Asian, US Stock Futures Rise on EU Trade Deal Hopes
Equity index futures for Asian and US stocks rose on Tuesday after the European Union agreed to speed up trade talks with the US, easing concerns about a renewed trade war. Futures for the S&P 500 and Nasdaq 100 jumped more than 1% in early trading after public holidays in the US and UK on Monday. Futures for shares in Australia, Japan and South Korea also rose.
Trading in cash Treasuries will resume on Tuesday after the holidays. The dollar weakened in early Asian trading with a gauge of the greenback’s strength near its lowest level in almost two years on weak demand for US assets. “Any further tariff news could inject more volatility into currency markets and drag the dollar lower,” Kristina Clifton, senior economist and currency strategist at Commonwealth Bank of Australia, wrote in a note. “There is a risk that President Donald Trump will announce tariffs on pharmaceuticals this week” and the Eurozone is the largest pharmaceutical exporter to the US, she added.
The European Union’s agreement to accelerate trade talks signaled a more friendly approach just days after Trump criticized the bloc for taking advantage of the U.S. Tariff headlines once again dominated markets, with investors closely watching how the administration handles negotiations with Japan and India after talks with China earlier this month boosted optimism.
Over the weekend, Trump extended a deadline for aggressive tariffs on the EU to July 9 from June
Trade tensions and weak demand for U.S. assets are showing up in the dollar. The Bloomberg Dollar Spot Index is on track to close at its lowest since July 2023, while the greenback is at or near key levels against a basket of currencies including the euro, the British pound, the yen and the Swiss franc. In Asia, China’s central bank asked its major lenders to raise the yuan’s share of the currency when facilitating cross-border trade, in its latest push for the currency’s use as the world grapples with a U.S. tariff assault.
Trump’s plan to bring more manufacturing back to the U.S. has President Xi Jinping’s government also considering options to boost production of high-end technology goods.
There will be close attention to the country’s electric vehicle sector, after BYD Co. introduced steep price cuts. China’s No. 1 best-selling car brand plunged 8.6% in Hong Kong on Monday, sending peers Li Auto Inc., Great Wall Motor Co. and Geely Automobile Holdings Ltd. lower amid investor concerns about growing competition in the sector.
The week’s big event is Nvidia Corp.’s results on Wednesday. The chip giant is seen as a bellwether for so-called growth stocks and the sustainability of the artificial intelligence boom. Its outlook will be crucial given macro risks and tariff uncertainty.
Investors are also gearing up for the Federal Reserve’s preferred inflation measure, the U.S. personal consumption expenditures price index excluding food and energy, due Friday. The April reading is forecast to rise 0.1% based on consensus expectations.
In commodities, oil fluctuated on Monday as the market weighed easing trade tensions against the prospect of increased OPEC+ supply. Gold slid.
Source: Bloomberg
