Before the Bell: Trade Tariffs Hit the Economy’s Engine

Rumors that the U.S. may ease tariffs on steel and aluminum to help the auto sector are fueling positive sentiment in Asia. Meanwhile, a flurry of companies in Europe have reported their earnings.

Yesterday, the U.S. stock market extended its rebound for a fifth consecutive day, albeit narrowly. The Dow Jones gained 0.3%, and the S&P 500 also closed slightly in the green. This marks the longest streak of gains for U.S. stocks since November, giving investors some renewed hope. Asian markets continued the upbeat momentum this morning. Expectations are building that Trump will soften trade tariffs on automobiles by exempting carmakers from duties on steel and aluminum. The sector had warned that layering metal tariffs on top of auto tariffs would make vehicles unaffordable. Hyundai Motor Co is up 1.5% and Kia Motors 2% in South Korea this morning.

Deutsche Bank posted a quarterly profit of 1.64 billion euro, its highest in 14 years. Meanwhile, Belgium’s FSMA has launched an investigation into Ekopak regarding its communications about the ‘Waterkracht’ project. This afternoon, PayPal, UPS, The Coca-Cola Company, Pfizer, Spotify, and Altria will release earnings. After the market closes, Visa and Starbucks will report as well.

Construction Sector Shows Signs of Recovery

The construction industry has been struggling, but the quarterly results from insulation producer Recticel this morning offer some positive signals. Recticel’s net organic sales rose sharply from 140.6 million euro in 2024 to 158.4 million euro this quarter, an increase of 12.7%. The company notes that activity in the residential sector is picking up in parts of Northwestern Europe, driving over 10% growth in its ‘Insulation Boards’ division. Renovation activity in non-residential buildings is also showing a positive trend. The catch? New construction of non-residential buildings—Recticel’s ‘Insulated Panels’ division’s mainstay—remains weak, putting pressure on margins. Still, Recticel expects further organic sales growth in 2025 and forecasts price increases starting this quarter. However, investors will have to wait until the next quarter for more specific guidance, as the company says the current climate makes it too difficult to issue firm projections.

Auto Sector Struggles

News that Trump may ease tariffs on auto-related materials will likely bring a sigh of relief in Germany. This morning, carmaker Porsche issued a profit warning. The company said U.S. tariffs are squeezing earnings, and it now expects its operating margin to fall to between 6.5% and 8.5%—a drop of 3.5 percentage points from earlier projections. Annual revenue forecasts have been trimmed from 39–40 billion euro to 37–38 billion euro. But tariffs aren’t the only issue: weaker-than-expected EV sales and sluggish demand in China are also hurting Porsche. Trump’s possible exemption for carmakers from steel and aluminum tariffs provides only a small bright spot in an otherwise tough market. Swedish automaker Volvo also downgraded its forecasts for 2025 and 2026 this morning and is feeling the pinch as well.

Did You Know…

that Coca-Cola sells 1.9 billion drinks every day to customers worldwide? The American giant controls about 50% of the global soft drink market.

This article was translated from Dutch and was originally published on Spaarvarkens.be.