Trade Deal Optimism May Lead To Continued Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Monday, with stocks likely to see further upside after ending last Friday's volatile session mostly higher.

The upward momentum on Wall Street comes amid ongoing optimism about trade deals ahead of the impending deadline for U.S. reciprocal tariffs early next month.

Positive sentiment has also been generated in reaction to news Canada has rescinded its digital services tax on American tech firms, which were initially set to begin being collected today.

The move comes after President Donald Trump said last Friday that ending trade talks with Canada due to the digital services tax.

"Rescinding the digital services tax will allow the negotiations of a new economic and security relationship with the United States to make vital progress and reinforce our work to create jobs and build prosperity for all Canadians," said Canadian Finance Minister Francois-Philippe Champagne.

After moving sharply higher early in the session, stocks saw considerable volatility over the course of the trading day on Friday. The major averages showed wild swings as the day progressed, although the S&P 500 and the Nasdaq still managed to end the day at new record closing highs.

The major averages moved to the upside going into the close after an early afternoon pullback. The Dow jumped 432.43 points or 1.0 percent at 43,819.27, the Nasdaq climbed 105.55 points or 0.5 percent to 20,273.46 and the S&P 500 rose 32.05 points or 0.5 percent to 6,173.07.

For the week, the tech-heavy Nasdaq surged by 4.3 percent, while the Dow jumped by 3.8 percent and the S&P 500 shot up by 3.4 percent.

Optimism about new trade deals contributed to the early rally on Wall Street after President Donald Trump indicated the U.S. had signed an agreement with China.

A White House official later clarified that the U.S. and China have agreed to "an additional understanding of a framework to implement the Geneva agreement."

A spokesperson for China's Ministry of Commerce subsequently said the two sides have "confirmed the details of the framework."

The spokesperson said Washington would lift "restrictive measures," while Beijing would "review and approve" items under export controls.

Commerce Secretary Howard Lutnick also told Bloomberg the Trump administration expects to soon reach deals with ten major trading partners.

However, stocks pulled back sharply in afternoon trading after Trump said he is ending trade talks with Canada due to the country imposing a digital services tax on our U.S. technology companies.

"We will let Canada know the Tariff that they will be paying to do business with the United States of America within the next seven day period," Trump said in a post on Truth Social.

On the U.S. economic front, the Commerce Department released a closely watched report that included the Federal Reserve's preferred readings on consumer price inflation.

While the report showed consumer prices in the U.S. crept up in line with expectations in the month of May, the report also showed core consumer prices rose by slightly more than expected.

"Today's release revealed a little more core inflation than expected based on CPI and PPI data, but not enough to concern anyone," said FHN Financial Chief Economist Chris Low.

The University of Michigan also released a report showing consumer sentiment in the U.S. improved by slightly more than expected in the month of June.

Retail stocks turned in a strong performance on the day, driving the Dow Jones U.S. Retail Index up by 1.8 percent to its best closing level in over four months.

Considerable strength was also visible among airline stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Airline Index.

On the other hand, gold stocks moved sharply lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 4.0 percent.

Commodity, Currency Markets

Crude oil futures are slipping $0.16 to $65.36 a barrel after rising $0.28 to $65.52 a barrel last Friday. Meanwhile, after plunging $60.40 to $3,287.60 an ounce in the previous session, gold futures are inching up $8.50 to $3,296.10 an ounce.

On the currency front, the U.S. dollar is trading at 144.45 yen versus the 144.65 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.1709 compared to last Friday's $1.1718.

Asia

Asian stocks ended mostly higher on Monday as hopes of Fed rate cuts as well as easing tensions in the Middle East helped boost investors' appetite for riskier assets.

With a July 9 deadline looming, traders also assessed the likely impact of U.S. President Donald Trump's trade war on the world's largest economy.

The U.S. dollar stayed under pressure in Asian trading and gold edged up toward $3,300 per ounce, while oil prices dipped as investors braced for more OPEC+ supply.

China's Shanghai Composite Index rose 0.6 percent to 3,444.43 on renewed hopes for a U.S.-China trade deal.

Hong Kong's Hang Seng Index dropped 0.9 percent to 24,072.28, as new data showed Chinese manufacturing activity contracted for a third straight month in June amid weak demand. A measure of non-manufacturing activity increased in the month, offering some respite.

Japanese markets ended at over 11-month highs due to investor optimism over ongoing trade negotiations. Investors shrugged off data that showed Japan's industrial production rose less than expected in May.

The Nikkei 225 Index advanced 0.8 percent to 40,487.39, marking its highest closing level since July 17. The broader Topix Index settled 0.4 percent higher at 2,852.84.

Tech stocks topped the gainers list, with start-up investor SoftBank Group shares surging 4.3 percent. Automakers Honda Motor and Toyota Motor fell 1-2 percent after Trump accused Japan of engaging in "unfair" automobile trade with the United States.

Seoul stocks snapped a two-day losing streak as investors looked to developments in tariff negotiations between South Korea and the United States. The Kospi closed up 0.5 percent at 3,071.70, led by gains in chemical shares.

Australian markets eked out modest gains as healthcare stocks rebounded from a six-week low. Lower iron ore prices weighed on the mining sector, limiting overall gains.

The benchmark S&P/ASX 200 Index edged up by 0.3 percent to 8,542.30, while the broader All Ordinaries Index ended up 0.3 percent at 8,773.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index inched up 0.2 percent to 12,602.82 on optimism over global trade negotiations.

Europe

European stocks have struggled for direction on Monday as investors eye progress in global trade negotiations ahead of the impending July 9 deadline for U.S. reciprocal tariffs.

Canada moved to calm tensions after reversing its decision to impose a Digital Service Tax (DST) on American technology companies.

U.S. President Donald Trump characterized trade in cars between the U.S. and Japan as unfair and floated the idea of keeping 25 percent tariffs on autos in place.

Elsewhere, a new trade agreement between the United States and the United Kingdom that reduces U.S. tariffs on British cars and aircraft parts officially came into effect today.

While the French CAC 40 Index is up by 0.1 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both down by 0.2 percent.

In corporate news, Skanska AB has fallen after announcing an investment of around SEK 700 million or CZK 1.6 billion in a new residential project called D.O.K. Radlice, located in Prague's Radlice district.

Defence technology firm Chemring has moved to the upside as it announced the acquisition of Landguard Nexus Limited for up to £20 million.

STMicroelectronics and Infineon Technologies have also jumped after J.P. Morgan placed them on positive catalyst watch.

U.S. Economic News

MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of June at 9:45 am ET. The Chicago business barometer is expected to rise to 43.0 in June from 40.5 in May, but a reading below 50 would still indicate contraction.

At 10 am ET, Atlanta Federal Reserve President Raphael Bostic is due to speak on the economic outlook and monetary policy before an MNI Livestreamed Connect Video Conference.

Chicago Federal Reserve President Austan Goolsbee is scheduled to participate in a moderated question-and-answer session before the Aspen Ideas Festival 2025 at 1 pm ET.