European equities nudged higher on Tuesday morning, offering a calm before the potential storm as markets await a critical announcement from the United States on trade tariffs. With President Trump’s long-trailed tariff decision imminent and fresh eurozone inflation data looming, investors are positioning themselves for what could be a defining moment in global trade relations and regional monetary policy.
After a jittery start to the week, key European indices staged a modest rebound. Germany’s DAX rose by 0.6%, France’s CAC 40 advanced 0.4%, and the UK’s FTSE 100 mirrored the DAX with a 0.6% lift. The gains come on the heels of Monday’s sharp losses, when sentiment soured following reports that U.S. tariffs could exceed previous expectations, prompting the DAX to fall 1.3%.
Investors are now squarely focused on the upcoming announcement from President Trump, which may land as early as Tuesday evening. His proposed reciprocal tariff strategy is designed to address longstanding trade imbalances, a move he framed on Monday as necessary despite insisting he would treat partners “very kindly.” The market response will hinge on the severity and scope of these measures, which could reshape trade dynamics across the Atlantic.
In parallel, eurozone watchers are parsing a host of economic indicators to gauge the strength of the regional economy. March’s inflation data will be particularly telling. The CPI is forecast to ease slightly to 2.2% year-on-year, down from 2.3%, though weaker-than-expected German figures have raised the possibility of a sharper dip. Any surprise to the downside could reignite questions around the European Central Bank’s path forward.
While the ECB has enacted six rate cuts since June, most recently trimming the key deposit rate to 2.5% in March, policymakers have been tight-lipped on future direction. Their next rate decision, due on April 17, now carries added weight as inflation trends and geopolitical risks converge.
JPMorgan European Discovery Trust plc is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
