(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, June 27 (Reuters) - What matters in U.S. and

global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

The glass appears half full once again.

With midyear approaching, the main Wall Street stock indexes are

back within a hair's breadth of new records, helped along by a

weakening dollar, the prospect of lower borrowing rates,

increasing trade optimism and a renewed focus on the artificial

intelligence theme.

Throw in some positive tax and regulatory twists, and now

we're likely to see new highs for the S&P 500 and Nasdaq later

today.

It's Friday, so today I'll provide a quick overview of

what's happening in global markets and then offer you some

weekend reading suggestions away from the headlines.

Today's Market Minute

* The United States has reached an agreement with China on how

to expedite rare earth shipments to the U.S., a White House

official said on Thursday, amid efforts to end a trade

war between the world's biggest economies.

* European Union leaders discussed new proposals from the United

States on a trade deal at a summit in Brussels on Thursday, with

Commission President Ursula von der Leyen not ruling

out tariff talks could fail and saying "all options remain on

the table".

* Iran would respond to any future U.S. attack by striking

American military bases in the Middle East, Supreme Leader

Ayatollah Ali Khamenei said on Thursday, in his first televised

remarks since a ceasefire was reached between Iran and Israel.

* U.S. Treasury Secretary Scott Bessent on Thursday asked

Republicans in Congress to remove a "retaliatory tax" proposal

that targets foreign investors from their sweeping budget

legislation, as lawmakers struggled to find a path forward on

the bill.

* What will be the biggest pain trades in the second half of

2025? ROI columnist Jamie McGeever discusses the most vulnerable

positions.

Wall St flirts with new record

While still underperforming the MSCI's all-country index for

the year so far, and lagging euro zone stocks by some 20% in

dollar terms in 2025, the S&P500 has all but completed a

remarkable 20% round trip from the peak of February to the

troughs of April and back.

The VIX 'fear index' ebbed to its lowest in four

months, while gold prices slipped to their lowest in

almost a month.

With more than 40% of S&P500 revenues coming from overseas,

the dollar's slide to 3-year lows this week spotlights a

10%-plus currency tailwind in 2025. The greenback remained near

the year's lows on Friday.

And even though President Donald Trump's harrying of Federal

Reserve Chair Jerome Powell unnerves many about the long-term

inflation impact of threatening Fed independence, it has stepped

up bets about a resumption of interest rate cuts - and most

clearly after Powell's term ends next year.

While markets awaited the latest U.S. May inflation update later

on Friday - with oil prices brushing off the latest Middle East

conflict to resume a near 20% year-on-year drop - two and

10-year Treasury yields fell to their

lowest since early May on Thursday.

The bond market has been soothed in part by this week's Fed

proposal on overhauling how much capital large global banks must

hold against relatively low-risk assets, part of a bid to boost

banks' participation in Treasury markets.

But markets got a further lift overnight from signs of some

movement on bilateral trade negotiations ahead of July 9's

expiry of the 90-day pause on Trump's sweeping tariff hikes.

The White House said the United States reached an agreement with

China on how to expedite rare earth shipments to the U.S.

European Union leaders discussed new proposals from the

United States on a trade deal at a summit in Brussels late on

Thursday, with Commission President Ursula von der Leyen saying

"all options remain on the table".

German Chancellor Friedrich Merz urged the EU to do a "quick

and simple" trade deal rather than a "slow and complicated" one,

even as French President Emmanuel Macron struck a cautious note.

And while the U.S. fiscal bill is still struggling through

the Senate, there was an important development on tax provisions

that may ease foreign investor concerns.

Treasury Secretary Scott Bessent asked Republicans in

Congress to remove a "retaliatory tax" proposal - the

controversial Section 899 that targets foreign investors with

higher tax in retaliation for any overseas disputes.

Justifying the removal, Bessent said that under a G7

agreement, a 15% global corporate minimum tax will not apply to

U.S. companies under "Pillar 2" of the Organization for Economic

Cooperation and Development tax deal.

The latest economic numbers, meantime, were a mixed bag but

show few signs of a sharp downturn yet.

Durable goods orders boomed in May well above forecasts,

while the labor market remained resilient with a drop in weekly

jobless claims. May trade data, on the other hand, showed a

sharp drop in exports.

As the second-quarter earnings season comes into view next

month, the longer-term AI investment theme was given a fresh

spur from an above-forecast revenue readout from Micron

Technology ( MU ) - even though its stock ended lower on

Thursday. AI darling Nvidia ( NVDA ) hit a new record high,

however, up more than 80% from the lows of April.

In other corporate news, Nike's ( NKE ) shares jumped 10%

overnight as its first-quarter revenue outlook exceeded market

expectations.

Elsewhere, stocks in Europe were sharply higher on Friday -

chiming with Wall Street. They have been boosted by the defense

spending push at this week's NATO summit and as details of

Germany's big fiscal stimulus unfolded.

German lawmakers on Thursday passed a multi-billion-euro package

of fiscal relief measures to support companies and boost

investment, involving corporate tax breaks amounting to almost

46 billion euros ($54 billion) from this year through to 2029.

Despite the positive noises on a U.S. trade deal, Chinese

stocks bucked the global trend and were in the red on

Friday.

China's industrial profits swung back into sharp decline,

falling 9.1% in May from a year earlier, as factory activity

slowed in the face of broader economic stress.

There was better news in Japan as core consumer inflation in

Tokyo slowed sharply in June. Tech stocks led the Nikkei

up more than 1%.

Weekend reads:

* TARIFF DAMAGE: Even though President Donald Trump appears to

have retreated from his more extreme trade tariff plans due to

market, industry and political pushback, trade barriers will

damage the economy over the next decade. So claims a Peterson

Institute paper by Warwick McKibbin, Marcus Noland and Geoffrey

Shuetrim, who estimate the impact under five different scenarios

- which get worse the bigger the retaliation overseas and the

higher the country risk premium demanded by global investors.

"Contrary to Trump's promises to revive U.S. industry, America's

manufacturing and agriculture sectors see disproportionate

losses in production and employment due to his tariffs."

* OPAQUE DEBT: Global sovereign debt vulnerability is rising and

54% of low-income countries are already in or at high risk of

debt distress, with many spending more on debt repayments than

on education, healthcare and infrastructure combined. With

frequent global shocks adding to the risk, the World Bank's Axel

van Trotsenburg argues on Project Syndicate that debt

obligations are now more complex, with a wider range of

creditors and some borrowing occurring behind closed doors and

outside the scrutiny of oversight mechanisms. "Without urgent

action to improve transparency, unsustainable debt-service

burdens in the developing world will become common."

* UKRAINE VS RUSSIA IN AFRICA: On Africa's dry western tip,

Mauritania has become an unlikely staging post for Ukraine's

increasingly global struggle with its adversary Russia. Reuters'

Jessica Donati and Olena Harmash detail Kyiv's Africa Strategy

in seeking allies with aide and embassies - countering Russia's

much more entrenched presence in the continent.

* SIU SIMPLE: With much attention on the European Union's

ability to attract or unlock much-needed investment capital,

accelerating its capital markets integration - or Savings and

Investments Union - is seen as critical. Nicholas Veron at

Bruegel proposes catalyzing this by hardening a central

supervisory system to replace the current complex hybrid of a

central agency - the European Securities and Markets Authority -

alongside national supervisory bodies. "The way to reform it is

by pooling all capital market supervisory authority into a

transformed multicentric ESMA that would operate mostly through

its own offices in EU countries, ensuring supervisory

consistency and no preferential treatment for any single

financial centre."

* WEGOVY TEEN IMPACT: A fast-growing cohort of American teens

who have chosen to take Novo Nordisk's weight-loss drug Wegovy,

placing them at the forefront of a monumental shift in the

treatment of childhood obesity. A Reuters special report by Chad

Terhune and Robin Respaut found children who had taken Wegovy or

a similar weight-loss drug, to speak with them about their

experiences. The reporters spent more than a year closely

following four teens and their families to examine in detail the

impact of treatment.

Chart of the day:

U.S. stock markets have completed a remarkable 20% round

trip since February to stand back at the brink of new records -

with the S&P500 up more than 10% on this time last year.

Today's events to watch

* U.S. May personal consumption expenditures inflation gauge

(0830EDT) University of Michigan's final June consumer survey

(10:00 AM EDT)

* New York Federal Reserve President John Williams and

Cleveland Fed President Beth Hammack speak

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.