UBS cuts Brent crude oil forecasts
Investing.com - European equity indices retreated Monday as attention returned to the chaotic U.S. trade policies, ahead of this week’s policy-setting meeting of the European Central Bank.
At 03:05 ET (07:05 GMT), the DAX index in Germany dropped 0.3%, the CAC 40 in France slipped 0.3% and the FTSE 100 in the U.K. fell 0.1%.
EU prepares tariffs countermeasures
A new month has started, but the uncertainty surrounding the Trump administration’s trade negotiations remains in the spotlight.
U.S. President Donald Trump has doubled upcoming steel and aluminium tariffs to 50%, with this latest policy shift coming via social media late Friday.
The European Commission said it "strongly" regrets Trump’s plan to increase tariffs, adding it "undermines ongoing efforts to reach a negotiated solution."
"This decision adds further uncertainty to the global economy and increases costs for consumers and businesses on both sides of the Atlantic," a European Commission spokesperson said, adding that "the (European Union) is prepared to impose countermeasures."
Tensions rise between U.S. and China
Elsewhere, China on Monday “firmly rejected” Trump’s accusation that the country had violated the terms of a mid-May trade deal signed in Geneva.
China’s commerce ministry said Trump’s accusations were unreasonable, and that Beijing will continue to safeguard its interests. Trump had not specified just what China’s violations were.
China’s response adds to recent signs of strain in U.S.-China relations, especially after U.S. officials admitted last week that trade talks between the two had “stalled.”
The comments, coupled with China’s repeated criticism of U.S. controls on its chip industry, sparked increased concerns that trade relations between the two largest economies in the world were souring, and that no lasting trade deal will be reached in the near-term.
ECB meeting due this week
Back in Europe, investors will be able to study the latest manufacturing activity readings from most of the major European countries later in the session, ahead of Thursday’s rate-setting meeting from the European Central Bank.
The central bank is widely expected to cut by 25 basis on June 5, taking the key rate to 2%, in what would be an eighth rate reduction in the past year.
This is largely seen as a done deal, and thus market participants will be looking to see if the policy makers hint at a pause in July, as the eurozone economy has been holding up better than anticipated, potentially allowing ECB chief Christine Lagarde time to assess the impact of U.S. tariffs.
Sanofi (NASDAQ:SNY) on acquisition path
In the corporate sector, French pharma group Sanofi (EPA:SASY) announced plans to acquire U.S.-based biopharmaceutical company Blueprint Medicines (NASDAQ:BPMC) for approximately $9.1 billion, seeking its rare immunology disease medicine pipeline.
Crude soars despite OPEC+ output increase
Oil prices rose strongly Monday after OPEC+ announced plans to increase production in July by the same amount as the prior two months, something of a relief after talk of a bigger increase.
At 03:05 ET, Brent futures climbed 2.5% to $64.36 a barrel, and U.S. West Texas Intermediate crude futures rose 3% to $62.60 a barrel.
Both benchmarks have jumped higher Monday, after dropping more than 1% last week, after the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, decided on Saturday to raise output by 411,000 barrels per day in July.
This is the third consecutive month the group of top producers has increased output by the same amount, and followed reports that they were set to discuss a bigger production hike as it looks to wrestle back market share.
Increased military action between Russia and Ukraine and reports of more U.S. sanctions on Russia’s oil industry, this time pressuring major buyers such as China and India, also boosted sentiment in the crude market.