EUROPEAN EQUITY UPDATE: Bourses benefit from EU/US deal, healthcare outperforms, media lags

STOXX 600: +0.7%

• Positive trade this morning, with European bourses posting gains after the US and EU announced a framework trade deal, mostly in line with source reports. Do note that bourses have held a downward bias throughout the morning, but without a clear driver; potentially some profit taking ahead of this week's key risk events.


• Price action is relatively contained across other assets, though stocks benefit from the reduced uncertainty, helping company planning.


• In a brief summary, the US is to impose a 15% tariff on most EU exports, including pharma and autos; metals are excluded from the tariffs, and remain with a 50% rate. Zero-for-zero tariffs were agreed on certain agricultural products, and on strategic products such as aircraft component parts and certain chemicals. In return for these lowered rates, the EU will invest USD 600bln in the US, said to include defence spending, along with a separate investment of USD 750bln for US energy, mainly LNG.


• In terms of the next steps, further technical details are to be negotiated "over the next weeks", according to European Commission President von der Leyen. The deal also requires approval from EU member states; ambassadors will meet today for a debrief from the Commission.


• Also on the docket today is US-China talks, where a 90 day extension is expected as touted by US officials and source reports this week. This morning, Reuters suggested talks would begin in the afternoon, Stockholm time (CET). Potential discussion points include Chinese oil imports, rare earths, industrial overcapacity and Fentanyl.

Sectors: Mostly positive

• Sectors opened entirely in the green, though have since turned to show a mixed picture, albeit mostly positive.


• Healthcare (+1.0%) outperforms after Pharmaceuticals were included within the broad 15% rate. Trump had previously touted rates on the sector of up to 200%. This benefits names such as Novo Nordisk (+1.0%) Roche (+1.5%) and Novartis (+1.2%).


• At the bottom lies Media, failing to benefit from the trade optimism after larger weighting MFE (-6.4%) raised its takeover offer for Prosieben (+10.5%).


• Other notable movers include Industrials. While the sector performs well (+0.7%), questions could be raised regarding the implications on the EUR 500bln defence fund, and the Commission’s pledge to invest in US defence, which would be negative for names such as Rheinmetall (-1.7%) and Thales (-3.3%).

US: ES +0.3%, NQ +0.5%, RTY +0.6%

• US equity futures are firm, though posting moderate gains compared to European bourses.


• RTY outperforms given the risk environment, and NQ follows closely behind, rising in sympathy with European tech gains, led by chipmaker ASML (+5%).


• The US specific docket on Monday is relatively light, with supply, and the Treasury's quarterly refunding announcement.


• For the week ahead, highlights include policy meetings from the Fed, BoJ, BoC; US jobs data, ISM manufacturing PMI, US PCE inflation data, Eurozone CPI and GDP, as well as Australian CPI. The corporate reporting slate is also busy, with notable companies including: UNH, PG, V, QCOM, MSFT, META, MA, AMZN, AAPL, and XOM.

28 Jul 2025 - 10:00- ForexGeopolitical- Source: Newsquawk