The European markets rose on renewed optimism following the EU and U.S. agreement to impose a 15 per cent tariff on most of the EU’s exports, as opposed to the feared 30 to 50 per cent tariff. That jump sent major indices higher on the spot: the Stoxx 600 index was up about 0.5%, the CAC 40 in France added 0.3%, and the FTSE 100 in London was up 0.5% after investor confidence soared. Auto and semiconductor shares posted the most gains as traders rejoiced at the end of the uncertainty while currency movements also sparked renewed interest in forex trading amid the shifting trade dynamics.
The euro lost 0.3 per cent to 1.165 but gained later to 1.1753 as the U.S. dollar stabilised, allowing markets to readjust risk as there was increasing visibility on trade direction. In addition to price relief, the deal will entail major investment proposals by the EU, as much as $600 billion in U.S. energy and infrastructure, which will ease the sting of tariffs. Analysts warn that the deal remains a net economic loss, forecasting slower growth in the eurozone, but argue that it will prevent something much worse. In Asia, equities mostly followed the trend, as the Hang Seng and Kospi increased slightly.
However, Tokyo Nikkei declined as uncertainty prevailed in the trade debate. As criticisms in Europe argued the deal was one sided, praising leaders such as Germany chained exporters, who have avoided the risk of a possible trade war and looking ahead more at the EU diversification policies, the direct impact was noticeable, less fear of the tariff shock, a higher resource to the world equity sentiment and a recovery of trading frameworks based on forex, equities and sector-based appreciation. As negotiations between the U.S. and China continue to progress toward agreements before major deadlines, with the market also preparing to be affected by decisions made by central banks later this week, the successful launch of this trade deal sets the tone for more relaxed situations, at least in the short term.
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