US-Canada Trade Talks Resume, Global Markets Rise Amid Debt Concerns

European markets saw slight declines amid volatile trading as investors monitored U.S. trade talks and the approaching July tariff deadline set by President Trump, with the STOXX 600 index down 0.2% but still poised for quarterly gains. The ongoing U.S.-China and U.S.-Canada trade negotiations, including an extension of the Canada digital tax deadline to July 21, have created cautious optimism among investors, though uncertainty remains high. Many investors are shifting focus to Europe due to the perceived stability of its infrastructure and defense spending, contrasting with the unpredictable U.S. trade policies under President Trump, who has threatened tariffs as high as 50% on EU goods without a deal. Meanwhile, Wall Street futures reached record highs, supported by mega-cap stocks, while a significant U.S. tax-cutting and spending bill faces delays in the Senate, raising concerns about added national debt and its impact on U.S. Treasury demand. The U.S. dollar has weakened substantially, prompting foreign investors to hedge their exposure, contributing to a bearish currency cycle, with expectations rising for Federal Reserve policy easing. These dynamics reflect a complex economic environment where geopolitical trade tensions, fiscal policy debates, and central bank actions continue to shape global market sentiment.