Global Markets React to Tax and Trade Developments

US Treasury Secretary Announces Key Decisions, Auto Stocks Rise

Financial markets are reacting to a series of decisions made by US officials. These decisions impact foreign investors and also signal potential trade adjustments. Key announcements have already triggered notable shifts in the trading landscape, as key stakeholders adjust their positions.

Section 899 Provision Scrapped

The Investment Company Institute (ICI) celebrated the decision by the Senate Finance and House Ways and Means committees to eliminate Section 899 from **Donald Trump**’s spending bill. The ICI had previously lobbied Congress against this measure. Section 899 would have affected most foreign investments in the US stock market.

The ICI stated its appreciation for the successful negotiations, led by **Treasury Secretary Scott Bessent**, which ensured the US continues to be the primary destination for global investors. The removal of this provision follows an agreement with G7 nations on a global tax deal.

“ICI applauds today’s announcement from Chairman **Crapo** and Chairman **Smith** that Section 899 will be removed from the One Big Beautiful Bill Act following the Administration’s agreement with G7 countries.”

—ICI Statement

JD Sports Shares Surge

Shares of the British sports apparel retailer, JD Sports, are currently seeing a significant rise. This increase has been fueled by better-than-expected fourth-quarter results reported by Nike. Sales for JD Sports are significantly derived from major brands, including Nike, Adidas, and Puma.

US Treasury Seeks to End ‘Revenge Tax’

**Treasury Secretary Scott Bessent** requested that the Senate and House of Representatives eliminate a provision targeting certain foreign investors from **President Trump**’s spending bill. This measure, referred to as a “revenge tax,” would have introduced new taxes on investors from specific countries. This would have reduced their returns on US equities and other assets.

The move to drop Section 899 came after an agreement with G7 nations on a global tax deal. This agreement ensures that “OECD Pillar 2 taxes will not apply to U.S. companies.” This provides greater certainty and stability for the global economy and enhances growth and investment in the US.

Automakers Gain

European auto stocks experienced gains during early trading. This was in reaction to the White House’s statement. The statement said the deadline for country-specific tariffs was “not critical” and “could be extended.” These moves followed confirmation from Beijing. Beijing confirmed the details of a trade agreement with Washington.

Europe’s Stoxx Automobiles and Parts index increased. This index has shown sensitivity to US trade policy announcements this year. Top performers within the sector included Porsche and Valeo, along with Stellantis and Mercedes-Benz. Since April, vehicles and parts imported to the U.S. have been subject to a 25% tariff.

In 2024, the EU exported $47.4 billion worth of machinery and vehicles to the United States, making it the EU’s largest export to the US (Eurostat).

US-China Trade Agreement Details Confirmed

The US and China have further confirmed the specifics of their trade agreement. This agreement was initially reached earlier this month. Details were released in a statement by China’s Ministry of Commerce Friday afternoon. This agreement, reached in London, is designed to foster stable economic relations.

European Stocks Open Higher

The final trading session of the week began with stocks firmly in positive territory. This followed optimism from the White House Press Secretary **Karoline Leavitt**. This optimism surrounded the upcoming reciprocal tariffs deadline. The pan-European Stoxx 600 index saw a rise, with gains in most sectors.

Mediobanca’s Shareholder Pledge

Italian lender Mediobanca announced it will return 4.9 billion euros ($5.7 billion) to shareholders. This is part of their strategy to fend off a hostile takeover bid from Monte dei Paschi di Siena (MPS). The company said MPS’s offer “lacks an industrial and financial rationale” for its shareholders. Mediobanca claims the combined entity would be a medium-sized commercial bank.

Opening Market Outlook

European equities are expected to extend yesterday’s gains at the open on Friday. This prediction is based on the stance taken by the Trump administration. The administration stated the July deadlines for reciprocal tariffs “could be extended” and are “not critical.”