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US stocks rose after President Donald Trump indicated that trade talks with the EU were progressing in a “positive” direction, a day after agreeing to delay his threatened 50 per cent levies on the bloc.
The S&P 500 was up 1.6 per cent in morning trading on Tuesday, with economically sensitive consumer cyclicals and tech companies among the biggest winners. All 11 of the benchmark index’s sectors were in positive territory.
The tech-heavy Nasdaq Composite added 1.9 per cent. In currency markets, the dollar index rose 0.4 per cent.
The moves came as data released after the market open showed US consumer confidence rebounded in May after five consecutive months of declines, and hours after Trump said on social media that he had been informed “that the EU has called to quickly establish meeting dates” with the US.
“This is a positive event, and I hope that they will, FINALLY, like my same demand to China, open up the European Nations for Trade with the United States of America,” the president said in a post on Truth Social.
Trump over the weekend agreed to delay his proposed 50 per cent tariffs on the EU and extend trade negotiations until July 9 following a conversation with European Commission president Ursula von der Leyen. Trump last Friday attacked the EU for what he alleged were unfair trade practices.
“It’s put a rocket on the negotiations and got the Europeans to respond in a much more proactive way,” said Caroline Shaw, portfolio manager at Fidelity International. “The pace of the deal seems important to the markets.”
Europe’s region-wide Stoxx Europe 600 has risen 1.5 per cent so far this week, more than wiping out its decline on Friday after Trump’s first suggestion of the 50 per cent tariff.
Germany’s Dax added 1 per cent on Tuesday to hit a record high, and France’s Cac 40 gained 0.2 per cent.
“Everyone has become convinced that Trump’s tariff talk is all sound and fury that signifies nothing,” said Peter Tchir, head of macro strategy at Academy Securities.
“There will be tariffs, but we’re not going to set up these massive tariffs that are going to be disastrous to the economy. We are not going to see 50 per cent levels,” Tchir said.
A flurry of US tariff announcements beginning in early April had weighed on consumer and business sentiment across the world’s biggest economy, roiling US equity markets and dragging the dollar lower against other major currencies.
But May’s Consumer Confidence Survey, which was published on Tuesday, showed a sharp recovery in sentiment.
“The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards,” said Stephanie Guichard, senior economist at The Conference Board.
“The monthly improvement was largely driven by consumer expectations as all three components of the Expectations Index — business conditions, employment prospects, and future income — rose from their April lows,” she said.
Yields on US Treasuries were lower, indicating higher prices, across the spectrum of maturities. The moves followed a broader recovery in government bond prices on Tuesday after Japan said it was considering curbing its bond issuance.
