UK bank have risen about 40 per cent so far this year and expectations are for continued growth in net interest income (NII), which rose 3 per cent in Q1 to £3.29bn. NatWest: Like Lloyds, the outlook on NII seems positive, with Morgan Stanley reckoning on Q2 delivering ahead of management forecasts for income to be at the “upper end of our previously guided range of £15.2-15.7 billion” for the full year.

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By Neil Wilson, investor strategist at Saxo UK