Morning bid: Ray of hope or false dawn for markets?

A look at the day ahead in European and global markets from Kevin Buckland

European investors still staggering from a nearly 12% plunge over three days in their regional stock benchmark are waking up to a futures market pointing more than 3% higher.

So what gives?

President Donald Trump has hardly backed down in his assault on perceived trade disparities, even doubling down on China by threatening additional 50% levies that would take the combined total well above 100%.

Wall Street didn't exactly have a stellar day - although an overall flat close would have come as a welcome respite after a 10% tumble over the previous two sessions.

The most remarkable thing about Monday's trading was the volatility, with the VIX fear gauge popping above 60 for only the second time since the pandemic.

All of this raises suspicions of whether the bounce in markets will last, and even a 3% rebound in the STOXX 600 wouldn't make up much of the rout since Trump's "Liberation Day" tariff announcement last Wednesday.

But a glance around Asian markets quickly reveals the standout winner: Japan.

Among the first signs that Trump's tariffs may after all be just a starting point for negotiations, Treasury Secretary Scott Bessent is leading a team that will talk trade with Tokyo in the coming days.

At the same time, there is a definite differentiation across geographies. Japan's 6% stock market rally is in stark contrast to a 5% sell-off in Taiwan, which faces 32% levies and relies heavily on chip exports.

Asian emerging markets have been punished with among the steepest of Trump's tariff rates, with no let-up in the stock rout. Thailand's benchmark dropped to a five-year trough, and Indonesia came back from a week-long break to a 9% plunge in its stock market and a record low for the rupiah.

Key developments that could influence markets on Tuesday:

- ECB policy maker Olli Rehn speaks in Helsinki

- German Finance Minister Christian Lindner speaks in Berlin

- ECB board member Luis de Guindos speaks at Spanish Banking Association gathering in Madrid

- Bank of England Deputy Governor Clare Lombardelli speaks in London

- Riksbank Governor Erik Thedéen speaks about the economy in Stockholm

- Norges Bank Governor Ida Wolden Bache gives a speech in Oslo

- San Francisco Fed President Mary Daly speaks in Provo, Utah

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(Reporting by Kevin Buckland; Editing by Jacqueline Wong)