By Mike Dolan
LONDON (Reuters) – What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Finance and Markets
European stocks and Wall Street futures climbed again after the weekend deal between the United States and European Union averted a trade war between two allies that account for almost a third of global trade. The euphoria also lifted the dollar across the board.
The U.S. struck a framework trade agreement with the EU on Sunday, imposing a 15% import tariff on most EU goods – half the threatened rate. The agreement mirrored key parts of the accord the U.S. reached with Japan last week, but, like that deal, this one leaves many open questions, including regarding tariffs on spirits and wine.
* Euro zone stocks jumped almost 1% to within a whisker of the record high set earlier this month, with S&P 500 futures up modestly ahead of the bell. The dollar’s rise was less intuitive, but analysts said reduced trade tensions may allow markets to now refocus on yield differentials.
* U.S. trade deals with the EU, Japan and UK are seen as a significant win for Washington, as they secure higher tariffs on imports into the U.S. without retaliation and include commitments for additional investment to boot. Not all in Europe were happy with the tariff hike. French Prime Minister Francois Bayrou called it a “sombre day” for Europe, which he said had resigned itself to submission. U.S. and Chinese trade negotiators now resume talks in Stockholm, but the August 1 deadline on U.S. tariffs has been defused considerably as a major market issue.
* Traders on Monday will also be keeping tabs on an OPEC+ ministerial meeting, but no change is expected in the production stance. It’s also a heavy day of Treasury debt sales, with $139 billion of two- and five-year notes under the hammer. Treasury yields were softer going into the sales.
* The week ahead is jam packed with events: policy meetings at the Fed, Bank of Japan and Bank of Canada; updates on the U.S. labor market, GDP and inflation; four megacap earnings reports and a quarterly refunding announcement.
Today’s column examines why the Fed may struggle to come up with justification for a rate hike in September.
Today’s Market Minute
* The U.S. struck a framework trade agreement with the European Union on Sunday, imposing a 15% import tariff on most EU goods – half the threatened rate – and averting a bigger trade war between the two allies that account for almost a third of global trade.
* Top U.S. and Chinese economic officials will resume talks in Stockholm on Monday to try to tackle longstanding economic disputes at the centre of a trade war between the world’s top two economies, aiming to extend a truce by three months and keeping sharply higher tariffs at bay.
