European stock markets opened higher on Friday as signals of progress in US-China trade talks boosted investor confidence. At the same time, the US dollar fell to its lowest level in three years.
This week, global markets reached all-time highs on the ceasefire agreement between Iran and Israel and increased expectations of interest rate cuts in the US.
On Thursday, the agreement between the US and China to accelerate shipments of rare earth elements to the US was positively received by the markets.
Investors interpreted this development as a step toward resolving the tariff war between the world’s two largest economies.European and Asian Stocks Start Strong
Following Asian stock markets reaching a three-year high, buying also strengthened in Europe. As of 0852 GMT, the STOXX 600 index, covering Europe, rose 0.9%, heading for a weekly gain of 1.1%. London FTSE 100: Up 0.5% Germany DAX: Up 0.8% MSCI World Equity Index: Up 0.2% daily, bringing its weekly gain to 2.9% It is progressing.
In the US, the S&P 500 index has risen 4.4% since the beginning of the year. This increase partially offset the sharp drop that followed President Donald Trump’s announcement of “Freedom Day” tariffs on April 2.
Aviva Investors senior economist Vasileios Gkionakis made the following assessment:
“There is currently some optimism regarding trade agreements. Following the tariff news in April and tensions in the Middle East, markets have started to recover again.”
However, Gkionakis added, “We are still at the beginning,” noting that markets are tired of the trade war narrative and that this process is now behind us. He also emphasized that he wanted it to stay.
Trump set July 9 as the deadline for the EU and other countries to agree on reducing tariffs.
Dollar at 3-Year Low
The US dollar continued its decline this week. The dollar index fell 0.2% to 97.183, reaching its lowest level in three years.
- Euro/dollar exchange rate rose to 1.1713.
This rise was influenced by consumer prices in France exceeding expectations.
Investors are closely watching US monetary policy due to expectations that Trump may appoint a more dovish Fed Chairman.
Therefore, a interest rate cut by the end of the year is anticipated. The expectation has risen to 64 basis points (bps); This figure was at 46 bps last week.
With this performance, the dollar is experiencing its worst start to the year since the transition to a floating exchange rate system in the early 1970s. According to Gkionakis, this decline cannot be explained solely by Fed policies:
“This also reflects a greater concern about the weakening of the US’s economically privileged position.”
Investors also believe that the Fed’s The Turkish Treasury will closely monitor the Core PCE price data, one of the most important inflation indicators, in today’s session.
European Bonds and Commodities
Movement in European bond markets remained limited.
- Germany 10-year government bond Bond interest rates remained stable at 2.567%.
Oil prices are experiencing their sharpest weekly drop since March 2023.
- Brent crude: $68.35 per barrel
- US WTI (West Texas Intermediate): $65.24 per barrel
Prices briefly rose above $80 due to the Israel-Iran conflict, but retreated sharply with the ceasefire.
