Wall Street Hits Record Highs Amid US-Canada Trade Optimism

 

Wall Street futures surged to record highs as investors welcomed progress in trade negotiations between the United States and Canada. Canada’s decision to scrap its digital services tax on Sundayunder pressure from President Trumpboosted hopes for a broader trade deal. The original July 9 deadline for Trump’s "reciprocal" tariffs has now been extended to July 21, with officials suggesting a full agreement may be reached by Labor Day on September 1. Markets were also watching closely as Trump’s large tax and spending bill moved slowly through the Senate. Although the president wanted it passed by July 4, that deadline may be missed. The Congressional Budget Office estimates the bill could add $3.3 trillion to the US national debt over ten years, potentially affecting global demand for US Treasury bonds. Despite these uncertainties, investors showed strong confidence in the US tech sector. Futures for the tech-heavy Nasdaq rose 0.5%, while S&P 500 futures added 0.4%, both reaching new highs. Big names like Nvidia, Alphabet, and Amazon led the gains. According to Rothschild’s Kevin Gardiner, markets have remained surprisingly resilient despite ongoing uncertainty, although valuations are now as stretched as they were in 2000. In Europe, stocks trimmed earlier losses and were set to post solid quarterly gains. Defense stocks led the way, buoyed by a NATO pledge to ramp up defense spending by hundreds of billions of dollars.

While Wall Street celebrated, global markets showed mixed reactions. Investors monitored upcoming eurozone inflation reports and Thursday’s US jobs data. With Friday a holiday, this report could influence the Federal Reserve’s next move on interest rates. Analysts expect job growth to slow, with unemployment rising to 4.3%, possibly pushing the Fed toward a rate cut as early as July. US bond yields fell, with the ten-year yield dropping three basis points to 4.25%, continuing last week's decline. The prospect of Fed easing helped bonds stay strong despite concerns about America’s growing budget deficit. Meanwhile, the US dollar struggled. Investors worried that tariff disputes and unpredictable White House policies could hurt long-term economic growth. The euro held steady after gaining over 1% last week, touching levels not seen since 2021. The British pound was slightly lower but remained near recent highs at $1.37. The dollar fell 0.3% to 144.19 yen and dropped 0.2% against a basket of major currencies, nearing a three-year low. According to Capital Economics, the dollar’s drop so far this year is the steepest since 1973’s move to floating rates. In commodity markets, the improving risk outlook pressured gold, which rose just 0.4% to $3,285 an ounce still below its April record of $3,500. Oil prices struggled amid expectations that OPEC+ might boost production. Brent crude slipped 17 cents to $67.60 a barrel, while US crude dropped 26 cents to $65.26. These moves reflect cautious investor sentiment as markets weigh growth prospects, inflation trends, and potential shifts in global policy.

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