Daily market update: UK stocks rebound after US U-turn on EU tariffs and Tesla faces BYD threat

“The latest U-turn on tariffs from the Trump administration gave European markets a boost yesterday and have helped UK stocks return from the Bank Holiday with pep in their step,” says AJ Bell investment director Russ Mould.

“The market is beginning to come to the view that the US trade policy’s bark is worse than its bite as an initial threat of 50% tariffs on EU goods by the beginning of next month has been pushed back until 9 July to allow time for talks to continue.

“US markets were also closed for Memorial Day on Monday and futures markets imply a recovery from Friday’s losses when trading begins on Wall Street later. The dollar ticked higher and the 30-year Treasury yield slipped back below the 5% mark as risk appetite was restored, at least to some extent.

“Tomorrow all eyes are likely to turn to Nvidia’s results. Its influence over wider markets may have reduced somewhat from the early stages of the AI boom but this remains one of the most significant corporate earnings announcements. 

“A better-than-expected number and outlook may help sustain any upturn in fortunes for US shares but the reverse would likely put them on the back foot.

“Takeover activity continues in the UK market. Elementis has agreed to sell its talc business in a bid to boost profitability and refine its focus on additives for the high-margin coatings and personal care markets, while microchip firm Alphawave IP Group and its larger US counterpart have extended the deadline on takeover talks. 

“And in a more rare example of outward M&A, ad agency M&C Saatchi agreed a deal for a UAE-based sports agency.”

Tesla

“The electric vehicle maker may have got back on the road after recent quarterly results were not as bad as the market feared but the company’s competitive position, particularly outside the US, continues to look challenged.

“At the weekend, Chinese rival BYD slashed prices on several of its models in the world’s second largest economy – making the difference between the price tag on its vehicles versus Tesla’s particularly stark.

“Tesla sales continue to slump in Europe – halving in April according to the latest data. Given this came against a backdrop of a meaningful increase in European electric vehicle sales more broadly, it suggests the brand damage caused by Elon Musk’s political interventions may be lasting.

“The company may also be suffering from its lack of tyre print in the hybrid market with many motorists still wary of going fully electric.”

These articles are for information purposes only and are not a personal recommendation or advice.