The S&P 500 and Nasdaq closed at fresh all-time highs on Monday, capping their strongest quarterly performance in a year. Investor sentiment was lifted by growing optimism around trade negotiations and the possibility of an interest rate cut.
Markets were buoyed by progress in trade talks involving China and the United Kingdom, offering a glimmer of hope that a broader global trade war might be avoided. With a critical deadline looming on July 9 from the Trump administration, investors are banking on deals being reached in time.
Shares of major US banks climbed after the Federal Reserve's annual stress test showed they remain financially sound. This clears the path for billions of dollars in share buybacks and dividend payments, further energizing the market.
Tech and clean energy stocks led the charge. Hewlett Packard Enterprise surged over 11 percent, First Solar jumped nearly 9 percent, and Juniper Networks rose more than 8 percent.
Index Performance Summary:
A key vote on a sweeping bill aimed at slashing taxes and government spending was expected during the Asian trading hours on Tuesday. However, the legislative process became entangled in a flurry of proposed amendments from both minority Democrats and Republicans.
President Donald Trump is urging lawmakers to pass the bill before the July Fourth holiday. His timeline coincides with pressure on global trade negotiators, who are racing to finalize deals before Trump-era tariffs expire. Meanwhile, markets are bracing for a pivotal US jobs report due out on Thursday.
US stock futures edged down ahead of the market open, with contracts for the S&P 500 and Nasdaq both falling by 0.2 percent, signaling a modest pullback in early trading.
Shares of Tesla dropped by nearly 5 percent in Frankfurt after Trump suggested that a government efficiency review might target subsidies granted to Elon Musk's companies. Although Tesla remains among the top ten most valuable firms on Wall Street, the stock has shed about one third of its value since its all-time high in December.
Meanwhile, Nvidia is on the brink of setting a new record. The chipmaker is closing in on a market cap of 4 trillion dollars, which would make it the most valuable company in history. Its shares remained steady in European trading ahead of the US pre-market session.
New economic indicators released Tuesday suggest that Japan and China, the region's two largest economies, are still weathering the storm brought on by trade uncertainty. The Bank of Japan's Tankan business sentiment index and China's manufacturing activity data point to cautious stability in the face of ongoing tariff concerns.
The US dollar weakened by 0.6 percent against the Japanese yen, falling to 143.21. Meanwhile, it remained largely unchanged against the euro at 1.18, hovering near levels last seen in September 2021.
Oil prices edged lower on Tuesday as markets anticipate a possible production hike from OPEC and its allies in August. Brent crude futures dropped 0.3 percent to 66.50 dollars per barrel. In contrast, gold prices rose by 1 percent, reaching 3337 dollars per ounce on the spot market.
Europe's STOXX 600 index dipped 0.2 percent to 540.45 as of 08:19 GMT. Other regional indices also trended downward, reflecting investor uncertainty amid the looming trade policy deadline.
Investor nerves were tested once again as concerns over a possible hike in US tariffs resurfaced. With the July 9 deadline for reaching trade agreements fast approaching, global markets are bracing for potential disruption if deals are not struck in time.
On Monday, US President Donald Trump voiced frustration over the lack of progress in trade talks with Japan. Treasury Secretary Scott Bessent warned that countries may face abrupt tariff hikes even if negotiations are conducted in good faith. This statement amplified tension on global trading floors.
The European Union has signaled readiness to sign a deal introducing a flat ten percent tariff across many of its exported goods. In return, however, Brussels is pushing Washington for tariff reductions in several high-value sectors including pharmaceuticals, alcoholic beverages, semiconductors, and commercial aircraft, Bloomberg News reported Monday.
A top EU trade representative is set to meet US officials in Washington this week in a last-ditch effort to prevent new tariffs from being implemented and to protect vital trade flows between the two economies.
European utility shares led the market on Monday, with the sector index climbing 0.8 percent. Meanwhile, media stocks faced headwinds, posting a decline of 1.4 percent.
Shares in Zealand Pharma surged by 4.1 percent, making it one of the top gainers on the STOXX 600 index. The rally followed a bullish note from Exane BNP Paribas, which initiated coverage with an outperform rating.
Polish logistics provider InPost saw its shares fall by 4.8 percent, marking the sharpest decline on the index. The drop came after major stakeholder Advent International offered approximately 3.5 percent of the company's stock to institutional investors.
The European Central Bank's annual forum kicks off Tuesday in Sintra, Portugal, featuring key speakers including ECB President Christine Lagarde and US Federal Reserve Chair Jerome Powell. On Monday, Lagarde cautioned that uncertainty remains a defining element of the global economic landscape.
Across the Atlantic, market participants are closely monitoring developments around President Trump's sweeping tax and spending reform proposal. A vote is expected in the coming days.
Encouraging data from June show that new manufacturing orders in the eurozone have stopped shrinking for the first time in over three years. The trend suggests early signs of stabilization in the region's industrial sector.
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