Stocks in Europe projected to rise due to US-EU trade agreement negotiations
In a significant development, the United States and the European Union (EU) have reached a trade agreement, reducing the tariff threat that the EU was facing. The deal, announced in late July 2025, lowers tariffs from a planned 30% to 15% on EU goods entering the U.S.
Under the terms of the agreement, the EU has committed to purchasing $750 billion worth of U.S. energy-related goods over three years and making an additional $600 billion in investments in the U.S. economy. The deal also includes zero tariffs on aircraft and parts and addresses non-tariff barriers, digital trade restrictions, and economic security measures to enhance supply chain resilience and cooperation on export controls.
The agreement is expected to have a generally positive short- to medium-term impact on European stocks. The reduction in tariffs lowers costs for European exporters to the U.S., likely improving their competitiveness and earnings outlook. The substantial purchase of U.S. energy and large investments strengthen transatlantic economic ties, potentially benefiting energy companies and investment-sensitive sectors on both sides.
However, some analysts caution about longer-term structural impacts on the EU economy and stock markets, which could introduce uncertainties later. These potential challenges could come from increased competition and adjustment challenges in some sectors within Europe.
Meanwhile, Asian markets, excluding Japan, were mostly higher. The pan-European STOXX 600, German DAX, U.K.'s FTSE, and France's CAC 40 had varying levels of decline, possibly due to President Trump's statement about a 50-50 chance of making a trade deal with the EU. European stocks closed mostly lower as a result.
In the U.S., the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average reached new record closing highs, driven by strong earnings, hopes for more trade deals, and easing Fed independence fears. Over 150 companies in the S&P 500 will reveal their quarterly earnings results this week, including Meta Platforms, Microsoft, Amazon, and Apple.
Investors are also looking for clarity on whether there will be a rate cut at the September policy meeting. The Federal Reserve's two-day policy meeting concludes on Wednesday, with no change in interest rates expected. U.S. stock futures are inching higher ahead of a busy week for markets, with the Federal Reserve's interest-rate decision and earnings from several major tech companies expected.
Oil prices rose as concerns about a trade war eased, while gold prices increased due to improved risk appetite and a weakening dollar. U.S. President Donald Trump stated that the EU has agreed to purchase "$750 billion worth of energy" from the United States and make $600 billion in additional investments as part of the deal. However, key differences have emerged between Trump's statements and Japan's official version of their bilateral agreement.
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[1] Source: Bloomberg [2] Source: Reuters [3] Source: CNBC [4] Source: Financial Times [5] Source: The Wall Street Journal
The U.S.-EU trade agreement, involving a commitment by the EU to purchase $750 billion worth of U.S. energy-related goods and make an additional $600 billion in investments, marks a significant boost in the technology sector, as it includes provisions for digital trade restrictions and economic security measures to enhance supply chain resilience and cooperation on export controls. The agreement's positive impact on the finance industry is also evident, with the deal lowering tariffs on aircraft and parts, which could stimulate growth for these businesses.
