With news of a successful trade deal between the United States and the European Union breaking this morning, the week seems to be off to a harmonious start.
Albeit priced-in somewhat courtesy of commentary from White House official Scott Bessent last week, considering how significant the EU is as a US trading partner, the news can be viewed as overwhelmingly positive for near-term US equities support.
While the EU will be subject to a 15% tariff rate going forward, this is a significant improvement on the 30% tariff that would have been imposed if an agreement was not made before the latest deadline of August 1st, which is now only 96 short hours away.
If nothing else, the latest development on US trade relations has helped quell a general feeling of market uncertainty that would otherwise hurt speculative investments such as US equities, Dow included.
It’s worth noting, however, that the latest agreement perhaps suits some European Union members more than others, and questions remain about how recent developments will affect European solidarity.
While a narrative exists that the European Union membership removes sovereignty amongst its members, it would be fair to say that recent developments may vindicate this school of thought somewhat more.
Regarding Dow pricing, news that further trade deals are to be made ahead of deadline will offer immediate support. This goes double for China, arguably the most critical nation the US has yet reached an agreement with.