Weekly outlook: Relief and criticism after the tariff deal

Initial assessments of the agreement

Imports from EU countries to the US will be subject to a 15 percent tariff, with a few exceptions. US exports to the EU will remain largely tariff-free. In addition, Commission President Ursula von der Leyen is said to have agreed to purchase US$750 billion worth of oil and gas from the US and to make US$600 billion worth of investments there. However, no agreement has yet been reached on sector-specific tariffs, for example on semiconductors or pharmaceuticals. Jan Holthusen of DZ Bank believes that the EU has caved in to Trump's blackmail, partly because of security policy considerations. The price for this is high. The new tariff rate is significantly higher than the effective level of around 1.0 percent that applied last year. Initial estimates for Germany assume a 0.1 to 0.2 percentage point lower GDP per year. The Federation of German Industries (BDI) also fears “immense negative effects on Germany's export-oriented industry.” On the positive side, further escalation has been averted for the time being.

Reporting season picks up speed

Nevertheless, the mood on the capital markets remains positive for the time being. The further course of events is likely to depend on the results of the reporting season. According to calculations by Deka, 163 and 185 companies from the S&P 500 and STOXX 600, respectively, accounting for almost 40 percent of market capitalization, will report in the coming days. Around a quarter of DAX companies will present their figures this week, with almost 50 percent doing so next week. Experts describe the start of the US reporting season as “good.” According to them, over 80 percent of companies have exceeded profit forecasts. In Europe, the start was bumpy, but the picture has since improved. Hans-Jürgen Delp of Commerzbank expects “continued high price volatility at the individual stock level” in view of the most intense phase of the reporting season.

Stocks “not particularly attractive”

Meanwhile, many banks are warning against high valuations on the stock markets. “It seems as if investors are wearing rose-colored glasses,” explain analysts at LBBW. According to their calculations, based on the 12-month forward P/E ratio, the US stock market has been more expensive than it is currently on less than 5 percent of all days since 1988. The scope for disappointment is therefore limited, and investors are likely to “soon come back down to earth.” Colleagues at Helaba also warn that the most important indices are “well above their fair range.” The risk/reward profile of stocks is currently “not particularly attractive.”

Important economic and business events this week

Monday, 28 July

USA/China: Start of two days of talks between finance ministers in Stockholm on the tariff dispute between the world's two largest economies.

Tuesday, 29 July

4:00 p.m.: USA: Consumer confidence index. The consensus forecast for July is for the index to rise to 95.9 points from 93.0 points in the previous month.

Wednesday, 30 July

10:00 a.m. Germany: GDP. Following the significant increase in gross domestic product in the first three months of the year, Deka strategists fear a “rebound effect” for the second quarter, as the pull-forward effects of many US importers in the context of tariff increases no longer supported growth in this period.

2:30 p.m. USA: GDP In the USA, on the other hand, Deka expects gross domestic product to rise in Q2. However, interpretation of the overall rate is complicated by tariff effects, which have led to shifts in foreign trade statistics and in some areas of domestic demand.

2:30 p.m. US: Fed interest rate decision. LBBW analysts (like almost everyone else) assume that the US monetary authorities “will stand firm against Trump's constant tirades that interest rates must be lowered and will therefore leave the key interest rate unchanged.”

Thursday, 31 July

3:30 a.m. China: Purchasing Managers' Index According to Deka, Chinese industry has remained robust so far this year despite high US tariffs. The official purchasing managers' index for the manufacturing sector is therefore likely to have remained close to the 50-point mark in July.

Japan: BoJ interest rate decision. Helaba believes that no change in key interest rates is to be expected in Japan either. In its decision, the Japanese central bank is likely to take into account above all the agreement negotiated with the US on tariffs of 15 percent. However, the loss of the majority of Prime Minister Shigeru Ishiba's ruling coalition is causing uncertainty, which has led to rising capital market interest rates.

Friday, 1 August

2:30 p.m. US: Labor market data. Deka economists assess the US labor market as “surprisingly robust” in view of the uncertainty caused by tariffs. However, momentum is weaker than in the previous year, and price developments show that the effects of tariffs are being felt with a time lag. In July, job growth is expected to be lower than in previous months, partly due to the elimination of a special effect.

4:00 p.m. USA: ISM Purchasing Managers' Index According to Helaba, the ISM index is likely to have remained close to the stagnation threshold of 50 in July due to ongoing uncertainty on the trade front. Analysts believe that this (leading) indicator does not signal an abrupt “downshift” from the levels of the past 12 to 18 months, as would be consistent with a recession scenario.
 

By Thomas Koch, 28 July 2025, © Deutsche Börse AG