Tariffs Halved, Dollar Surges, Markets Brace for Fed, BoJ in Packed Week- 29.07.2025

This global market update highlights optimism after the U.S. and EU agreed to halve tariffs to 15%, boosting equity sentiment and lifting the U.S. dollar. Investors now turn their attention to the Federal Reserve and Bank of Japan meetings, as well as key U.S.–China trade talks and major tech earnings expected to drive volatility.

Global Snapshot

• The U.S. and the European Union reached a trade deal on Sunday, July 27, agreeing to reduce tariffs on most EU imports from 30% to 15%. In return, the EU pledged $600 billion in U.S. investments.
• Global markets initially rallied. European equity futures opened higher, while the S&P 500 and Nasdaq both hit record highs.
• Attention shifted quickly to renewed U.S.–China trade talks in Stockholm, aiming to extend the tariff truce by 90 days before the August 12 deadline.
• The U.S. dollar surged, the euro dropped over 1%—its largest daily decline in two months—and the British pound slipped to a two-month low around $1.3338.

Global Market Update: Federal Reserve Meeting and U.S. Outlook

Markets & Macro

• Treasury yields edged higher despite relief from the EU deal. Strong issuance volumes and lingering trade uncertainties kept yields elevated.
• Focus now turns to major economic data including Q2 GDP, labor market reports, and earnings from tech giants like Apple, Microsoft, Amazon, and Meta.
• The Federal Reserve begins its two-day meeting today. No policy change is expected, but forward guidance could impact expectations for a potential December rate cut.

Global Market Update: Eurozone Response and ECB Expectations

Last 24 Hours

• European equities closed slightly lower as optimism over the U.S.–EU deal faded and political backlash grew in France and Germany.
• The euro fell sharply (–1.3%) to around $1.158 amid concerns that the trade deal disproportionately benefits the U.S. and could reduce eurozone growth by 0.4–0.7%.

Looking Ahead

• The ECB is expected to signal a slowdown in quantitative tightening this week. However, trade-driven inflation risks could limit the scope for further rate cuts.

Global Market Update: UK Inflation Trends and BoE Policy Outlook

Market Moves

• The FTSE 100 rose ~0.4%, supported by gains in large caps like AstraZeneca. The FTSE 250 fell ~0.3% amid mixed earnings from firms like Greggs and Inchcape.

Macro Data

• July CPI continued to climb due to elevated food and services inflation, reinforcing expectations for a Bank of England rate cut on August 7.

Global Market Update: China Trade Talks and Market Sentiment

• Stocks closed higher as trade talks resumed in Stockholm.
• However, weekly trade volumes posted their weakest performance since May, suggesting a cooling in global trade activity after recent highs.

Japan PMI and Nikkei Performance

• The Nikkei fell ~0.8% amid fading optimism on trade progress.
• Japan’s manufacturing PMI returned to expansion territory, signaling early signs of an industrial rebound.

 EMEA & Emerging Markets

• Trade tensions and tariff spillovers weighed on sentiment. Emerging market equities came under pressure, bond yields rose, and currencies experienced increased volatility.
• Risk appetite remained subdued due to global demand concerns and geopolitical overhangs.

Commodities and Crypto Highlights

Commodities

• Oil prices rose slightly: Brent hovered around $70.20/barrel and WTI at $66.90, supported by U.S. sanctions talk and tightening supply concerns.
• Gold remained flat around $3,316/oz. Base metals like copper and iron ore slipped due to global growth fears.

Crypto Highlights

• Ethereum rallied to its highest level since December 2024, fueled by improving risk sentiment and waning demand for safe-haven assets like gold.

Top Crypto News (Past 48 Hours)

• Coinbase expands its legal defense against SEC over staking services.
• VanEck submits a revised Ethereum Spot ETF filing with updated compliance measures.
• Binance withdraws its license application in Hong Kong.
• BlackRock invests in LayerZero, a startup focused on tokenized asset infrastructure.
• Solana partners with Circle to develop institutional-grade wallet solutions.
• Tether adds $1 billion worth of Bitcoin to its reserve holdings.

Summary & Watchlist

• Trade optimism offered a short-lived boost; markets now refocus on inflation, central bank signaling, and global growth.
• Key upcoming events: Fed and BoJ meetings, U.S.–China trade talks, Q2 U.S. GDP, major tech earnings, and the August 12 tariff deadline.