This content was published on

July 28, 2025 – 06:33

(Bloomberg) — The record rally in US stocks looks set for more gains after the European Union reached a trade deal with President Donald Trump, further easing fears of a damaging trade war.

Futures for the S&P 500 rose 0.4% after the index notched five successive all-time highs last week. Contracts for European stocks gained 1% after the deal, which imposes 15% tariffs on most of the bloc’s exports. The MSCI All Country World Index traded at a record while Asian shares were flat. The euro strengthened against the dollar. Crude oil edged 0.3% higher. Treasuries and a gauge of the greenback were steady.

Markets, rebounding from April lows, are drawing comfort from the latest trade deal and signs the US and China will extend their truce, easing fears over Trump’s tariffs. That optimism faces a test this week with key data, Federal Reserve and Bank of Japan meetings and earnings from megacap companies that may shape the outlook for markets and the global economy.

Trade deals are coming in “less worse than expected,” Chi Lo, senior market strategist for Asia Pacific at BNP Paribas Asset Management, said on Bloomberg TV. “That change in expectation and sentiment pushed up the markets over the past few weeks, and going forward, we do need to see the fundamentals come back to play.”

Trump and European Commission President Ursula von der Leyen announced the EU deal on Sunday at his golf club in Turnberry, Scotland, although they didn’t disclose the full details of the pact or release any written materials.

The hard-fought deal will see the bloc face 15% tariffs on most of its exports, including automobiles, staving off a trade war that could have delivered a hammer blow to the global economy.

Asian stocks with large European exposure rose Monday after the trade agreement.

Markets Live Strategist Garfield Reynolds says:

The deal will be a relief for equity investors globally, though the rally in response may turn out to be a modest one as this sort of accord was probably priced in to a large extent after Japan’s pact. The ‘Sell America’ trade may not come back with these trade deals, but a move to buy other markets first is likely.

Meanwhile, shares in Hong Kong advanced after the South China Morning Post reported the US and China are expected to extend their tariff truce by another three months. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are scheduled to meet in Stockholm on Monday. Shares in mainland China dipped 0.2%.

Also, Goldman Sachs lifted its 12-month target for the MSCI China index on higher valuations, brighter prospects for a trade deal and a stronger yuan.

Elsewhere in Asia, Japanese Prime Minister Shigeru Ishiba signaled he intended to stay in office despite a growing number of calls within the ruling party for him to step down. Ishiba faces a crunch meeting of his party’s lawmakers Monday. 

“Consensus in the market is for Ishiba to remain in office,” and if he were to announce his resignation, that would be a positive surprise for stock prices as a change in government would stimulate the economy, said Shoji Hirakawa, chief global strategist at Tokai Tokyo Intelligence Lab.

Later in the week, the Bank of Japan is set to keep interest rates unchanged with traders on alert for any signs of future guidance by the central bank.

This week will also bring a US jobs report, while Magnificent Seven members Apple Inc., Amazon.com Inc., Microsoft Corp. and Meta Platforms Inc. are all due to report numbers. Robust corporate earnings have bolstered investor confidence in US stocks, as companies head for their highest share of beats since the second quarter of 2021.

Progress in trade deals, positive economic data and corporate resilience have offset worries that stocks are overheating. More than 80% of S&P 500 companies have exceeded profit estimates, according to data compiled by Bloomberg Intelligence.

In geopolitical news, Thailand and Cambodia are set to hold talks Monday to discuss an end to their deadly border clashes after Trump warned Washington wouldn’t make a trade deal with either country while the conflict continued.

Corporate News:

Samsung Electronics Co. will produce semiconductors for Tesla Inc. in a new $16.5 billion pact that gives a boost for its underperforming foundry division.CK Hutchison Holdings Ltd. said it may invite a “major strategic investor” from China to join a group seeking to buy its global ports, bolstering investor confidence that the company will see through the troubled transaction.Advantest Corp. shares fell as much as 10% after UBS cut rating on the stock to sell.

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.4% as of 1:26 p.m. Tokyo timeNikkei 225 futures (OSE) fell 0.7%Japan’s Topix fell 0.6%Australia’s S&P/ASX 200 rose 0.3%Hong Kong’s Hang Seng rose 0.4%The Shanghai Composite fell 0.2%Euro Stoxx 50 futures rose 1%

Currencies

The Bloomberg Dollar Spot Index was little changedThe euro was little changed at $1.1752The Japanese yen was little changed at 147.70 per dollarThe offshore yuan was little changed at 7.1692 per dollarThe Australian dollar was little changed at $0.6565

Cryptocurrencies

Bitcoin rose 0.3% to $119,175.56Ether rose 1.4% to $3,877

Bonds

The yield on 10-year Treasuries was little changed at 4.39%Japan’s 10-year yield declined three basis points to 1.570%Australia’s 10-year yield was little changed at 4.34%

Commodities

West Texas Intermediate crude rose 0.4% to $65.42 a barrelSpot gold rose 0.1% to $3,340.86 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Joanne Wong and April Ma.

©2025 Bloomberg L.P.