Date: 4th July 2025.


European Markets Slip Ahead of Tariff Deadline, Wall Street Surges on Jobs Report and Fiscal Optimism.



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European Equities Slide on Trade Uncertainty


European stock markets edged lower on Friday as investors grew increasingly cautious ahead of a looming US trade policy deadline. With the July 9 expiration of President Trump's 90-day pause on increased tariffs approaching, concerns over unresolved trade agreements weighed heavily on sentiment.


The pan-European STOXX 600 index declined by 0.4% to 541.61 points in early trading, setting course for a weekly loss. Major regional benchmarks across the continent also moved into negative territory, driven by uncertainty over US-EU trade negotiations.


US Markets Rally on Robust Jobs Data and Legislative Progress


President Trump announced that Washington would begin sending formal tariff notifications to trading partners on Friday. These letters will detail the new duties—expected to range between 20% and 30%—on goods exported to the United States. Several key allies, including the European Union and Japan, have yet to secure final trade deals with the US, raising fears of a renewed trade war.


Sector-wise, mining stocks led the losses with a 1.1% drop, followed by a 0.8% slide in technology shares. Meanwhile, France’s Alstom gained 1.1% after landing a €2 billion ($2.4 billion) contract from New York’s Metropolitan Transportation Authority.


US equity markets surged as traders reacted positively to a stronger-than-expected June employment report and growing optimism over fiscal stimulus. The markets closed early on Wednesday ahead of the July 4 holiday, but not before notching record highs.


NASDAQ rose 1.02% to 20,601
S&P 500 climbed 0.83% to 6,279
Dow Jones Industrial Average gained 0.77% to 44,828, near its January peak of 44,882
Investor confidence was further boosted by the passage of the One Big Beautiful Bill (OBBB) in the US House of Representatives. Approved by a narrow 218–214 vote, the sweeping pro-growth legislation is expected to be signed into law by President Trump on July 4, his self-imposed deadline.


The OBBB aims to generate $500 billion in savings over the next decade, defying the Congressional Budget Office’s projection of a $3.3 trillion deficit increase. Key provisions include:


Raising the debt ceiling by $5 trillion
Expanding standard deductions and child tax credit
Reducing taxes on tips, overtime, Social Security, and auto loans
Increasing the SALT deduction cap to $40,000
Blocking a planned $4.5 billion tax hike set for year-end
As equities climbed, volatility dropped, with the VIX falling 1.56% to 16.38. However, US Treasury yields spiked amid strong data and diminished expectations for Federal Reserve rate cuts. The 2-year yield rose 9.5 basis points to 3.88%, while the 10-year yield climbed 7 basis points to 4.35%.


DXY (US Dollar Index) surged to 97.422 before paring gains to close at 97.168, supported by US Treasury Secretary Bessent’s commitment to maintaining a strong-dollar policy.


Oil Prices Ease on Diplomatic Hopes and OPEC+ Output Plans


Crude oil prices retreated slightly on Friday, driven by easing geopolitical tensions and expectations of increased supply from OPEC+.


Brent crude dipped 0.51% to $68.45 per barrel
WTI crude dropped 0.37% to $66.75 per barrel
Oil markets responded to reports that the US and Iran may resume nuclear talks next week, as disclosed by both Iranian officials and US media outlet Axios. Iranian Foreign Minister Abbas Araqchi reaffirmed Tehran’s commitment to the Non-Proliferation Treaty, despite recent tensions and legislation suspending cooperation with the International Atomic Energy Agency.


Looking ahead, traders are closely watching the upcoming OPEC+ meeting, where an additional production increase of 411,000 barrels per day (bpd) for August is expected. Four delegates confirmed the proposed hike as the oil alliance continues efforts to reclaim market share.


Additional Developments: Sanctions and Diplomacy


Adding complexity to the geopolitical picture, the US Treasury imposed fresh sanctions on a network accused of smuggling Iranian oil disguised as Iraqi shipments. Another target included a Hezbollah-linked financial entity.


At the same time, Saudi Arabia’s Defense Minister Prince Khalid bin Salman met with President Trump at the White House to discuss regional de-escalation strategies.


Meanwhile, Barclays revised its oil price forecast upward, citing stronger demand outlooks. The bank now sees Brent crude averaging $72 per barrel in 2025, and $70 per barrel in 2026.


Conclusion: Markets Brace for Trade Decision, but Optimism Lingers


Global markets are at a crossroads, with investors balancing optimism over US economic momentum and fiscal policy against the potential fallout of escalating trade tensions. As the July 9 tariff deadline nears and nuclear talks with Iran possibly resume, both equity and energy markets may experience renewed volatility.


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Please note that times displayed based on local time zone and are from time of writing this report.


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Andria Pichidi
HFMarkets


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