We're kicking off the new trading week with a burst of optimism after a turbulent close last Friday. The market was shaken by a sharp risk-off move triggered by Donald Trump's announcement of 50% tariffs on European Union goods. Indices reacted predictably—DAX in particular gave back most of its gains from the week, gold surged, and safe-haven flows pushed the Japanese yen higher.
However, over the weekend, the narrative shifted. News broke that the implementation of those tariffs will be delayed, and that was enough to reignite risk appetite. Futures opened with a bullish gap and are pushing higher as we move through the early Monday hours. Optimism has returned to the markets—for now.
On the currency front, we’re seeing continued weakness in the U.S. dollar, and interestingly, the Japanese yen is also on the back foot as traders move away from safe havens. This signals a return to a risk-on mode, at least in the short term.
Commodities are more subdued to start the week. Gold, which benefited from Friday’s panic, is struggling today as sentiment improves. Oil is also under pressure, but the broader picture for crude remains neutral with prices largely moving sideways over the past several sessions.
As for the economic calendar, it’s a quiet day. British markets are closed for the Spring Bank Holiday, and American markets are shuttered in observance of Memorial Day. With both London and New York out, expect significantly lower liquidity throughout the session.
Let’s see how long this optimism holds, especially as markets prepare for a week packed with data and potential political developments.