Market Reactions to EU-US Trade Developments

Bangkok – Stock markets in Europe and Asia surged on Monday, buoyed by positive trade negotiations between the European Union and the Trump administration, especially with a deadline approaching.

U.S. futures and oil prices climbed ahead of a trade consultation in Stockholm between U.S. and Chinese officials. Germany’s DAX rose by 0.6% to 24,359.81, while France’s CAC 40 increased by 0.8% to 7,900.48. The UK’s FTSE 100 saw a modest rise, reaching 9,148.34, an increase of 0.3%.

The trade agreement, which was reached before President Trump increased tariffs, positioned EU exports to the U.S. initially at a 15% tariff, down significantly from 1%. This deal materialized after a brief meeting between Trump and European Commission President Ursula von der Leyen at Turnberry Golf Course in Scotland. It also hinted at more substantial import duties on both sides, stirring concerns about economic impacts worldwide.

Meanwhile, Japan’s Nikkei 225 index slipped by 1.1% to 40,998.27, raising questions about last week’s trade truce between Japan and Trump, particularly concerning Japan’s $550 billion investment commitment to the U.S. The specifics of the agreement remain under negotiation, with sources noting that formal documentation has yet to be completed.

In Hong Kong, the Hang Seng index gained 0.7%, reaching 25,563.32, while the Shanghai Composite inched up 0.1% to 3,597.94. Taiwan’s markets rose by 0.2%. CK Hutchison, a major player in Hong Kong’s business landscape, hinted at potentially working with Chinese investors, although this brought its shares down by 0.6% on Monday.

Elsewhere in Asia, the Korean Kospi climbed 0.4% to 3,209.52, and Australia’s S&P/ASX 200 also increased by 0.4% to 8,697.70, while India’s Sensex fell by 0.3%. Trading in Thailand was suspended due to holidays.

On Friday, the S&P 500 had a slight rise of 0.4%, closing at 6,388.64. This marked a fifth consecutive increase for the index. The Dow Jones industrial average added 0.5% to 44,901.92, and the Nasdaq Composite gained 0.2%, closing at a record 21,108.32. Deckers, the firm behind Ugg Boots and Hoka Shoes, saw stocks jump by 11.3%, buoyed by unexpectedly strong profit figures, especially outside the U.S., where revenues soared nearly 50%.

However, Intel’s shares dropped 8.5% after the company reported losses when analysts had predicted profits. The company, facing struggles in the competitive chip market, announced job cuts and other cost-saving measures as it tries to recover. Intel’s historically significant role in Silicon Valley contrasts sharply with its recent lag behind competitors like Nvidia and AMD, particularly in the booming market for AI chips.

As companies strive for robust profit growth to justify elevated stock prices, Wall Street’s optimism has grown in response to Trump’s efforts in trade negotiations, hoping to ease proposed tariffs and prevent economic downturns. Trump recently announced agreements with Japan and the Philippines, with another significant deadline looming on August 1.

This week also marks a key Federal Reserve meeting regarding interest rates. Trump took the opportunity to urge the Fed to lower rates again, suggesting it might benefit the U.S. government’s debt situation. Fed Chairman Jerome Powell stated he’s awaiting further economic data before acting on interest rates. Markets expect the Fed to hold off on rate cuts until at least September.

On the commodities front, U.S. benchmark crude saw a minor increase of 40 cents, reaching $65.56 per barrel, while international Brent crude added the same amount, closing at $68.06 per barrel. The dollar slightly strengthened against the yen, moving from 147.71 to 147.85, while the euro dipped from $1.1758 to $1.1719.