Over the weekend the US and EU agreed to a new trade deal which includes a 15% tariff on EU goods entering the US. The EU also agreed to buy $750B of US energy and make investments of $600B in the US. This news arrives ahead of Thursday’s deadline to reach new trade deals with reciprocal tariffs set to launch Friday. In recent weeks, the US has reached deals with Japan, Indonesia and Vietnam which include some tariffs. Apparently over 200 letters were set to go out over the weekend. Negotiations continue with Canada, China and other countries.
So far, markets have greeted this news with a shrug, suggesting that as with recent earnings, a trade deal had already been priced in by the market gains since early April. US index futures are flat to up 0.3% with the NASDAQ leading and the Dow trailing. Over in Europe, the DAX is down 0.1%, the CAC is up 0.2%, and the FTSE is down 0.1%. The Euro is getting hammered on the news down 0.8%. The US Dollar is climbing, sending the Loonie and Pound down 0.2%. Gold is steady this morning as is Copper. Crude Oil is up 1.8% on the news.
It’s peak week for earnings season. Headliners stateside include Visa and UnitedHealth on Tuesday; Meta Platforms and Microsoft on Wednesday; Apple and Amazon.com on Thursday; and Chevron plus ExxonMobil on Friday. Canadian headliners include Celestica later today; Canadian Pacific, Kinross Gold* and Agnico-Eagle* on Wednesday; Bombardier*, TC Energy and Fairfax Financial on Thursday; and Telus, Enbridge, and Imperial Oil on Friday.
The back half of this week is really busy for economic news. The Bank of Canada and the Federal Reserve Board are both announcing interest rate decisions on Wednesday. Both North American central banks are expected to remain on hold at 2.75% and 4.50% respectively. US ADP payrolls are also due on Wednesday, followed by nonfarm payrolls and Manufacturing PMI reports on Friday.
*Shares of Kinross Gold, Fairfax Financial, Bombardier, and Agnico-Eagle are held in portfolios managed by SIA Wealth Management.