European indices hit new record highs on Tuesday after the Financial Times reported that the EU and US are on the verge of resolving their dispute over aircraft subsidies at a summit in Brussels.
This follows news last week that negotiations could lead to a commitment from both sides to end the trade war and remove tariffs on steel and aluminum. Additionally, investor sentiment still seems to be supported by expectations that the US Federal Reserve is likely to maintain its dovish stance at its two-day meeting starting today.
U.S. index futures rose slightly on Tuesday, with the S&P 500 and Nasdaq settling at all-time highs. Investors weighed the prospects for a solid economic recovery and the potential for market disruptions when the Federal Reserve begins tapering its $120 billion-a-month program of buying government bonds and mortgage-backed securities. In the bond market, the yield on the 10-year Treasury note rose to near 1.5 percent on Monday. Meanwhile, investors await the release of retail sales and producer price data for May.
Meanwhile, oil prices rose to multi-year highs on Tuesday, continuing a string of three consecutive weekly increases as expectations for increased Iranian crude oil exports eased after Iranian Deputy Foreign Minister Abbas Araghchi said nuclear talks in Tehran are unlikely to conclude before the country's June 18 presidential election. Risk appetite was also supported by hopes of strong demand in Western economies amid an acceleration in COVID-19 vaccinations. Meanwhile, India reported that many states eased restrictions on Monday, including the capital New Delhi, as the number of new infections fell to the lowest level in more than two months. On the supply side, OPEC+ agreed to maintain its plan to gradually ease supply restrictions through July, signaling continued strength in the oil market.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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