US Stock Futures Rise As Trump, EU Reach Tariff Deal: Markets Wrap

Stock-index futures climbed after the European Union struck a deal with President Donald Trump that will see the bloc face 15% tariffs on most exports, averting a potentially damaging trade war.

S&P 500 contracts rose 0.4% and those for European stocks jumped 1%. The euro was slightly stronger against the dollar after the US-EU deal. Asian shares fluctuated at the open as Japanese equities declined 0.4%. Treasuries dipped slightly with yields on the 10-year gaining one basis point to 4.4%. Gold edged lower and oil was marginally higher.

Investors are bracing for a busy week of data - including meetings of the Federal Reserve and the Bank of Japan - and earnings from megacap companies that could set the tone for the rest of the year in markets and the economy. Stocks have risen from their slump in April as investors speculate the US will strike trade deals with countries and that will help avoid significant damage to company earnings and the global economy.

“A US trade deal with the EU sets the markets up for a positive start to the week, although market participants also confront one of the busiest weeks on the economic calendar for the year,” wrote Kyle Rodda, a senior market analyst at Capital.com in Melbourne. 

Trump and European Commission President Ursula von der Leyen announced the EU deal on Sunday at his golf club in Turnberry, Scotland, although they didn’t disclose the full details of the pact or release any written materials.

The hard-fought deal will see the bloc face 15% tariffs on most of its exports, including automobiles, staving off a trade war that could have delivered a hammer blow to the global economy.

Markets Live Strategist Garfield Reynolds says:

The deal will be a relief for equity investors globally, though the rally in response may turn out to be a modest one as this sort of accord was probably priced in to a large extent after Japan’s pact. The ‘Sell America’ trade may not come back with these trade deals, but a move to buy other markets first is likely.

Meanwhile, the US and China are expected to extend their tariff truce by another three months, the South China Morning Post reported. The report comes ahead of trade talks between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng in Stockholm on Monday.

Elsewhere in Asia, Japanese Prime Minister Shigeru Ishiba signaled he intended to stay in office despite a growing number of calls within the ruling party for him to step down. Later in the week, the Bank of Japan is set to keep interest rates unchanged with traders on alert for any signs of future guidance by the central bank.

This week will also bring a US jobs report, while Magnificent Seven members Apple Inc., Amazon.com Inc., Microsoft Corp. and Meta Platforms Inc. are all due to report numbers. Robust corporate earnings have bolstered investor confidence in US stocks, as companies head for their highest share of beats since the second quarter of 2021.

Progress in trade deals, positive economic data and corporate resilience have offset worries that stocks are overheating. More than 80% of S&P 500 companies have exceeded profit estimates, according to data compiled by Bloomberg Intelligence.

However, the risk of a bubble in stock markets is rising as monetary policy loosens alongside an easing in financial regulation, according to Bank of America Corp.’s Michael Hartnett.

In geopolitical news, Thailand and Cambodia are set to hold talks Monday to discuss an end to their deadly border clashes after US President Donald Trump warned Washington wouldn’t make a trade deal with either country while the conflict continued.

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 9:16 a.m. Tokyo time

• Hang Seng futures rose 0.1%

• Japan’s Topix fell 0.2%

• Australia’s S&P/ASX 200 rose 0.2%

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.2% to $1.1768

• The Japanese yen was little changed at 147.70 per dollar

• The offshore yuan was little changed at 7.1649 per dollar

Cryptocurrencies

• Bitcoin rose 0.6% to $119,551.98

• Ether rose 1.5% to $3,880.59

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.40%

• Japan’s 10-year yield declined 1.5 basis points to 1.585%

• Australia’s 10-year yield advanced two basis points to 4.36%

Commodities

• West Texas Intermediate crude rose 0.3% to $65.37 a barrel

• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.