By Wayne Cole and Lucy Raitano
SYDNEY/LONDON (Reuters) -European shares were softer on Monday as markets awaited developments in trade talks, as well as a European Central Bank policy meeting later this week, while U.S. futures were brighter ahead of some major tech earnings.
The European Union is exploring a broader set of possible counter-measures against the United States as prospects for an acceptable trade agreement with Washington fade, according to EU diplomats.
Investors had been hoping for some progress in trade talks ahead of U.S. President Donald Trump’s August 1 tariff deadline, with U.S. Commerce Secretary Howard Lutnick still confident a deal could be reached with the EU.
The pan-European benchmark STOXX 600 index was down 0.2% as was the UK’s blue-chip FTSE 100. The euro was 0.2% higher at $1.1652.
S&P 500 futures edged 0.2% higher, while Nasdaq futures were up 0.3%. U.S. indexes are already around record highs in anticipation of more solid quarterly earnings reports.
But tariff uncertainty is also casting a shadow over markets, with Trump’s August 1 deadline fast approaching.
“Let’s say that tariffs are pushed off again from August 1, which I think is the rosiest outcome at this point, then I don’t think markets will spike another 10% higher. I’m thinking more that we get a grind higher for the rest of the year,” said Oliver Blackbourn, multi-asset portfolio manager at Janus Henderson.
Markets, meanwhile, are gearing up for a host of big tech company results this week, including Google owner Alphabet, Tesla and IBM.
“They are going to be key for sentiment because frankly there’s not a lot else to drive things,” said Michael Brown, senior research strategist at Pepperstone.
“We saw the banks deliver decent results last week, so you’d certainly be looking for the big tech names to keep up with that to reinforce the bull case (for equities),” he said.
Investors also expect upbeat news for defence groups RTX, Lockheed Martin and General Dynamics. Higher government spending around the globe has seen the S&P 500 aerospace and defence sector rise 30% this year, while defence stocks in Europe have also hit record highs.
MARKETS UNFAZED BY JAPANESE POLITICS
The yen firmed on Monday as markets shrugged off the Japanese ruling coalition’s defeat in upper house weekend elections.
Japan’s ruling coalition lost control of the upper house in an election on Sunday, further weakening Prime Minister Shigeru Ishiba’s grip on power ahead of the tariff deadline.
