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European stocks faced a down day on Tuesday, with corporate earnings reports mixed and investors increasingly anxious ahead of key tariff negotiations between the U.S. and its trading partners.
The Euro STOXX 600 index extended its losses, down by 0.6%, while bourses in Germany and France declined 1.1% and 0.8%, respectively. Corporate earnings from major players including SAP and UniCredit were closely watched, but it was Akzo Nobel, the maker of Dulux paints, that stole the spotlight, falling 5.4% after it lowered its core profit outlook for 2025. Chemical stocks, including Akzo Nobel, lost 2% in response to weak guidance.
Investors Eye U.S. Tariff Negotiations Amid Fading Hopes for Deal
Investors were also focused on the ongoing U.S.-EU tariff talks as the August 1 deadline for tariff impositions approaches. The European Union is exploring a broader range of potential countermeasures against the U.S. following a lack of progress in negotiations, heightening concerns about a full-scale trade war.
As a result, the euro held steady at $1.1689, though still a distance from the near four-year high hit earlier this month. The single currency has appreciated by 13% this year, driven by investor preference for alternatives to U.S. assets, which have been under pressure from tariff-related uncertainties. The euro’s resilience will be monitored closely, especially given its significance for the export-reliant eurozone economy.
Analysts at ING noted that the euro’s ability to maintain its position over the dollar will depend on the escalation of tariff tensions and whether the EU becomes a relative loser in the face of significant deals struck between the U.S. and other countries.
Wall Street Futures Dip Ahead of Big Earnings Week
Wall Street futures showed a slight decline, with both the S&P 500 and Nasdaq hitting record highs in the previous session. Investors are awaiting results this week from major U.S. companies like Alphabet and Tesla, as well as European heavyweights like LVMH and Roche.
Uncertainty surrounding tariffs continues to cloud the outlook, as companies are wary about the economic effects of the escalating trade tensions. The earnings reports from these heavyweights could provide further insights into how global trade and tariffs are impacting corporate performance.
Fed Independence in Focus as Powell’s Speech Approaches
Meanwhile, U.S. investors remain on edge, with rumors surrounding the independence of the Federal Reserve and President **Trump’s potential influence on Fed Chair Jerome Powell. Treasury Secretary Scott Bessent suggested on Monday that the Federal Reserve as an institution may need to be examined for its success. These developments have added further uncertainty to an already volatile market.
The dollar index, which measures the greenback against six key currencies, remained flat at 97.849. The Fed is widely expected to keep interest rates steady in its July meeting, but there is speculation that it might cut rates later in the year. All eyes are now on Powell’s speech scheduled for later Tuesday, with traders hoping for clues about the central bank’s next moves.
Asian Market Pullback Amid Political Uncertainty
In Asia, stock markets saw a slight retreat after hitting a near four-year high. The MSCI Asia-Pacific index outside Japan slipped by 0.4% but remains up nearly 16% for the year. Japan’s markets, which reopened after a holiday, were affected by political uncertainty following the ruling coalition’s loss in the upper house elections. The yen rose by 1% on Monday, recovering some losses from the past weeks, and held steady at 147.43 per dollar.
European shares have been weighed down by mixed earnings results, concerns over tariff tensions, and a cautious outlook for U.S.-EU trade negotiations. The euro has managed to hold steady despite the tariff concerns, with the European Central Bank facing more room to ease policies if the trade tensions escalate further. With a major week of earnings ahead and significant decisions at the Federal Reserve in the spotlight, global markets remain uncertain as tariffs loom large.
