European stocks ticked higher Tuesday on easing trade tensions, with Germany's DAX hitting a record high .
The European Union agreed yesterday to fast-track talks with the U.S., after President Trump on Sunday pushed back plans to impose a 50% tariff on the bloc.
But although Trump could walk back on the levy, investors need to price in at least some probability of prolonged, high tariffs, Pepperstone said.
U.S. Markets:
Stock futures rose as markets returned following the Memorial Day holiday.
All eyes will be on a consumer confidence survey for May, which should show if the U.S.-China trade deal managed to improve consumers' mood, Danske Bank said.
"Another preliminary survey from University of Michigan released earlier pointed towards further weakening in consumer sentiment in early May."
Forex:
The euro slipped against the dollar, but the currency could become a viable alternative to the dollar if the idea is pushed by European policymakers, ING said.
The dollar fell as uncertainty over U.S. tariffs remains elevated.
In an environment where market participants need little excuse to further trim their U.S. exposure, the DXY dollar index could fall to 98.000, Pepperstone said.
Bonds:
The 10-year Bund yield fell, and is expected to hover around 2.5% for now amid trade difficulties between the U.S. and Europe, Citi said.
However, a fall to 2.2% is possible "if there is lasting re-escalation," the U.S. bank added.
UniCredit expects eurozone government bond supply to decline in June but to remain above 100 billion euros.
Eurozone sovereigns have issued 660 billion euros in government bonds year-to-date, equivalent to more than 50% of their total issuance objectives for the year, it said.
Yields on U.K. government bonds fell, tracking moves in eurozone bonds, as trade tensions ease
Long-end Treasury yields dropped as investors returned to the market with caution, awaiting May's consumer confidence survey.
Energy:
Oil prices slipped with investors looking ahead to OPEC's meeting on Sunday to review its supply agreement.
The cartel is increasingly expected to hike output, keeping pressure on oil prices.
Still, lower prices in 2025 through 2026 could lead to an earlier and lower peak for U.S. shale production, Goldman Sachs said.
Metals:
Gold futures slumped, extending losses seen on Monday.
Signs that Trump is easing his stance on trade with the EU has dented safe-haven demand, ANZ said.
Nevertheless, erratic trade policies from the U.S. are creating uncertainty across global markets, which should support safe-haven demand for gold over the long run, it added.
EMEA HEADLINES
The U.S. Reinforces Europe's Northern Front, Fearing War With Russia
GOTLAND, Sweden-At the crack of dawn, a dozen U.S. Marines recently took position in a field on this sleepy Swedish island about 200 miles from the Russian city of Kaliningrad and fired their mobile rocket system.
Thyssenkrupp Plans to Become Holding Company of Independent Businesses
Thyssenkrupp plans to make all of its divisions independent and open to outside investment, a major overhaul that aims to turn the German industrial group into a holding company after more than two centuries as a manufacturer.
The company said Monday that it would start preparations to separate its materials-services and automotive-technology segments in the coming years and that its decarbonization-technologies unit would follow suit. It aims to retain a majority interest in its businesses in the medium term.
GLOBAL NEWS
German Consumer Confidence Edges Higher Despite Tariff Uncertainty
Consumer sentiment in Germany improved a little as wage expectations grew and views of the economic outlook calmed, despite the uncertainty provoked by President Trump's tariff policies, a monthly survey said Tuesday.
The consumer-climate index published by research groups GfK and the Nuremberg Institute for Market Decisions ticked up for a third straight month to minus 19.9 in June's forecast, 0.9 points higher than in May. Economists polled by The Wall Street Journal expected the measure a little stronger, at minus 19.6.
French Inflation Declines, Opening Door to ECB Rate Cut
French inflation cooled more than expected in May, likely clearing the way to an expected European Central Bank interest-rate cut next month.
Consumer prices were 0.6% higher on year this month, down from 0.9% in April, according to EU-harmonized figures published Tuesday by France's statistics agency Insee. Economists had expected May's rate to stay at 0.9%, according to economists polled by The Wall Street Journal.
China Turns to Consumers to Boost Growth, but Households Are Wary
HAIKOU, China-To weather a trade war with the U.S., China is looking to its own consumers to keep the economy churning.
Beijing has made bolstering domestic consumption a top policy priority for the first time, promising efforts to boost household spending. In one initiative this year, the government allocated 300 billion yuan, equivalent to around $42 billion, to expand a program that pays shoppers to trade in old vehicles or electronics for new ones.
Lagging Confidence in Dollar Offers Chance to Raise Euro's Profile, Lagarde Says
Europe must maintain a steadfast commitment to open trade and bolster its legal and institutional foundations to raise the profile of the euro currency as confidence in the dominance of the U.S. dollar wanes, according to European Central Bank President Christine Lagarde.
"We should make clear that we support a win-win approach to trade, ensuring that we are the most attractive partner to make deals with," Lagarde said in a speech in Berlin on Monday.
Trump Threatens to Redistribute $3 Billion in Harvard Grants to Trade Schools
President Trump on Monday said he was considering taking billions in grant money away from Harvard University and redistributing it to trade schools across the U.S., the latest salvo in his administration's campaign against the Ivy League institution.
"I am considering taking Three Billion Dollars of Grant Money away from a very antisemitic Harvard, and giving it to TRADE SCHOOLS all across our land," he posted on his Truth Social platform early on Memorial Day. "What a great investment that would be for the USA, and so badly needed!!!"
Charles Rangel, Long-Serving Harlem Congressman, Dies at 94
Years before longtime Rep. Charlie Rangel became Harlem's longtime Democratic representative in Congress, he was an artillery specialist in the Korean War.
In November 1950, near the North Korean village of Kunu-ri, the Chinese army encircled Rangel's unit. After being hit with shrapnel and leading dozens of soldiers to safety in a nighttime escape, Rangel was awarded a Purple Heart and a Bronze Star with valor. Whenever he faced adversity later in his political life-including a House censure in 2010-he would frequently recall that no day could be as terrible as that one trapped in North Korea.
U.S. Aims to Keep Chinese Navy Guessing With New Missile System
BATAN ISLAND, Philippines-The Air Force C-130 transport plane dipped down on the sun-baked airfield of this remote island in the northern Philippines, delivering a weapon system designed to give the U.S. an edge in the intensifying superpower standoff in the Pacific.
The Navy-Marine Expeditionary Ship Interdiction System, or Nmesis, is an antiship missile launcher mounted on a remote-controlled truck. The dumbbell-shaped islet where it landed lies just 120 miles south of Taiwan.
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This article is a text version of a Wall Street Journal newsletter published earlier today.