Trade Tensions Rattle Markets Amid Global Economic Uncertainty

European and U.S. markets saw declines as uncertainty surrounding U.S. trade policies affected investor sentiment. A pivotal call between U.S. President Donald Trump and Chinese leader Xi Jinping is anticipated amid ongoing trade tensions. Global economic indicators such as manufacturing and inflation show signs of strain.

European shares fell on Tuesday, paralleled by a dip in U.S. stock futures, as market sentiment waned due to unpredictable U.S. trade policies. Investors adopted a cautious stance ahead of key developments later in the week.

A much-anticipated conversation between U.S. President Donald Trump and Chinese leader Xi Jinping is expected shortly. This follows Trump's recent allegation against Beijing for not honoring an agreement to reduce tariffs and trade restrictions. Markets, already shaken by trade tensions between the U.S. and China, await this call with keen interest.

Amid this, data showed U.S. manufacturing shrank for a third straight month. Similarly, China's factory activity declined in May, as U.S. tariffs began impacting manufacturers. In response, European markets anticipate interest rate cuts, while fluctuating currency values highlight the prevailing economic volatility.

(With inputs from agencies.)