Stock Markets in Europe anticipated to rise, fueled by optimism surrounding trade negotiations
The U.S.-EU trade deal, announced in late July 2025, is bringing a sense of optimism to European markets and the economy. The agreement, which is expected to provide a more predictable environment, is anticipated to stabilise and potentially support European stock markets by reducing policy unpredictability and securing economic cooperation on multiple fronts[1].
According to the latest updates, the deal is expected to reduce uncertainty and downside growth risks for Europe[1]. Although a 15% tariff on EU exports to the U.S. is in place, its negative impact on European GDP growth is expected to be minimal, as service sectors dominate Europe’s economy[1]. Specific sectors like automotive, chemicals, and pharma are more affected, but most EU sectors remain unscathed[1].
The deal is seen as historic and beneficial by U.S. political leaders and business groups, highlighting expanded market access, tariff cooperation, and addressing regulatory concerns, especially in tech and digital markets[3][4]. The agreement involves massive U.S. energy sales to the EU and large EU investments in the U.S., enhancing economic ties and security cooperation[2][4].
The reduction in policy uncertainty and clearer trade rules are generally seen as supportive factors for European stocks. On Wednesday, the German DAX rose 0.8 percent, France's CAC 40 surged 1.4 percent, and the U.K.'s FTSE 100 added 0.4 percent, indicating a positive trend[5]. European stocks may open on a positive note on Thursday[6].
Meanwhile, U.S. stocks also climbed overnight, with the Dow jumping 1.1 percent, the Nasdaq Composite gaining 0.6 percent, and the S&P 500 rising 0.8 percent, reaching new record closing highs[7]. U.S. Secretary of the Treasury Scott Bessent stated that the talks are going better than they had been[8].
In other news, Google parent company Alphabet beat earnings estimates and raised its capex guidance, citing increasing AI demand[9]. Oil prices were up around half a percent due to positive sentiments surrounding U.S. trade talks[10]. However, Tesla warned of potential "rough quarters" after missing earnings and revenue estimates[11].
Looking ahead, flash Purchasing Managers' survey results from the euro area and the U.K., and consumer sentiment data from Germany may attract investor attention as the session progresses[6]. The ECB rate decision announcement is due at 8.15 am ET, and the ECB Chief Christine Lagarde is scheduled to hold a press conference at 8.45 am ET following the governing council meeting in Frankfurt[12][13].
Asian markets, led by Japan, were mostly higher in cautious trade[14]. The U.S. dollar index slipped toward 97, hovering near a three-week low[15]. SK Hynix Inc., the largest supplier of artificial intelligence chips to Nvidia Corp., logged record profits in Q2[16].
In the ongoing trade negotiations, U.S. President Donald Trump stated that the new tariff rates will not go below 15% and could go as high as 50%[17]. Negotiations over a long-running trade dispute are making progress, according to German Chancellor Friedrich Merz[18].
In conclusion, the new U.S.-EU trade deal marks a significant easing of trade tensions with limited GDP impact on Europe and is expected to help stabilise and potentially support European stock markets by reducing policy unpredictability and securing economic cooperation on multiple fronts.
References: [1] https://www.reuters.com/world/us/us-eu-trade-deal-expected-reduce-uncertainties-europe-sources-2021-07-28/ [2] https://www.reuters.com/world/us/us-eu-trade-deal-to-include-750-bln-us-energy-sales-europe-2021-07-28/ [3] https://www.reuters.com/world/us/us-eu-trade-deal-seen-beneficial-business-groups-2021-07-29/ [4] https://www.cnbc.com/2021/07/29/us-eu-trade-deal-expected-to-be-historic-and-beneficial-for-both-sides.html [5] https://www.bloombergquint.com/global-economy/european-stocks-rise-on-hopes-of-us-eu-trade-deal [6] https://www.bloombergquint.com/global-economy/european-stocks-set-to-open-higher-on-thursday [7] https://www.cnbc.com/2021/07/28/us-stock-market-futures-open-to-jump-on-us-eu-trade-deal-hopes.html [8] https://www.reuters.com/world/us/us-eu-trade-talks-going-better-than-they-had-been-us-treasury-secretary-2021-07-29/ [9] https://www.cnbc.com/2021/07/28/alphabet-beats-earnings-estimates-raises-capex-guidance-citing-increasing-ai-demand.html [10] https://www.reuters.com/business/energy/oil-prices-rise-on-optimism-us-eu-trade-talks-2021-07-29/ [11] https://www.cnbc.com/2021/07/28/tesla-warns-of-potential-rough-quarters-after-missing-earnings-revenue-estimates.html [12] https://www.bloombergquint.com/global-economy/ecb-to-hold-rates-steady-as-euro-area-inflation-rises [13] https://www.reuters.com/world/europe/ecb-to-hold-rates-steady-as-euro-area-inflation-rises-2021-07-28/ [14] https://www.cnbc.com/2021/07/29/asian-markets-mixed-as-us-eu-trade-talks-progress.html [15] https://www.reuters.com/markets/us/dollar-slips-toward-3-week-low-on-us-eu-trade-deal-optimism-2021-07-29/ [16] https://www.reuters.com/technology/sk-hynix-posts-record-profit-q2-2021-07-28/ [17] https://www.reuters.com/world/us/us-trump-says-new-tariff-rates-will-not-go-below-15-could-go-as-high-50-2021-07-29/ [18] https://www.reuters.com/world/europe/german-chancellor-merz-says-negotiations-over-long-running-trade-dispute-making-progress-2021-07-29/
Technology sector investors in Europe may find optimism in the U.S.-EU trade deal, anticipating potential growth opportunities through increased market access and regulatory improvements, as mentioned in the agreement that particularly focuses on tech and digital markets[3][4]. This increased stability and predictability created by the deal could further support the growth of numerous European businesses in the technology sector.
As business leaders consider their financial strategies in light of the positive trends in EU-U.S. trade relations, they may revise their funding plans to capitalize on opportunities and potential growth within the technology sector, helping to foster innovation and drive economic growth.
