By Caroline Valetkevitch and Lewis Krauskopf
NEW YORK (Reuters) -Investors cautiously embraced news of a trade deal on Sunday between the U.S. and European Union that is expected to bring clarity for companies and some certainty to markets ahead of U.S. President Donald Trump’s Friday tariffs deadline.
The euro rose against the U.S. dollar, up 0.27% at $1.177. The currency also gained 0.2% against both the pound and the Japanese yen.
Trump announced the United States has struck a framework trade deal with the EU that includes a 15% tariff on EU goods entering the U.S. and significant EU purchases of U.S. energy and military equipment.
European Commission President Ursula von der Leyen said the deal includes “cars, semiconductors and pharmas.”
The deal is similar to parts of the framework agreement the U.S. clinched with Japan last week.
“It’s really in line with the Japan deal, and I assume investors will view it positively as they viewed the Japan deal,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
Optimism over easing trade tensions broadly helped push U.S. stocks to record highs last week and lifted European shares to their highest since early June.
Trump’s April 2 “Liberation Day” announcement of sweeping global tariffs sent stocks plunging in the immediate aftermath, due to spiking fears about a recession that have since faded.
“I don’t think equities in particular needed much of an excuse to rally and now they’ve got one,” said Michael Brown, senior research strategist at Pepperstone in London.
Still, investors have been bracing for increased volatility heading into August 1, which the U.S. has set as a deadline for raising levies on a broad swath of trading partners.
“We will need to see how long the sides stick to the deal. From a market perspective, it is reassuring in the sense that having a deal is better than not having a deal,” Eric Winograd, chief economist at investment management firm AllianceBernstein, said about the EU agreement.
The announcement came after Von der Leyen traveled to Scotland for talks with Trump to push a hard-fought deal over the line.
(Reporting by Lewis Krauskopf and Caroline Valetkevitch; additional reporting by Lucy Raitano in London and Matt Tracy in Washington DC; editing by Alden Bentley, Edward Tobin, Amanda Cooper, Nick Zieminski and Marguerita Choy)
