Global markets jumped Thursday morning as optimism grew around a looming trade agreement between the United States and the European Union. The rally followed news of a finalized US–Japan tariff deal earlier this week and came just hours ahead of the European Central Bank’s highly anticipated policy meeting.
European equities led the charge. The pan-European Stoxx 600 rose nearly 0.4%, while Germany’s DAX gained 0.5% and Spain’s Ibex surged more than 1.5%. Asian markets also advanced, with Japan’s Nikkei climbing 2% and China’s CSI 300 gaining modestly. Wall Street opened slightly mixed, with the Nasdaq and S&P 500 inching up and the Dow Jones Industrial Average dipping slightly.
Fueling the rally was speculation that the US and EU are preparing to settle long-running tariff disputes using a model similar to the 15% rate negotiated with Japan. Sources familiar with the matter say trade officials are working behind the scenes to finalize the terms ahead of the G20 summit next month. The deal would mark a significant easing of transatlantic trade tensions that have simmered since 2018.
Investors are also closely watching the European Central Bank’s policy decision today. The ECB is widely expected to hold interest rates steady at 2% after initiating cuts earlier this year. But analysts warn that any hawkish shift in the bank’s messaging could quickly rattle equity markets. Inflation in the Eurozone has remained stubbornly above the ECB’s 2% target, raising questions about how long the central bank can maintain its current stance.
Meanwhile, the US earnings season continues to play out, with tech stocks holding steady despite recent volatility. Traders are bracing for reports from Apple, Amazon, and Alphabet in the coming days. The interplay of macroeconomic signals and corporate performance has left many investors in wait-and-see mode, hoping the summer’s early optimism doesn’t fade.
Today’s rally reflects broader confidence that trade tensions may be easing, at least for now. But as always, the durability of this momentum will depend on follow-through from central banks and policymakers, especially in an environment where sentiment can turn on a headline.
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