Weekly Market Summary: Trump’s Tariffs Shake Wall Street and Europe

Weekly Market Summary: Trump’s Tariffs Shake Wall Street and Europe

Immediate Reaction in Financial Markets

Wall Street Turns Red

The week ended with a sharp downturn for the main U.S. stock indexes:

• Dow Jones fell 256.02 points, marking a decline of 0.61%.
• S&P 500 dropped 0.67%.
• Nasdaq sank 1%.

These losses capped off a week in which all three indexes posted declines of over 2%, impacted by a new turn in President Donald Trump’s trade policy.

The president surprised markets by announcing that he would recommend a 50% tariff on all imports from the European Union starting June 1, 2025, and specifically targeted Apple, stating that iPhones sold in the U.S. but manufactured abroad would face a 25% tariff.

Apple Leads Declines After Direct Threat

Shares of Apple (AAPL) were hit hardest, falling 3%, after Trump posted the message on his Truth Social network. This was the first time in the year the president singled out a specific company as part of his tariff strategy, triggering alarms among tech investors.

The company faces pressure due to its international supply chain, particularly its manufacturing lines in China, and a tariff of this scale could significantly impact both its profit margins and its market position in the U.S.

Partial Response from the White House

Despite the immediate market impact, the White House tried to downplay the statements. Administration officials did not view Trump’s remarks as an official policy announcement. However, the damage was done: volatility returned, and analysts warned of a renewed climate of trade war, reminiscent of Trump’s first term.

Global Impact: Europe Feels the Blow

STOXX 600 Suffers Worst Day Since April

The ripple effects of Trump’s statements quickly spread across the Atlantic. European stock markets closed with widespread losses.

• STOXX 600 index being the hardest hit, falling 0.9%, marking its sharpest daily drop since early April.

This decline ended a six-week winning streak, underscoring how sensitive markets remain to the return of protectionist rhetoric.

Germany, one of the U.S.’s largest trade partners.

• DAX fell 1.5% after nearing record highs earlier in the day, following the release of better-than-expected GDP growth data.
• France, Spain, and Italy were not spared either, with their major indexes each losing over 1%.

On a weekly basis, the index recorded its first loss since March, and volatility in Europe, measured by the Euro STOXX Volatility Index, spiked to a three-week high.

Hardest-Hit Sectors: Luxury, Automotive, and Banking

The sectors most exposed to transatlantic trade bore the brunt of the damage. The automobiles and parts index dropped 3.1%, while European bank shares slid 1.8%. The luxury goods sector plunged 2.7%, given its strong reliance on the U.S. market.

Volatility and Bond Yield Drops

Investor anxiety translated into a strong demand for safe-haven assets, pushing down yields on both U.S. and European bonds. The yield on the benchmark 10-year bond dropped in response to growing concerns over a potential economic slowdown.

Investors began to anticipate more interest rate cuts by the European Central Bank (ECB), now expecting the deposit rate to fall to 1.60% by December, down from 1.72% before Trump’s comments.

Gold and Oil: Safe Havens Amid Geopolitical Tensions

Gold Shines as a Safe-Haven Asset Amid Uncertainty

Amid growing market nervousness, gold reaffirmed its traditional role as a safe-haven asset. On Friday, the precious metal rose 2.1%, reaching $3,362.70 per ounce, marking its best week in the last six. U.S. gold futures settled at $3,365.80, driven by increased demand for safety and a weakening dollar, which fell 0.9% during the session.

Trump’s tariff threats, combined with the House of Representatives’ approval of a new tax and spending bill that would significantly increase public debt, heightened investor risk perception.

Oil Rises on Nuclear Negotiation Tensions and OPEC+ Activity

Oil prices also benefited, though driven more by geopolitical developments. Both Brent and West Texas Intermediate (WTI) crude rose 0.54%, closing at $64.78 and $61.53 per barrel, respectively.

This rebound was partly due to position-covering ahead of the U.S. long weekend, but also due to uncertainty surrounding nuclear negotiations between the U.S. and Iran, held in Rome.

Markets fear that failure in the talks could lead to open conflict in the Middle East, directly impacting global crude supply. In parallel, OPEC+ is expected to announce a new production increase of 411,000 barrels per day for July, as it considers fully lifting the remaining voluntary output cuts by October.

Summer Outlook and Supply Risk

The Memorial Day weekend in the U.S. marks the start of the peak driving season, which traditionally boosts fuel demand. The combination of increased geopolitical tension, production adjustments by OPEC+, and the prospect of a more uncertain trade environment could maintain upward pressure on oil prices.

Companies Under the Microscope: Mergers, Litigation, and Expansion

Microsoft and Activision: Regulatory Barrier Lifted

In the tech sector, one of the week’s most significant headlines was the withdrawal of the Federal Trade Commission’s (FTC) lawsuit against Microsoft’s $68.7 billion acquisition of Activision Blizzard. This decision ends a legal battle that lasted more than two years and clears the way for Microsoft (MSFT) to strengthen its position in the gaming industry through one of the largest acquisitions in the sector’s history.

Microsoft President Brad Smith described the decision as a “victory for gamers and common sense,” emphasizing that the integration of Activision will enhance Xbox content offerings and cloud gaming services.

Strategic Acquisitions: Salesforce, Rio Tinto, Foxconn

Several companies were also in the spotlight for key strategic moves:

Salesforce (CRM) is reportedly in advanced talks to acquire Informatica (INFA), sending INFA shares up 25%, while CRM shares dropped 3% amid investor concerns about the cost of the potential deal.

Rio Tinto (RIO) was selected to lead a new lithium project in Chile, partnering with state-owned Empresa Nacional de Minería. The $425 million investment is part of a broader push to expand its role in the global battery supply chain.

Foxconn (2354.TW) emerged as a potential buyer of UTAC Holdings, a semiconductor assembly firm, in a deal estimated at $3 billion. The move reflects Foxconn’s strategy to bolster its semiconductor capabilities amid ongoing U.S.–China trade tensions.

Operational Risks and Adjustments: Apple, Deckers, Phillips 66

In addition to trade threats, several companies faced structural challenges:

Apple (AAPL), pressured by Trump’s comments, launched trade-in discounts in China to sustain sales in the face of growing competition from Huawei. The company’s stock has dropped 20% this year.

Deckers Outdoor Corporation (DECK) warned of a $150 million tariff impact anticipated for fiscal 2026, despite reporting a 16% increase in annual revenue.

Phillips 66 (PSX) announced it will shut down its Los Angeles refinery in December, resulting in the loss of hundreds of jobs and cutting 20% of California’s gasoline refining capacity. The company is undergoing a major restructuring amid the state’s challenging energy market.

Tech Innovations: Google I/O and Nvidia at Computex 2025

Google I/O 2025: Gemini 2.5, Project Astra, and Android Advances

At the Google I/O 2025 conference, the company unveiled significant breakthroughs in artificial intelligence and software development:

• Gemini 2.5 Pro: The latest version of Google’s multimodal AI model includes the new Deep Think mode for complex tasks and enhanced reasoning capabilities. It supports input and output across audio, images, video, and text, and will be available starting June 2025.
• Project Astra: A universal AI agent designed to be useful in everyday life, capable of real-time understanding and reasoning. Astra will be integrated into Google products like Search and the Gemini app.
• Android XR: Introduced with improvements in security, design, and performance, along with Gemini integration to offer smarter and more personalized user experiences.

These innovations reflect Google’s commitment to embedding AI into its ecosystem, signaling a leap forward in both consumer tools and enterprise applications.

Nvidia at Computex 2025: NVLink Fusion, DGX Spark, and Foxconn Partnership

During Computex 2025, Nvidia (NVDA) announced a series of major developments aligned with its artificial intelligence strategy:

• NVLink Fusion: A new interconnection technology that enables the construction of semi-custom AI infrastructures. This advancement facilitates the integration of proprietary chips with Nvidia’s platform, opening new opportunities for cloud and enterprise-level AI deployment.
• DGX Spark: A next-generation AI desktop chip set to launch in the coming weeks. Designed to expand access to high-performance AI, DGX Spark could become a staple in research and development environments.
• Foxconn Partnership: Nvidia and Foxconn revealed plans to jointly build a 100-megawatt AI data center in Taiwan. This project is set to serve the island’s growing tech ecosystem and solidify Taiwan’s role in the global AI supply chain.

Together, these announcements position Nvidia and Google (GOOGL;GOOG) at the forefront of the AI race, underscoring how strategic innovation continues to shape investment narratives in the tech sector.

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