European Stocks Rise as US Tariff Deadline Looms, Barclays and NatWest Support the FTSE 100.

European stock prices rise, with the FTSE 100 up 0.1% and the DAX 40 in Frankfurt adding 0.6%. Barclays and NatWest support the large-cap index, while Shell falls 2.7% due to a weaker outlook and a second-quarter loss in Chemicals & Products. US stocks are set to open lower after the Independence Day holiday, with tariffs kicking in on August 1 if trade deals are not reached.

European stock markets experienced a positive start to the week, with the FTSE 100 up 0.1% and the DAX 40 in Frankfurt adding 0.6%. The FTSE 100, which includes the top 100 companies listed on the London Stock Exchange, was buoyed by support from Barclays and NatWest, while Shell fell 2.7% due to a weaker outlook and a second-quarter loss in its Chemicals & Products division [1].

The FTSE 100, which had fallen on Thursday due to the looming European Central Bank (ECB) decision, rebounded as the central bank is expected to cut interest rates to 2.25% from 2.5% amidst economic uncertainties over U.S. President Donald Trump's tariffs [1]. The midcap index FTSE Mid-Cap 250 also saw a rise of 0.4% [1].

Meanwhile, the DAX 40 in Germany rose by 0.7%, while the CAC 40 in France fell by 0.8% [1]. Company-specific news also influenced market movements. J Sainsbury PLC (LON:SBRY) reported a 7.2% rise in annual profit, with shares trading 2.3% higher, while Deliveroo Holdings PLC (LON:ROO) saw a 2.5% increase in its first-quarter revenue, with shares trading 2.5% higher [1].

On the U.S. side, markets are set to open lower after the Independence Day holiday. The U.S. and the European Union are in trade talks, with President Trump considering imposing tariffs on European goods, potentially raising prices for U.S. consumers [2]. The EU has warned of retaliatory tariffs on American products if a deal is not reached. The U.S. services surplus, which took the nation's trade deficit with the EU down to 50 billion euros ($59 billion), represents less than 3% of overall U.S.-EU trade [2].

The U.S. and EU trade relationship is substantial, with the value of trade in goods and services amounting to 1.7 trillion euros ($2 trillion) in 2024 [2]. The biggest U.S. export to Europe is crude oil, followed by pharmaceuticals, aircraft, automobiles, and medical and diagnostic equipment, while Europe's biggest exports to the U.S. include pharmaceuticals, cars, aircraft, chemicals, medical instruments, and wine and spirits [2].

The potential impacts of higher tariffs include increased prices for U.S. consumers on imported goods. Companies like Mercedes-Benz and Campari Group have indicated that prices may rise, but some corporations may shift production to the U.S. to avoid tariffs [2]. The U.S. economy could lose 0.7% of its GDP if trade deals are not reached, according to a research review by Bruegel [2].

References:
[1] https://uk.investing.com/news/stock-market-news/ftse-100-today-index-falls-as-ecb-decision-looms-sainsbury-deliveroo-gain-4034947
[2] https://economictimes.indiatimes.com/news/international/business/us-tariffs-on-european-goods-threaten-to-shake-up-the-worlds-largest-2-way-trade-relationship/articleshow/122279188.cms?from=mdr