Sinéad Carew and Marc Jones
NEW YORK, London (Reuters) – Global stock gauges fell on Monday, and the euro fell and the US Treasury Department was sold as investors carefully greeted a trade deal between the US and the European Union at the start of the market action-packed week.
The weekend framework trade agreement, which President Ursula von der Leyen of the European Commission, described as the best the bloc can get, imposes 15% import duties on most EU goods, but the EU spends $600 billion on US investments, opening up a key portion of the market.
The agreement could avoid harmful standoffs between trading partners, which make up almost a third of global trade, but some European capitals complained that it was biased in Washington’s favor.
“We’ve seen a lot of effort into making our customers more comfortable,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.
Equity investors’ enthusiasm for trade contracts likely declined as market participants looked into the details and questioned how European requirements for US defense and energy spending would be enforced, Janasivic added.
MSCI stock gauges worldwide fell 2.78 points (0.30%) to 938.48. The index, which represents stocks from 47 countries, had closed five records from six previous trading sessions.
Tepid Equity Action on Monday followed a series of record highs for the S&P 500 and NASDAQ. This is thanks to solid quarterly revenue and bets on quarterly revenue and artificial intelligence stocks, and optimism that the US will ultimately reach an agreement with its trading partners.
On Wall Street, the 500 failed to smash another record six times in a row, finishing 1.13 points (0.02%) at 6,389.77.
Nasdaq Composite closed its record with a gain of 21,178.58 with 70.27 points (0.33%). The Dow Jones industrial average fell 64.36 points (0.14%) to 44,837.56, but the early December record has not yet been over.
Previously, the Pan-European Stoxx 600 index fell 0.22%, while the broad European Ftseurofirst 300 index fell 0.15%.
Phil Orlando, chief market strategist at Federate Hermes, said removing uncertainty is a relief, along with a 15% tariff rate, lower than the “silly number” spoken in early April.
“You have some certainty going forward, and you have numbers that you think are reasonable,” he said.
Orlando said investors should be patient as the S&P 500 has risen about 32% from its April low. He pointed out the US inflation and pay report and the US Federal Reserve Conference all a week ago, along with revenue reports from MegaCaps, including Apple, Microsoft and Amazon.
The European agreement follows last week with Japan, Indonesia and the Philippines. Other countries were still scrambling to make a deal ahead of President Donald Trump’s August 1 deadline.
The US top and Chinese economic officials were held in Stockholm for more than five hours of consultation aimed at resolving long-standing economic conflicts at the heart of the trade war between the world’s top two economies.
In currencies, the dollar rose against major currencies after the weekend’s trade agreement. Investors are also aiming for this week’s US and Japan Central Bank Conference.
The euro fell 1.27% to $1.1591. The dollar strengthened 0.62% against the Japanese yen to 148.57.
Dollar Index <= USD>measured the greenback against a basket of currencies, including the yen and euro, and rose 1.07% to 98.65.
The US Treasury Department will rise following trade contracts and US bond auctions. The next US Federal Reserve Policy Conference begins Tuesday, with the Fed not expected to change interest rates this week. Central banks are being cautious about cutting interest rates because they want to determine the impact of tariffs on inflation before making a decision.
The Benchmark US 10-Year Note yield rose 2.8 basis points to 4.414%, and 30-year bond yield rose 3.3 basis points to 4.9616% from 4.386% on Friday.
The two-year note yield, which usually moves in stages with Federal Reserve expectations, rose 1.1 basis points to 3.928%.
In the energy market, oil prices rose more than 2% after Trump’s announcement that US-EU deals and Trump would shorten deadlines for ending the war in Ukraine or face severe tariffs.
US crude rose 2.38% or $1.55 to $66.71 per barrel, while Brent closed at $70.04 per barrel, or 2.34% at $1.60.
In precious metals, gold has been lowered nearly three weeks as the trade deal lifted the dollar and risk sentiment, but investors have been waiting for new clues on the rate policy of this week’s Fed meeting.
Spot Gold fell 0.56% to $3,317.31 per ounce. US gold futures fell 0.74% to $3,309.20 per ounce.
(Reporting by Sinéad Carew in New York, Marc Jones in London, Ankur Banerjee in Singapore and Gregor Stuart Hunter, edited by Jan Harvey, Giles Elgood, and Nia Williams)
