Details of the commercial agreement to boost the feeling of the market
The framework agreement between the United States and the European Union (EU) has provided very necessary clarity for global markets. The agreement sees American tariffs on most EU imports established at 15%, significantly lower than the 30% threatened level that had markets to the limit. This commitment has immediately raised the feeling in the variable income markets.
The agreement favors the interests of the United States through European commitments to increase the purchases of American energy and defense goods. In addition, the EU has agreed to boost the investment in US infrastructure projects. UU. These concessions have helped justify the most moderate tariff approach from Washington’s perspective.
The European Variable Income Indices published solid gains, with technology and export -oriented sectors that lead the advance. The reduction of uncertainty must support corporate investment decisions that had been waiting for commercial clarity.
China’s negotiations offer additional support
Parallel developments in commercial conversations between the United States and China have further increased risk appetite. The negotiations resumed in Stockholm with reports that suggest another extension of 90 days to the current agreements. This provides additional breathing space for markets already driven by the EU agreement.
Currency markets respond to reduced tensions
The broad base strength of the euro represents the most immediate market reaction to the trade agreement. EUR/USD exceeded as investors moved away from the safe positions of the US dollar. The single currency had been under pressure from commercial uncertainty that affected European exporters.
Sterling also benefited from the improved risk environment, although Brexit’s considerations continue to create winds against. Libra’s performance remains more dependent on internal political developments than broader commercial dynamics.
The Central Bank meetings remain the key approach
Despite the progress of trade, attention now resorts to the meetings of the Federal Reserve (Fed) and the Bank of Japan this week. Both central banks are expected to maintain the current policy configuration, but the comments will be crucial for the market management.
The Fed faces continuous political pressure regarding the rates policy, which makes President Powell’s statements particularly significant. The markets will analyze any track on future policy routes given the changing commercial landscape.
The BOJ continues its ultra accommodative position, but commercial developments could influence their economic projections. Japanese exporters will benefit from the reduction of global commercial tensions.
Merchandise reflects the change in risk feeling
Oil showed an immediate response to commercial developments, with prices earning 0.5%. The fears of reduced trade war support the expectations of the demand for industrial products. The energy sector benefits from both the improved growth prospects and the EU specific commitments to increase the energy purchases of the United States.
The gold decline to the minimum of two weeks demonstrates the change of security assets. Precious metal generally falls when risk appetite improves and commercial tensions are facilitated.
Base metals have also responded positively to commercial clarity. Copper and aluminum, sensitive to global growth expectations, published profits in improved manufacturing perspectives.
The basic products complex now faces the challenge of maintaining profits if the commercial impulse continues or quickly is investigated if the negotiations stop.
