US government drops hints: Hope for trade agreements drives Wall Street
Canada still wants to make concessions: several tariff deals could be concluded soon.
(Photo: AP)
The US government has hinted that several contracts could still be concluded before the deadline for tariff agreements expires on July 9. This is creating a buying mood and confidence on the US stock markets. The Fed remains tight-lipped on interest rates.
Slight optimism regarding developments in the trade dispute led to rising prices on Wall Street at the start of the week. The S&P 500 and Nasdaq Composite reached new record highs. US Secretary of Commerce Howard Lutnick and Treasury Secretary Scott Bessent fueled hopes for the imminent conclusion of numerous trade agreements between the US and its trading partners. It was also encouraging that tariff negotiations between the US and Canada will resume after US President Donald Trump declared them broken off on Friday. Canada wants to make concessions on the digital tax. Washington is also apparently granting its most important trading partners more time for negotiations, as Bessent explained. The current deadline for the reciprocal tariffs to take effect is July 9.
The Dow Jones Industrial Average improved by 0.6 percent to 44,095 points. The S&P 500 and the Nasdaq Composite each gained 0.5 percent. According to preliminary data, the NYSE recorded 1,586 gainers (Friday: 1,532) and 1,207 losses (1,241). 39 stocks closed unchanged (68).
In the bond market, the yield on ten-year US Treasury bonds declined slightly, losing 3 basis points to 4.23 percent. Atlanta Fed President Raphael Bostic's baseline expectation is that it will be appropriate for the Fed to cut interest rates once this year. The heightened uncertainty means it is likely too early for the central bank to act. The market is more likely to expect two interest rate cuts in 2025. Purchasing managers' sentiment in the Chicago area unexpectedly deteriorated in June. Recently, weaker US data had fueled interest rate cut speculation.
Dollar continues to slideThe dollar index fell another 0.6 percent to a new three-year low. The greenback is on the verge of its weakest first half of the year in roughly four decades. "The erosion of monetary policy independence means the dollar should slowly but surely drift further lower over the medium term," Pepperstone said, referring to the succession debate for Federal Reserve Chairman Jerome Powell sparked by Trump.
The price of gold recovered some of its losses from Friday. A declining need for safety among investors had weighed on the precious metal. The price per troy ounce improved by 1.0 percent to $3,308. Gold has gained more than 25 percent in the first six months of the year – its largest gain since 2007.
Oil prices continued to decline with the ongoing ceasefire in the Middle East. New momentum was lacking, it was said. Brent and WTI prices fell by as much as 0.8 percent. Attention now turns to the OPEC+ meeting this weekend, where the group is expected to agree to increase production in August by at least another 411,000 barrels per day.
Wells Fargo rose 0.7 percent, JP Morgan rose 1.0 percent, and Goldman Sachs rose 2.4 percent. The largest U.S. banks have the necessary conditions to survive a severe economic downturn, according to the results of the U.S. Federal Reserve's annual stress test.
Renewable energy stocks were under pressure because the latest version of the Senate's tax and spending bill will phase out tax credits for large-scale wind and solar projects by the end of 2027—earlier than previous drafts. The latest version also includes a surprise new tax on projects using materials from China. Enphase fell 3.0 percent, and NextEra Energy and AES each fell 2.1 percent. The prospect of expiring subsidies for electric vehicles pushed Tesla down another 1.8 percent.
Oracle shares rose 4.0 percent. According to CEO Safra Catz, the company has had a strong start to the new fiscal year. According to a filing with the U.S. Securities and Exchange Commission (SEC), the company has signed several cloud contracts. One of them is expected to contribute over $30 billion to annual revenue starting in fiscal year 2027/28.
US home improvement chain Home Depot (-0.6%), through its subsidiary SRS Distribution, has reached an agreement to acquire GMS (+11.7%). The total transaction value is $4.3 billion, or $5.5 billion including debt. Juniper Networks gained 8.4 percent. The Department of Justice has settled a lawsuit challenging Hewlett Packard Enterprise's $14 billion acquisition of the wireless network solutions provider. As part of the agreement, HPE (+11.1%) must divest its global Instant On campus and branch business.
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Source: ntv.de, mau/DJ
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