US–EU Trade Breakthrough Sparks Another Global Equity Surge

Global financial market rallied over the past week, driven by a landmark of US-Japan trade agreement, and the optimism further carried on on early this week as US-EU reached a trade deal on Sunday. Risk-on sentiment extend dominated across asset classes, with equities surging while traditional safe havens like gold and U.S. Treasuries came under pressure.

U.S.–EU Trade Breakthrough Bolster Investors’ Confidence

Markets were further energized by a long-awaited trade deal between the United States and the European Union. The agreement includes a reduction in tariffs to a mutual 15%, $600 billion in EU investment into the U.S., and a multi-year commitment to U.S. energy and defense products worth $750 billion. The deal avoided the anticipated 30% tariff hike and marked a pivotal step in stabilizing global trade tensions.

U.S. Commerce Secretary Howard Lutnick confirmed the deal was finalized just days ahead of the August 1 deadline, triggering a sharp rally across equity markets and lifting the euro as trade confidence returned.

Equities Hit New Highs

The S&P 500 and Nasdaq surged to fresh record highs, marking the fifth consecutive day of record high gains for the S&P, meanwhile the Nasdaq’s futures also marked another record high on Monday’s opening.

European equities also followed suit, buoyed by optimism over the U.S.–EU accord and expectations that trade diplomacy may now extend to China and other major partners. The UK FTSE 100 also reached a record level at 9150, reflecting broader global optimism.

Safe-Haven Assets Retreat

As capital flowed into risk assets, traditional havens saw outflows. U.S. Treasury yields rose, with the 10-year yield climbing to 4.40%, while the Euro 10-year Government Bond yield also rose sharply to 2.75%. Meanwhile, gold prices retreated from five-week highs above $3,400/oz, reflecting a shift in sentiment.

“The market clearly priced out some of the geopolitical risk premiums,” said Shawn Lee, Senior Market Analyst at Ultima Market. “If the trade cycle continues to improve, we may see more capital rotation away from safe-haven assets.”

XAUUSD, 4-H Chart Analysis | Source: Ultima Market

Gold pulled back from the recent high near $3440, keeping the metal in a short-term consolidation range for now. While capital appears to be rotating away from safe-haven assets amid improved risk sentiment, gold may still retain its broader structural support in the near term.

This pause suggests that investors are reassessing positioning, especially as upcoming macro data and geopolitical developments could revive demand for hedging assets.

What’s Next: Focus Turns to Fed & China

With the EU trade deal now secured, investors will shift their attention to the upcoming Federal Reserve meeting on July 30, where policymakers are expected to maintain their wait-and-see approach amid mixed inflation data. Meanwhile, U.S.–China trade talks will resume in Stockholm, with hopes of setting the stage for a possible Trump-Xi summit later this year.

Markets are embracing a cautiously bullish tone, buoyed by easing trade tensions and strong earnings. However, the coming weeks will be pivotal—any missteps on trade implementation, disappointing economic data, or unexpected Fed signals could swiftly reverse sentiment.

Disclaimer

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