US and EU reportedly nearing a trade deal

Reports suggest that the EU and US negotiators are nearing a trade deal, with speculation that the tariff imposed on the bloc could mirror that seen in Japan, at 15%. If true, this would be a substantial reduction on the 30% muted by Trump earlier in the month.

Etihad airlines aim to carry around 21.5m passengers in 2025, up 19% from 18m in 2024. This goal will be supported by the addition on 16 new aircraft in coming months. The airline recently revised up its growth target to carry 38mn passengers by the end of the decade, up from the previous goal of 33mn.

A delegation, consisting of both government officials and investors, from Saudi Arabia arrived in Syria on Wednesday to sign agreements worth USD 6bn. The Syrian information minister, Hamza al Mustafa, said that the investment forum would see the signing of 44 pacts, creating 50,000 employment opportunities. The investment plans are expected to cover a variety of sectors, including telecoms, energy, civil aviation and construction.

Eurozone consumer confidence saw a marginal improvement in a provisional July print, rising to a value of -14.7 from -15.3 in June. The improvement comes despite high levels of uncertainty, particularly around the status of trade with the US, although it is worth noting that the index remains well below it historical long-run average.

The flash S&P Global Japan composite PMI remained steady at a value of 51.5 in July, with movements in the manufacturing and services subcomponents offsetting each other. The manufacturing component dropped below the neutral-50 mark, to a value of 48.8, while the services index rose further into expansionary territory, increasing to 53.5 from 51.7 in June.

Today’s Economic Data and Events

12:00 EC HCOB composite PMI (Jul): forecast 50.7

12:30 UK S&P Global composite PMI (Jul): forecast 51.8

15:00 TU one-week repo rate: forecast 43.5%

16:15 EC one-week repo rate: forecast 2.0%

16:30 US initial jobless claims (w/e 19 Jul): forecast 226k

17:45 US S&P Global composite PMI (Jul): forecast 52.8

Fixed Income

US Treasury yields rose on Wednesday, with equity markets rising on news of the Japan trade deal. The 2yr yield rose just short of 5bps to reach 3.88%, and the 10yr yield gained 4bps to 4.3798%.

European bond yields also saw widespread rises. The 10yr Bund yield rose 5bps to 2.636%, while the 10yr Gilt yield increased by 6.5bps to 4.632%.

FX

The dollar spot index saw its fourth consecutive day of declines, falling 0.2%. EURUSD gained 0.14% to reach 1.1771, while GBPUSD gained 0.4% to 1.3582. USDJPY fell 0.1% to 146.51.

In emerging markets, the South African Rand continued to strengthen, with USDZAR declining a further 0.16% to reach 17.5284. USDTRY rose 0.1% to 40.4553, while USDINR gained 0.06% to 86.4187.

Equity Markets

US equity markets advanced on news of a possible US-EU trade deal. The S&P 500 rose 0.8%, reaching a new high. The NASDAQ gained 0.6% and the Dow Jones rose 1.1%.

European equity markets saw a similar boost from the news. The Eurostoxx 50 rose 1%, the CAC 40 gained 1.4% and the DAX rose 0.8%. The FTSE 100 increased by 0.4%.

Locally, the DFM rose 1% and the ADX gained 1.5%. The Tadawul reversed the previous day’s decline, jumping 1.3% higher.

Commodities

Oil futures fell again on Wednesday. Brent crude declined 0.1% to USD 68.51/b and WTI fell 1.5% to USD 65.25/b. The EIA reported that US crude inventories declined by 3.17m barrels last week.

Gold reversed some of the week’s gains, falling 1.3% to close at USD 3,387.29 per ounce.