Wall Street futures reached record highs on Monday as optimism over U.S. trade negotiations with key partners helped boost sentiment in markets.
World stocks hovered just below recent record highs and European shares trimmed early falls.
Canada said on Sunday it had rescinded its digital services tax in a bid to advance trade negotiations, bowing to pressure from U.S. President Donald Trump.
The talks are aimed at getting a deal done by July 21, extending Trump’s original July 9 deadline for his "reciprocal" tariffs. Officials have suggested most deals could now be done by the September 1 Labor Day holiday.
Investors were also keeping a wary eye on the progress of a huge U.S. tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Trump’s preferred July 4 deadline.
The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation’s debt over a decade, testing foreign appetite for U.S. Treasuries.
There was no doubting the demand for the U.S. tech sector and megacap growth stocks including Nvidia (NASDAQ:NVDA), Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN). Nasdaq futures rose another 0.5%, while S&P 500 futures added 0.4%, having touched record highs.
"We have been surprised at just how resilient markets have been in the face of a tremendous amount of uncertainty," Kevin Gardiner, global investment strategist at Rothschild & Co, said.
"Markets continue to look resilient, though we note that we haven’t seen equity valuations look more expensive since 2000," he added.
European stocks trimmed early falls, but were set to log gains for the quarter, while investors monitored signs of any delay on the July 9 tariff deadline, looming large.
They were down just 0.1%, though European defence stocks led sectoral gains with a rise of just over 1%. The sector has remained buoyant since last week’s NATO pledge to spend 3.5% of GDP on core defence and 1.5% on broader defence-related measures, a jump worth hundreds of billions of dollars a year.
Attention also turned to a European Central Bank conference in Sintra, Portugal, as well as key euro zone inflation reports due this week and the closely watched U.S. non-farm payrolls report on Thursday.
Asian markets closed on a mixed note with Chinese blue chips up 0.4%, after surveys showed manufacturing improved slightly in June while service activity picked up. Hong Kong stocks closed down 0.9% while Japan’s Nikkei rose 0.8%.
DOLLAR DOLDRUMS
A holiday on Friday means U.S. jobs data will come a day early, with analysts forecasting a rise of 110,000 in June and a rising jobless rate reaching almost a year high at 4.3%.
The resilience of the labour market is a major reason the majority of Federal Reserve members say they can afford to wait on cutting rates until they can gauge the true impact of tariffs on inflation, so a weak report would stoke speculation of a rate cut in July rather than September.
The prospect of policy easing has helped Treasuries weather worries on the ballooning U.S. budget deficit.
Ten-year Treasury yields fell 3 basis points to 4.25%, having fallen 7 bps last week.
The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth.
The euro steadied, having climbed more than 1% last week to its highest levels since 2021 against a broadly weak dollar.
Sterling tipped 0.1% lower to just below a similar peak hit last week, trading near $1.37.
The dollar was down 0.3% to 144.19 yen and the dollar index eased 0.2% to 97.237, a whisker above three-year lows.
The dollar has fallen by more at this stage in the year than in any previous year since the U.S. moved to a free-floating exchange rate in 1973.
"At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move," James Reilly, a senior markets economist at Capital Economics, said.
In commodity markets, the general revival in risk sentiment weighed on gold, which rose 0.4% to $3,285 an ounce but held below April’s record top of $3,500. [GOL/]
Oil prices continued to struggle on concerns about plans for increased output from OPEC+, which contributed to a 12% slide last week. [O/R]
Brent declined 17 cents to $67.60 a barrel, while U.S. crude fell 26 cents to $65.26 per barrel.