Stocks Gain, Havens Retreat on Trade Deal Optimism: Markets Wrap
Asian equities were set to climb Thursday after a US trade deal with Japan and signs of another with the European Union injected fresh vigor into stocks. Haven assets retreated.
Equity index futures for Japan and Australia climbed, with contracts for Tokyo benchmarks up more than 1% early Thursday in Asia. The ended Wednesday 0.8% higher to set a third consecutive daily closing record, while shares climbed in after-hours trading after reporting revenue.
The gains followed news reports the US was closing in on an agreement with the EU that would set a for most products after an accord with Japan.
Late Wednesday in the US, President Donald Trump suggested that he would not go as he sets so-called “reciprocal” tariff rates ahead of an Aug. 1 deadline. “We’ll have a straight, simple tariff of anywhere between 15% and 50%,” Trump said.
Progress on trade deals offered validation for investors betting Washington would adopt a pragmatic approach to trade policy before tariffs would meaningfully impact corporate profits.
“Momentum is building with trade deals a week ahead of the Aug. 1 deadline,” said Mark Hackett at Nationwide. “The adage ‘don’t short a dull tape’ seems apropos, given the steady move higher for equities with low volatility.”
Treasuries halted a five-day rally, the fell and gold retreated as demand for haven assets waned. The moves left the US 10-year yield four basis points higher at around 4.38% Wednesday. Bonds remained lower even after a strong $13 billion sale of 20-year securities that tested the appetite for long-maturity debt.
In Japan, the yen was steady after a 40-year government bond auction saw its since 2011. Bank of Japan watchers now authorities to raise the benchmark interest rate either in October or January. Separately, Japanese Prime Minister Shigeru Ishiba denied media reports that he is set to announce his resignation.
Elsewhere in Asia, Thailand releases June customs trade balance and Reserve Bank of Australia Governor Michele Bullock speaks. Later Thursday, the European Central Bank hands down a rate decision.
Trade Deals
Trump’s top trade negotiators hailed their approach toward addressing grievances with Japan as a possible incentive for the EU.
Commerce Secretary Howard Lutnick said Japan’s pledge of billions in US investments “could be” a model for the EU. Treasury Secretary Scott Bessent stopped short of saying the bloc can win the same sort of deal.
“With the Aug. 1 deadline looming, investors have been encouraged by the recent trade-deal announcements,” said Ian Lyngen and Vail Hartman at BMO Capital Markets. “The progress on the trade war will provide clarity and help the market move forward to incorporate the new global trade environment.”
Meanwhile, bond traders are boosting bets that the Federal Reserve will slash rates more aggressively next year, pricing about 75 basis points of cuts. That compares to 25 basis points projected in April.
Trump said the Fed board “should act” on lowering rates, “but they don’t have the courage to do so.” Meantime, Treasury Secretary Bessent said that there’s “no rush” to identify a successor to Fed Chair Jerome Powell .
Some of the main moves in markets:
Stocks
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Cryptocurrencies
Commodities
This story was produced with the assistance of Bloomberg Automation.
