Markets Rise, Euro Gains After Major EU-US Trade Deal

Most global stock markets saw gains on Monday, while the euro strengthened after the European Union and the United States finalised what US President Donald Trump described as the “biggest-ever” trade deal, effectively averting a serious transatlantic trade war.

The breakthrough, announced on Sunday by President Trump and European Commission President Ursula von der Leyen at Trump’s golf resort in Scotland, follows a series of recent US trade agreements, including one with Japan. The EU-US accord sets the stage for renewed talks with China this week and comes as investors brace for a flurry of economic data, central bank decisions, and corporate earnings from the world’s biggest firms.

Highlights of the EU-US Agreement

Market Reactions and Investor Sentiment

The euro jumped to $1.1779, up from Friday’s $1.1749, reflecting confidence in the deal’s potential to reduce uncertainty. Equity markets also gained momentum on optimism that major economies were resolving trade tensions with Washington.

Asia-Pacific Market Overview:

European & US Futures: Also indicated upward movement following the EU-US deal.

Chris Weston of Pepperstone commented:

“The news flow from both the extension with China and the agreement with the EU is clearly market-friendly, and should put further upside potential into the euro… and should also put renewed upside into EU equities.”

Packed Week Ahead for Global Markets

Investors are now looking ahead to a critical week which includes:

• US-China Trade Talks:
  Delegations led by US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng will meet in Stockholm.
• Temporary Tariff Reductions:
  • US tariffs: temporarily reduced to 30%
  • China’s countermeasures: down to 10%
  • 90-day truce (from May’s Geneva talks) to expire on 12 August
• Major Corporate Earnings:
  • Amazon
  • Apple
  • Meta
  • Microsoft
• US Economic Data:
  • GDP growth
  • Employment statistics
• Central Bank Announcements:
  • Federal Reserve: Expected to hold interest rates; market watching closely for future guidance, particularly post-tariff impacts
  • Bank of Japan: No significant changes expected in borrowing costs

Currency and Commodity Snapshot (as of 02:30 GMT)

Closing Indices from Friday

The week ahead promises to be pivotal in shaping investor sentiment, particularly as policymakers and markets digest the full impact of Trump’s tariff deals and their broader implications for global trade.