Markets rise, Euro gains as EU and US strike landmark trade deal

Global stock markets mostly advanced Monday, and the euro strengthened after the European Union and United States announced a landmark trade agreement aimed at avoiding a potentially damaging trade war.

The deal—described by former US President Donald Trump as the “biggest-ever”—was revealed during a joint announcement with European Commission President Ursula von der Leyen at Trump’s golf resort in Scotland on Sunday. It follows similar trade agreements reached by the US with Japan and other partners last week and comes ahead of a new round of negotiations with China.

Under the agreement, a baseline tariff of 15% will be imposed on EU exports to the United States. The levies will cover key European industries, including automobiles, pharmaceuticals, and semiconductors.

In return, the EU has committed to purchasing $750 billion worth of US energy and investing an additional $600 billion in various sectors.

“We’ve reached a deal. It’s a good deal for everybody,” Trump said. “This is probably the biggest deal ever reached in any capacity.”

Von der Leyen echoed the sentiment, saying the agreement would bring "stability and predictability," which are vital for businesses on both sides of the Atlantic.

The announcement lifted market sentiment, pushing the euro to $1.1779 from Friday’s close of $1.1749. Equities extended recent gains, supported by optimism around improving trade relations.

Markets react positively

Hong Kong led gains among Asian markets, jumping around 1%, while Shanghai, Sydney, Wellington, Taipei, and Jakarta also moved higher. European and US futures pointed to further gains. However, Tokyo slipped for a second straight session, giving back some of the strong gains made last week following Japan’s own trade deal with the US. Singapore and Seoul also posted slight losses.

On Wall Street, both the S&P 500 and Nasdaq ended last week at record highs, providing further momentum for global equities.

“The positive developments in US-EU and US-China trade negotiations are clearly market-friendly,” said Chris Weston of Pepperstone. “This should boost the euro further and support EU equity markets.”

Busy week ahead for investors

Investors are bracing for a packed week featuring key economic data, central bank decisions, and earnings from major tech companies including Amazon, Apple, Meta, and Microsoft.

In Stockholm, US Treasury Secretary Scott Bessent is set to lead a delegation for fresh trade talks with a Chinese team headed by Vice Premier He Lifeng. Though the two countries had imposed steep tariffs on each other earlier this year, those have been partially rolled back during a 90-day truce established in May. That ceasefire is set to expire on August 12.

Attention is also turning to the US Federal Reserve’s upcoming policy meeting. While no rate change is expected, markets will be closely watching for any signals on the Fed’s economic outlook amid ongoing tariff policies and trade realignments. The Bank of Japan is also expected to hold rates steady in its own decision this week.

Market snapshot as of 02:30 GMT

Tokyo (Nikkei 225): -0.7% at 41,148.07
Hong Kong (Hang Seng): +1.0% at 25,631.28
Shanghai (Composite): +0.3% at 3,602.97
Dollar/Yen: 147.74, up from 147.68
Euro/Dollar: 1.1755, up from 1.1738
Pound/Dollar: 1.3436, up from 1.3431
Euro/Pound: 87.48 pence, up from 87.40
WTI Crude: +0.5% at $65.48 per barrel
Brent Crude: +0.5% at $68.80 per barrel
New York (Dow Jones): +0.5% at 44,901.92 (previous close)
London (FTSE 100): -0.2% at 9,120.31 (previous close)