Global stock markets rose on Monday and the euro strengthened, boosted by improved sentiment following a trade agreement between the United States and the European Union. The deal provided some clarity at the start of a pivotal week featuring policy meetings by the Federal Reserve and the Bank of Japan.
The U.S. and EU reached an agreement that sets a 15 percent import tariff on most European goods, half the initially threatened rate. The agreement comes just a week after the U.S. concluded a similar trade deal with Japan.
European futures, euro surge
In the European stock market, futures jumped over 1 percent on Monday, while U.S. stock futures also gained, with S&P 500 futures up 0.48 percent and Nasdaq futures rising 0.65 percent. The euro has also strengthened, rising against the U.S. dollar, British pound and Japanese yen.
Countries are now rushing to secure trade agreements ahead of the August 1 deadline set by U.S. President Donald Trump. Talks between the United States and China are scheduled for Monday in Stockholm, with expectations growing that the two sides may agree to another 90-day extension of the truce between the world’s two largest economies.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.32 percent, nearing the almost four-year high it reached last week. Meanwhile, Japan’s Nikkei slipped 1 percent after touching a one-year peak last week.
Although many in Europe still view the baseline 15 percent tariff as high compared to initial hopes for a zero-for-zero tariff arrangement, it is a significant improvement over the previously threatened 30 percent rate.
The U.S.-EU trade deal offers greater clarity for businesses and helps prevent a larger trade war between the two allies, which together represent nearly one-third of global trade.
In the Chinese stock market, the CSI300 index rose 0.17 percent, while Hong Kong’s Hang Seng rose 0.50 percent.
Read: Oil prices rise to $68.92 as U.S.-EU trade deal eases demand concerns
Investors eye key market movers this week
This week, investors are closely watching key monetary policy meetings from the Federal Reserve and the Bank of Japan, along with the closely watched U.S. monthly employment report and earnings results from major tech giants, including Apple, Microsoft and Amazon.
While both the Fed and BOJ are widely expected to hold interest rates steady, comments from policymakers will be critical as markets look for clues on the future direction of monetary policy. The recent U.S.-Japan trade agreement has created room for the Bank of Japan to consider another rate hike later this year.
The Federal Reserve, however, is likely to adopt a cautious stance on rate cuts, as officials await more data to assess the impact of tariffs on inflation.
In commodities, oil prices edged higher following the U.S.-EU trade deal, with both Brent crude and U.S. West Texas Intermediate futures rising 0.5 percent. Meanwhile, gold prices declined to their lowest level in nearly two weeks as demand for safe-haven assets weakened amid improving trade sentiment.
