Global stock markets rose and the euro strengthened on Monday following a framework trade agreement between the United States and the European Union. The deal imposed a 15% tariff on most EU goods, half the initially threatened rate, easing concerns over escalating trade tensions. This agreement came a week after the U.S. reached a similar deal with Japan, signaling efforts to avoid broader trade conflicts ahead of an August 1 deadline set by U.S. President Donald Trump. Meanwhile, talks between the U.S. and China are scheduled to begin in Stockholm, with expectations of another 90-day extension to the current tariff truce.
European futures jumped over 1%, while S&P 500 futures rose 0.5% and Nasdaq futures advanced 0.6%. The euro appreciated against major currencies including the dollar, sterling, and yen. Experts noted that while the rally reflects optimism, caution is warranted as much of the positive news appears priced in. Asia-Pacific shares outside Japan saw modest gains, with MSCI’s broad index up 0.32%. Japan’s Nikkei slipped 1% after recently reaching a one-year high.
Although many in Europe view the 15% tariff as still steep compared to hopes for zero tariffs, it is notably lower than the previously threatened 30% rate. The U.S.-EU agreement brings clarity to businesses and reduces the risk of a significant trade war between two major global economies that together represent nearly a third of world trade. Analysts describe the deal as removing a major tail risk, bringing stability and predictability back to trade policy. The delay in a U.S.-China agreement is seen as part of the same diplomatic approach, favoring negotiation over confrontation.
Commodity markets responded with a 0.5% rise in Brent crude and West Texas Intermediate oil prices. Gold prices declined to their lowest levels in nearly two weeks, reflecting diminished demand for safe-haven assets. Investor attention now shifts to upcoming monetary policy meetings from the Federal Reserve and Bank of Japan, as well as key U.S. economic data and earnings reports from major tech companies. The Federal Reserve is expected to maintain rates but faces pressure amid political criticism and differing opinions within its board regarding potential rate cuts. The Bank of Japan may find room to raise rates following the trade deal with Japan, adding to the week’s high-stakes financial events.Tools
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