U.S. stock futures edged higher following the announcement of a key trade agreement between the United States and the European Union, a move that averts the risk of a potentially harmful trade war. Attention now shifts to the U.S.-China negotiations in Sweden, where reports suggest the world’s two largest economies might extend their current trade truce. Adding to the market’s focus is the looming August 1 deadline for increased “reciprocal” U.S. tariffs on several countries, alongside a busy week filled with major corporate earnings, vital economic indicators, and a highly anticipated Federal Reserve interest rate announcement.
Futures Show Gains
Investors appeared optimistic Monday as futures for major U.S. stock indexes rose, reflecting confidence after significant trade developments and in anticipation of upcoming earnings reports and economic data.
By 03:25 ET, Dow futures had gained 146 points (0.3%), S&P 500 futures added 25 points (0.4%), and Nasdaq 100 futures climbed 127 points (0.5%).
The S&P 500 and Nasdaq, both technology-heavy indexes, ended Friday’s session at record highs, extending Wall Street’s recent positive momentum. Strong quarterly earnings and greater clarity on U.S. tariff policies have helped bolster equities in recent weeks.
European markets also closed at a four-month peak, providing a positive backdrop for U.S. trading.
The U.S.-EU Trade Agreement
President Donald Trump announced on Sunday in Scotland that the U.S. and EU have reached a landmark trade deal including a 15% tariff on European goods entering America.
The agreement covers major EU purchases of U.S. energy and military equipment, as well as substantial investment commitments to the U.S. economy.
“They are agreeing to open up their countries to trade at zero tariff,” Trump told reporters. He added that the EU would “purchase a vast amount of military equipment” from the U.S.
European Commission President Ursula von der Leyen confirmed the deal includes a 15% tariff applied broadly, which she said would “rebalance” trade between the two major partners. Last year, the U.S. imported $3.3 trillion in goods, with more than $600 billion coming from the 27-member EU.
This agreement should ease investor concerns, especially with the August 1 deadline approaching for Trump’s planned “reciprocal” tariffs. The EU was facing increased duties of up to 30% and had pushed for a zero-for-zero tariff agreement.
U.S.-China Talks Expected to Extend Trade Truce
The U.S. and China are anticipated to extend their tariff truce by another 90 days in trade talks starting Monday in Stockholm, according to the South China Morning Post, citing sources close to the negotiations.
The temporary suspension of most tariffs, agreed in May, is due to expire on August 12.
Sources told SCMP the talks will focus on unresolved issues, including U.S. concerns about China’s industrial overcapacity, rather than immediate breakthroughs.
During this extension, neither side plans to introduce new tariffs or escalate tensions. Beijing is expected to seek clarification on the 20% tariffs imposed in March on Chinese goods over fentanyl concerns.
Trump said Sunday that the U.S. is “very close” to a deal with China but gave no further details. Meanwhile, China’s People’s Daily editorial emphasized Beijing’s commitment to resolving disputes through “equal dialogue and mutual respect.”
The Financial Times also reported that the U.S. has paused tech export restrictions to China to avoid disrupting talks.
A Packed Week Ahead
Analysts at ING describe the coming week as “massive” for the U.S. economy, with possible new trade deals expected before August 1. Major tech giants such as Meta Platforms, Microsoft, Apple, and Amazon are due to release earnings.
Important economic reports include July’s nonfarm payrolls and a closely watched inflation figure, while the Federal Reserve will announce its interest rate decision on Wednesday.
Though Trump has applied pressure on the Fed to cut rates quickly, officials are widely expected to keep borrowing costs steady. Policymakers have indicated a “wait-and-see” stance, partly due to uncertainty over tariff impacts on the economy.
Gold Remains Steady
Gold prices held firm Monday as a weaker dollar offset increased risk appetite following the U.S.-EU trade deal.
Investors exercised caution ahead of the Fed’s interest rate decision, eager to hear guidance on the U.S. economy’s outlook for the second half of 2025.
Spot gold rose 0.1% to $3,340.02 an ounce, with futures up 0.1% to $3,396.67 by 03:29 ET.
Oil prices also benefited from optimism around the trade pact, while improved market sentiment lifted Bitcoin.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
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