Investors around the world were digesting a mix of optimism and uncertainty following a historic stretch of record closes in U.S. indices and crucial geopolitical developments.
On Wall Street, the S&P 500 and Nasdaq Composite began trading on Tuesday near their highest levels ever, continuing a pattern of modest gains that culminated on Monday with both indices closing at new records. The Dow Jones Industrial Average opened just off its late 2024 peak, following a slight dip in the previous session.
Internationally, both the MSCI World Index and European markets opened slightly lower, pausing after a strong upward run the prior week.
Asian markets opened on a weaker note Tuesday as enthusiasm about the U.S.-EU trade deal faded and investors turned cautious amid a data-heavy week
U.S.-EU trade announcement
The focus remained on the U.S.-EU trade accord finalized over the weekend. Under this agreement, EU tariffs are set to drop to 15 percent—down from a planned 30 percent scheduled to start August 1. This announcement calmed fears of an escalating trade war and was a clear positive for multinational corporations, particularly automakers and manufacturers with cross-Atlantic supply chains. However, internal criticism—especially from France, which labeled the deal a “submission”—highlighted ongoing disagreements within the European Union and kept investors cautious.
With the U.S. still negotiating tariff deals with Canada and Mexico, and China talks ongoing, trade risks continue to hover just beneath the surface, potentially influencing market sentiment as the week unfolds.
Read more: U.S. and EU strike tariff deal: Stock markets surge, euro rises as trade tensions ease
Corporate earnings: Tech sector in focus
Tuesday marks the beginning of a packed calendar for corporate earnings, with the spotlight firmly on America’s top technology firms. Investors are closely monitoring reports from Microsoft, Apple, Amazon, and Meta for clues about the health of the tech sector—one of the most significant drivers behind the Nasdaq’s recent surge. Strong guidance or surprise profits from these firms could extend the upward momentum, while any disappointment risks triggering a swift reversal.
Fed awaited
All eyes are also on the U.S. Federal Reserve, which convenes its July meeting on Wednesday. While the majority expectation is for rates to remain unchanged, investors are parsing every statement for hints of dovishness. With fresh PCE inflation data and critical jobs numbers due this week, even a subtle shift in the Fed’s tone could ignite market moves, especially given the widespread anticipation of a continued “higher-for-longer” rate environment.
Despite record equity highs and resilience since the April 2025 sell-off, investors remain wary. The unresolved status of U.S.-China trade negotiations—and the threat of tariffs returning in mid-August—underscore the fragility of the current bullish sentiment.
Charu Chanana, chief investment strategist, Saxo Bank, remarked to Economy Middle East that the convergence of central banks, earnings, macroeconomic data, and geopolitical factors could signify a turning point for global markets this week. The signals from the Federal Reserve, along with the July non-farm payrolls (NFP) and PCE inflation data from the United States, have the potential to reshape the timeline for rate cuts and rekindle interest in rate-sensitive assets. Furthermore, the upcoming August 1 tariff deadline and the ongoing US-China trade talks are crucial catalysts influencing global risk sentiment and sector rotation. Additionally, the forthcoming earnings reports from Big Tech companies will be pivotal in determining whether spending on artificial intelligence is translating into monetization, which is essential to sustaining the Nasdaq-led equity rally.
