Stocks Rise on Trade-Talk Optimism, Dollar Dips: Markets Wrap

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(Bloomberg) — Asian stocks rose along with equity-index futures as record-high US shares and progress in several trade negotiations boosted risk appetite.

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The MSCI Asia-Pacific index advanced 0.3%. The Nikkei 225 index jumped by more than 1.6% after Japan’s top negotiator extended his stay in the US for further talks ahead of a July 9 deadline. Contracts for the S&P 500 index rose 0.4% and those for the Nasdaq 100 gained 0.5%. The Canadian dollar edged up after the country rescinded digital services tax to advance discussions with the US. Crude oil fell 0.5% as traders wound back risk premiums before the OPEC+ meeting. 

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A gauge of the dollar dipped 0.2% as Senate negotiations continued over President Donald Trump’s $4.5 trillion tax-cut package. The Bloomberg Dollar Spot Index has posted its worst start to a year since at least 2005.

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On Friday, US stocks rose to a fresh all-time high for the first time since February, underscoring the conviction the economy is withstanding policy uncertainties. Trump in April put tariffs on dozens of trading partners on pause for three months, providing a boost for equities. A gauge of Asian stocks is set to climb more than 4% for a second month as investors look past tariff angst and recent tensions the Middle East.

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“With the US at all time highs, everyone’s happy. Markets are in a good place,” said Joshua Crabb, head of Asia Pacific equities at Robeco, on Bloomberg Television. “That’s the time to be a little bit more wary. Valuations do matter. Geopolitical issues are still around, tariff negotiations are still ongoing. So I do think one needs to have a degree of caution in the way they’re looking at markets at the moment.”

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India’s trade team also extended its stay in Washington to iron out differences as the two sides look to clinch a deal, people familiar with the matter said.

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Canada withdrew its digital services tax on technology companies in a move to restart trade talks with the US. Prime Minister Mark Carney and Trump agreed that the two countries will resume negotiations with a view toward agreeing on a deal by July 21.

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Taiwan too said it’s made “constructive progress” in a second round of trade talks with the US.

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“The momentum and trends seen in risky markets portray an almost nirvana environment in which to operate,” Chris Weston, head of research at Pepperstone Group, wrote in a note. Rapid reduction of geopolitical risks and expectations about imminent trade deals are “all adding tailwinds to risk markets.”

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Lower-than-expected US inflation and easing uncertainty in trade tensions have helped improve market sentiment. The S&P 500 index has gained 10% this quarter, its sixth advance in seven quarters. A gauge of the dollar has tumbled 6.3% this quarter, on pace for its biggest quarterly decline since December 2022.

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“The recent conflict in the Middle East is a reminder, both that new policy shocks can surface, but also that unless the worst outcomes materialize, they can create a ‘wall of worry’ for markets to climb,” Goldman Sachs Group Inc. strategists including Kamakshya Trivedi wrote in a note.