Wall Street edges up as investors digest new deal
U.S. equities made modest gains Monday after the announcement of a new trade agreement between the United States and the European Union. The deal imposes a 15% import tariff on most EU goods while opening significant sectors of the European market to American companies. In exchange, the EU has committed to invest $600 billion into the U.S. economy. While some analysts see this as a win for Washington, the restrained stock market reaction suggests investors are awaiting further clarity.
By midday, the Nasdaq climbed 0.30% and the S&P 500 rose slightly, following a series of record highs. Traders are now focused on major upcoming events, including the Federal Reserve’s rate decision, earnings from Apple and Amazon, and Friday’s U.S. jobs report.
Europe slips and euro stumbles amid mixed reactions
European stock indexes moved lower, with the STOXX 600 falling 0.27% and the FTSEurofirst 300 down 0.24%. Despite avoiding a potential trade standoff, some EU capitals expressed concerns that the deal disproportionately benefits the U.S. The euro dropped nearly 1% to $1.1632 as markets recalibrated expectations around monetary policy and trade exposure.
Apolline Menut of Carmignac labeled the agreement “damage control” rather than progress, citing Europe’s forced purchases of U.S. goods and a lack of reciprocal tariffs. Investors are also monitoring whether this pact will influence other negotiations, including ongoing U.S.-China talks.
Dollar strengthens and bond yields climb
Following the trade news, the U.S. dollar index rose 0.75%, buoyed by investor confidence in the greenback ahead of the Fed’s decision. The dollar also gained against the yen, trading at 148.3. Treasury yields rose across the board, with 10-year notes reaching 4.412% and 30-year bonds climbing to nearly 4.96%.
Despite President Trump’s pressure on the Fed to lower rates, the central bank is expected to stay cautious until the inflationary impact of recent tariffs becomes clearer. Market watchers believe the Fed’s tone this week will influence near-term bond and currency moves.
Oil climbs, gold dips as trade momentum builds
In commodities, U.S. crude gained 1.86% to $66.36 per barrel and Brent rose to $69.68. The energy market received a boost from Europe’s commitment to purchase U.S. energy, part of the broader trade deal. Meanwhile, gold fell 0.83% to $3,308.34 an ounce as rising risk appetite and dollar strength weighed on precious metals.
Investors are closely watching whether upcoming rate decisions will alter inflation expectations and commodity demand, especially as geopolitical risks remain elevated with Trump warning of new tariffs unless Russia ends its war in Ukraine.
