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US, European stock futures jump, euro rises after

agreement

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US-China talks to continue with truce likely to be

extended

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Megacap earnings and Fed, BOJ meeting due this week

By Ankur Banerjee

SINGAPORE, July 28 (Reuters) - Global stocks rose and

the euro firmed on Monday after a trade agreement between the

United States and the EU lifted sentiment and provided clarity

in a pivotal week headlined by the Federal Reserve and the Bank

of Japan policy meetings.

The U.S. struck a framework trade agreement with the

European Union, imposing a 15% import tariff on most EU goods -

half the threatened rate, a week after agreeing to a trade deal

with Japan that lowered tariffs on auto imports.

Countries are scrambling to finalise trade deals ahead of

the August 1 deadline, with talks between the U.S. and China set

for Monday in Stockholm amid expectation of another 90-day

extension to the truce between the top two economies.

"A 15% tariff on European goods, forced purchases of U.S.

energy and military equipment and zero tariff retaliation by

Europe, that's not negotiation, that's the art of the deal,"

said Prashant Newnaha, senior Asia-Pacific rates strategist at

TD Securities. "A big win for the U.S."

S&P 500 futures rose 0.4% and the Nasdaq futures

gained 0.5% while the euro firmed across the

board, rising against the dollar, sterling and yen. European

futures surged nearly 1%.

In Asia, Japan's Nikkei slipped after touching a one-year

high last week while MSCI's broadest index of Asia-Pacific

shares outside Japan was up 0.27%, just shy of

the almost four-year high it touched last week.

While the baseline 15% tariff will still be seen by many in

Europe as too high, compared with Europe's initial hopes to

secure a zero-for-zero tariff deal, it is better than the

threatened 30% rate.

The deal with the EU provides clarity to companies and

averts a bigger trade war between the two allies that account

for almost a third of global trade.

"Putting it all together, what we've seen with Japan, with

the EU, with the talks which are due to be held in Stockholm

between the U.S. and China, it really does negate the risk of a

prolonged trade war," said Tony Sycamore, market analyst at IG.

"The importance of the August tariff deadline has

significantly been diffused."

The Australian dollar, often seen as a proxy for

risk sentiment, was 0.12% higher at $0.65725 in early trading,

hovering around the near eight-month peak scaled last week.

FED, BOJ AWAIT

In an action-packed week, investors will watch out for the

monetary policy meetings from the Fed and the BOJ as well as the

monthly U.S. employment report and earnings reports from megacap

companies Apple ( AAPL ), Microsoft ( MSFT ) and Amazon ( AMZN )

.

While the Fed and the BOJ are expected to stand pat on

rates, comments from the officials will be crucial for investors

to gauge the interest rate path. The trade deal with Japan has

opened the door for the BOJ to raise rates again this year.

Meanwhile, the Fed is likely to be cautious on any rate cuts

as officials seek more data to determine if tariffs are

worsening inflation before they ease rates further.

But tensions between the White House and the central bank

over monetary policy have heightened, with Trump repeatedly

denouncing Fed Chair Jerome Powell for not cutting rates. Two of

the Fed Board's Trump appointees have articulated reasons for

supporting a rate cut this month.

ING economists expect December to be the likely starting

point for rate cuts, but it "may be a 50 basis point cut, if the

evidence on weaker jobs and GDP growth becomes more apparent as

we anticipate."

"This would be a similar playbook to the Federal Reserve's

actions in 2024, where it waited until it was completely

comfortable to commit to a lower interest rate environment,"

they said in a note.