Stocks surge, euro steady after US-EU trade agreement
SINGAPORE (REUTERS)Global stocks rose and the euro appreciated on Monday after a trade agreement between the United States and the European Union lifted sentiment and provided some clarity in a week of key policy meetings by the Federal Reserve and the Bank of Japan.The US struck a framework trade agreement with the European Union, imposing a 15% import tariff on most EU goods - half the threatened rate, a week after agreeing to a similar trade deal with Japan.Countries are scrambling to finalise trade deals ahead of an August 1 deadline set by US President Donald Trump, with talks between the US and China set for Monday in Stockholm amid expectations of another 90-day extension to the truce between the world's top two economies.European futures surged more than 1%, while S&P 500 futures rose 0.5% and Nasdaq futures advanced 0.6%.The euro strengthened across the board, rising against the dollar, sterling and yen.MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.32%, just shy of the almost four-year high it touched last week. Japan's Nikkei fell 1% after hitting a one-year high last week.While the baseline 15% tariff will still be seen by many in Europe as too high, compared with Europe's initial hopes to secure a zero-for-zero tariff deal, it is better than the threatened 30% rate.The US-EU deal provides clarity to companies and averts a bigger trade war between the two allies that account for almost a third of global trade."A major tail-risk has now been defused," said Marc Velan, head of investments at Lucerne Asset Management in Singapore."Markets are interpreting this as a sign of stability and predictability returning to trade policy," he added.Gains for China's blue-chip stocks petered out towards the midday break.The Australian dollar, often seen as a proxy for risk appetite, was at $0.657, hovering around the near eight-month peak scaled last week.In commodities, oil prices rose after the US-EU trade agreement. Brent crude futures and U.S. West Texas Intermediate crude both rose 0.5%.
Gold prices fell on Monday to their lowest in nearly two weeks on reduced appetite for safe havens.
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