Preview of the day ahead in European and global markets by Tom Westbrook:
Market reactions to recent tariff changes on Canada and Mexico suggest a willingness to negotiate. This sentiment extends to China as well.
Canada's Justin Trudeau and Mexico's Claudia Sheinbaum coordinated efforts with Donald Trump on Monday to step up border enforcement measures.
Sheinbaum's strategic approach received praise from political analysts, instilling some relief among investors.
Stocks reached a two-month peak, with electric vehicle manufacturers leading the surge. Expectations of a potential agreement with China, under the pressure of a 10% tariff, buoyed investor confidence.
The euro reversed course from a two-year low of $1.01 to $1.03 in a significant shift, reflecting a diminished fear of an immediate trade conflict.
Cryptocurrency traders seized the opportunity to buy into bitcoin and ether amid market volatility.
However, uncertainties persist post-fluctuations, increasing policy unpredictability, noted by J.P. Morgan's Michael Feroli.
European stock futures inched up by 0.1% in Asian markets.
Market focus could shift towards financial reports from Amundi, UBS, and BNP Paribas, along with businesses affected by tariffs like Ferrari, Infineon, and Diageo.
Google parent Alphabet is scheduled to announce earnings post-market close in New York.
Regarding China, Trump warns of escalating tariffs unless China halts fentanyl exports. China maintains it has addressed this issue, shifting the responsibility to the U.S.
Trump plans to communicate with Chinese President Xi Jinping shortly, with attention on the outcome and China’s handling of the dollar exchange rate post-holiday.
Most anticipate stability in the yuan's trading band, following recent market turbulence. The offshore yuan remains within previous onshore trading band boundaries.
Uncertainty looms over the potential trade deal that Europe might negotiate to avert threatened tariffs by Trump.
Key market influencers on Tuesday include earnings reports from Amundi, BNP Paribas, Dassault Systemes, Diageo, Ferrari, Infineon Technologies, UBS, and Alphabet.