Dollar rises on EU-US trade deal but European stocks turn sour ~ EconomyLens.com

New York (AFP) – The dollar jumped Monday on the back of a US-EU trade deal, but the main European stock markets fell, reflecting unease at terms viewed as lopsided. Frankfurt closed sharply down, as shares in German carmakers plunged. Paris dipped, while London — outside the EU — also receded. Wall Street, meanwhile, finished mixed after a choppy session. Both the Nasdaq and S&P 500 edged to fresh records, while the Dow slipped.

The US market’s “muted” reaction made sense given the heavy number of economic news releases this week that could move the market, said Angelo Kourkafas, senior global strategist at Edward Jones. “Because markets have run a lot in a short amount of time, we may get some good enough news, but they may not elicit the same reaction as some of the good news over the last couple of weeks when valuations were lower than they are today,” Kourkafas said.

While Brussels defended the deal announced over the weekend as “better than a trade war with the United States,” several EU countries expressed unhappiness. European capitals saw the agreement’s 15 percent tariffs on most EU exports to the United States — but none on US exports to the EU — as skewed. As part of the deal, President Donald Trump said the bloc had agreed to purchase “$750 billion worth of energy” from the United States, and make $600 billion in additional investments.

“While the deal has avoided a much worse outcome for now, it remains to be seen whether it will last,” cautioned Jack Allen-Reynolds, a eurozone economist at Capital Economics. With average US tariffs on EU imports now around 17 percent, “we think this will reduce EU GDP by about 0.2 percent,” he said. He predicted that “uncertainty is likely to remain high” because Trump “could still change his mind even after the deal has been finalized and signed.”

Oil prices rose strongly. That was partly on relief from the deal — but also because Trump shortened a deadline for Russia to end its war in Ukraine to August 7 or 9, after which he vowed to sanction countries buying its crude. Monday also saw the start of a fresh round of trade negotiations between China and the United States ahead of August 12, when a 90-day truce between the economic superpowers is scheduled to end.

Shares in European companies tracked the unease at the EU-US deal. Volkswagen, BMW and Porsche all shed more than three percent as the implications of high tariffs on their exports to the United States sank in. In Paris, shares in Pernod Ricard, which exports wine and spirits to the United States, fell more than three percent.

Traders were prepared for a busy week in the United States, with a slew of corporate earnings reports — including from Apple, Microsoft, Meta and Amazon — and macro data readings giving indications about US jobs and growth. The Federal Reserve is expected to keep interest rates unchanged at its meeting this week, with investors focused on its outlook for the rest of the year given Trump’s tariffs and recent trade deals.

– Key figures at around 2030 GMT –

New York – Dow: DOWN 0.1 percent at 44,837.56 (close)

New York – S&P 500: UP less than 0.1 percent at 6,389.77 (close)

New York – Nasdaq Composite: UP 0.3 percent at 21,178.58 (close)

London – FTSE 100: DOWN 0.4 percent at 9,081.44 (close)

Paris – CAC 40: DOWN 0.4 percent at 7,800.88 (close)

Frankfurt – DAX: DOWN 1.0 percent at 23,970.36 (close)

Tokyo – Nikkei 225: DOWN 1.1 percent at 40,998.27 (close)

Hong Kong – Hang Seng Index: UP 0.7 percent at 25,562.13 (close)

Shanghai – Composite: UP 0.1 percent at 3,597.94 (close)

Euro/dollar: DOWN at $1.1597 from $1.1742 on Friday

Pound/dollar: DOWN at $1.3356 from $1.3438