On Friday, US stocks closed at record highs, thanks to optimism about upcoming trade agreements and growing expectations of interest rate cuts. At the end of Friday, the Dow Jones Index (US30) rose by 1.00% (+3.89% for the week). The S&P 500 Index (US500) added 0.52% (+3.41% for the week). The Nasdaq (US100) Tech Index closed up 0.39% (+4.17% for the week). Earlier in the day, markets rose on encouraging news of progress in trade with key partners, including a framework agreement with China. Although Trump’s unexpected comments about Canada briefly dampened sentiment, they failed to derail the broader rally.

As for Friday’s data, inflation expectations for the year ahead fell to 5% from 6.6% last month, which is even lower than the preliminary estimate of 5.1%. Long-term inflation expectations were also revised down to 4% from the preliminary 4.1% and compared to 4.2% in May.

The Canadian dollar (CAD) weakened to 1.37 per US dollar as new threats from the US regarding tariffs and trade policy uncertainty offset previous gains. President Trump’s announcement that he was ending all trade talks with Canada over a new digital services tax and his warning of inevitable retaliatory tariffs rattled exporters and undermined confidence in the economy’s imminent growth. Domestically, Canada’s economy contracted by 0.1% per month in April and May, highlighting its vulnerability to US tariffs and worsening the outlook for trade-sensitive sectors.

The Mexican peso (MXN) strengthened to 18.81 per US dollar, reaching ten-month highs amid easing geopolitical tensions, dovish signals from the Fed, and solid domestic fundamentals. Despite unemployment rising to 2.7% in May, the labor market remains historically tight, supporting consumption and incomes even with a slight contraction in GDP in Q1, supporting Banxico’s cautious accommodative stance.

Equity markets in Europe were mostly rising on Friday. The German DAX (DE40) rose by 1.62% (+3.40% for the week), the French CAC 40 (FR40) closed up 1.78% (+1.88% for the week), the Spanish IBEX35 (ES35) rose by 1.11% (+1.43% for the week), and the British FTSE 100 (UK100) closed up 0.72% (+0.28% for the week). The rally was supported by progress on the trade front, including the agreement between the US and China and the potential delay in the introduction of tariffs in Europe. On the corporate front, growth was broad-based, led by automakers. Porsche led the index with a 7.6% gain, followed by Daimler Truck Holding, BMW, Mercedes-Benz Group, Continental, and Volkswagen, with gains ranging from 3.9% to 6.1%.

WTI crude oil prices rose by 0.4% to $65.5 per barrel on Friday but posted their sharpest weekly decline in years amid a decline in geopolitical risk premiums. The market rose above $80 during the Iran-Israel conflict and then weakened after President Trump announced a ceasefire, easing concerns about supply disruptions from the region. The market refocused on fundamentals, including upcoming OPEC+ decisions and signs of strengthening summer demand.

Asian markets were mostly higher last week. Japan’s Nikkei 225 (JP225) rose by 4.94%, China’s FTSE China A50 (CHA50) added 0.62%, Hong Kong’s Hang Seng (HK50) increased by 4.07%, and Australia’s ASX 200 (AU200) showed a positive result of 0.10%.

The official PMI Index for China’s manufacturing sector from NBS rose to 49.7 in June 2025 from 49.5 in May, in line with expectations, but marking the third consecutive month of decline in business activity. The official PMI Index for China’s non-manufacturing sector from the NBS was 50.5 in June 2025, exceeding market consensus and May’s reading of 50.3. This was the highest reading since March, helped by the trade truce with the US and Beijing’s efforts to stimulate domestic demand and contain deflationary pressures.

The Australian dollar rose to $0.653 on Monday, helped by the continued weakening of the US dollar amid the Federal Reserve’s dovish stance and growing budget problems. In the domestic market, the monthly inflation rate calculated by the Melbourne Institute showed moderate growth in June, reversing the previous month’s decline and marking the fourth increase this year.