Tariff optimism cools, Vietnam's stock market plummets 4%, European stocks rebound, the dollar hits a new monthly high, and the euro falls to a five-week low

On the 29th, Tuesday, Asian stock markets fell for the third consecutive day, with the Vietnam VN Index dropping 4%. The positive momentum from recent trade agreements has lost steam, and investors are adopting a cautious stance ahead of a week filled with economic data and corporate earnings reports. The MSCI Asia-Pacific Index fell 0.8%.

The US Dollar Index rose 0.3%, reaching a new high since the end of June. S&P 500 futures increased by 0.2%, with the index nearly flat on Monday but still closing at a historic high. European stock index futures rose 0.2%. The euro continued to decline after recording its largest drop in over two months in the previous trading session.

Optimism surrounding the tariff agreement is fading, and investors are turning their attention to a series of key indicators. The Federal Reserve will hold a policy meeting on Wednesday, expected to keep interest rates unchanged, followed by earnings reports from major US tech companies.

• S&P 500 futures rose 0.2%, and Nasdaq 100 index futures increased by 0.3%.
• The Euro Stoxx 50 index opened up 0.35%, Germany's DAX index rose 0.5%, the UK's FTSE 100 index increased by 0.1%, and France's CAC 40 index rose 0.1%.
• The Nikkei 225 index closed down 0.8%, at 40,674.55 points. Japan's Topix index fell 0.8%, at 2,908.64 points. South Korea's Seoul Composite Index closed up 0.7%, at 3,230.57 points.
• The Vietnam VN Index dropped 4%, at 1,495.10 points.
• The US Dollar Index rose 0.3%, at 99.02, reaching a new high since the end of June.
• The euro fell 0.3% against the dollar, to 1.1555, the lowest level in five weeks.
• The yen rose 0.2% against the dollar to 148.30. The euro fell 0.5% against the yen to 171.28, the lowest level in two weeks.
• The yield on the US 10-year Treasury bond remained largely unchanged at 4.40%.
• Spot gold rose 0.1%, at $3,318.11 per ounce.
• US crude oil prices increased by 0.18% to $66.83.
• Bitcoin rose 0.7% to $118,807.94.

EU Trade Agreement Sparks Controversy

According to CCTV News, on July 27 local time, US President Trump stated that the US has reached a trade agreement with the EU, imposing a 15% tariff on goods exported from the EU to the US. However, the market and an increasing number of critics have dispelled early hopes that the agreement would bring stability to transatlantic relations.

Capitals across Europe are defending the trade agreement reached with Trump, but German industry officials warn that the agreement poses risks to the automotive industry and will reduce the competitiveness of European companies. The Dutch Minister of Foreign Trade described the agreement as "not ideal" and called for the European Commission to continue negotiations with the US.

Pepperstone Group research strategist Dilin Wu stated:

"The market's reaction to the trade agreement has become more rational, especially in light of the recent fluctuations in interest rate cut expectations. Investors are now more focused on 'hard data' to validate economic and policy prospects."

The euro fell 0.3% against the dollar to 1.1555, the lowest level in five weeks.

Federal Reserve Decision in Focus

The key event for the market this week is the Federal Reserve's interest rate decision. The Federal Reserve will hold a two-day meeting starting Tuesday to review interest rate policy under significant political pressure, evolving trade policies, and economic cross-influences.

This week, the U.S. will also release reports on gross domestic product, employment, and the Federal Reserve's preferred price index. Forecasters expect a large amount of data to show a rebound in economic activity in the second quarter.

Marc Franklin, Senior Portfolio Manager of Asset Allocation at Manulife Investment Management Asia, stated:

"Clearly, the Federal Reserve has shifted to a data-dependent approach."

He noted that the focus will be on non-farm payroll data, "which could be decisive for short-term policy decisions."

Fidelity International stated that as the Federal Reserve cuts interest rates to buffer the U.S. economy, the dollar declines, and central banks continue to expand gold reserves, gold prices could reach $4,000 per ounce by the end of next year. As of the time of writing, spot gold rose 0.05% to $3,316.11 per ounce.

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