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European stocks ended the week on a negative note, slipping lower on Friday as uncertainty grew over the looming U.S. trade tariffs deadline set by President Donald Trump. With U.S. markets closed for the Independence Day holiday, trading activity was muted, and European investors remained cautious about the potential fallout from trade negotiations.
At 03:05 ET (07:05 GMT), the DAX index in Germany dropped 0.2%, the CAC 40 in France slipped 0.7%, and the FTSE 100 in the U.K. fell 0.3%. The uncertainty surrounding Trump’s July 9 deadline for the imposition of higher tariffs weighed heavily on investor sentiment.
Uncertainty Over Trade Deals Ahead of Trump’s July 9 Deadline
Markets had been buoyed earlier by optimism that the U.S. would secure a series of trade deals, thereby avoiding hefty tariffs that could stifle global economic activity. However, as the July 9 deadline approaches, the situation remains uncertain. Although U.S. officials had previously expressed confidence in reaching multiple agreements, only three trade deals have been finalized thus far.
President Trump confirmed on Thursday that Washington will begin sending formal letters to major economies on Friday outlining new tariff rates. These tariffs, ranging from 10% to 20% and 60% to 70%, are set to take effect from August 1. The move further stoked concerns among market participants about potential disruptions to global trade.
The European Union is pushing for an “agreement in principle” before the July 9 deadline, but the European Commission, negotiating on behalf of the EU, is preparing for all outcomes, including the potential for escalatory tariff measures.
German Industrial Orders Slump
Data released on Friday showed a significant decline in Germany’s industrial orders in May, dropping by 1.4% month-on-month, much worse than expected. The slump was primarily driven by a sharp 17.7% decline in orders in the computer, electronics, and optical products sector, which had seen several large-scale orders in April. Despite the one-off nature of this decline, the data indicates the continuing uncertainty surrounding the recovery of Germany’s economy, the largest in the eurozone.
The European Central Bank (ECB) has cut interest rates by two percentage points since June 2024 and signaled a pause in its rate-cutting cycle for the time being. However, market participants still expect a further reduction to 1.75% later this year, reflecting concerns over economic growth and inflation in the eurozone.
Air France-KLM Expands Stake in SAS
In corporate news, Air France-KLM announced plans to increase its stake in Scandinavian Airlines (SAS) from 19.9% to 60.5%. The move, which involves acquiring full stakes held by Castlelake and Lind Invest, is expected to create synergies for Air France-KLM while allowing the company to expand its footprint in the Scandinavian market.
French train maker Alstom also made headlines, securing a €2 billion ($2.4 billion) order from the New York Metropolitan Transportation Authority to supply M-9A railcars for the Long Island Rail Road and Metro-North Railroad. This order highlights continued investment in infrastructure and public transportation, particularly in North America.
Oil Prices Retreat Ahead of OPEC+ Meeting
Oil prices saw a slight retreat on Friday after a strong rally earlier in the week. Brent crude futures fell 0.4% to $68.51 a barrel, while U.S. West Texas Intermediate crude dropped 0.3% to $66.82 a barrel. Despite the daily dip, both contracts posted weekly gains of 1-2%, recovering from significant losses seen in the previous week.
The Organization of Petroleum Exporting Countries and its allies, collectively known as OPEC+, is expected to announce an output hike of 411,000 barrels per day for August during its meeting this weekend. This would follow similar production increases in May, June, and July. The decision comes as OPEC+ continues to scale back its two-year-long production cuts to help stabilize oil prices and meet growing global demand.
Additionally, reports on Thursday indicated that the U.S. plans to resume nuclear talks with Iran next week, while Iran reaffirmed its commitment to the nuclear Non-Proliferation Treaty. This development could have implications for oil markets, as any progress in these negotiations could reduce geopolitical risk in the region.
Conclusion
As U.S. markets remain closed for the holiday, European stock markets experienced cautious trading, with concerns over trade tariffs, U.S. fiscal policy, and broader economic uncertainties weighing on investor sentiment. As the deadline for Trump’s tariff decisions approaches, the markets will be looking closely for any updates on trade negotiations, which could drive further volatility in global markets. Meanwhile, the oil market remains focused on OPEC+’s upcoming decision on production levels, as well as ongoing geopolitical developments that could impact supply dynamics.
