Dow (DJIA): Dow edges higher on US-EU trade deal, remains shy of December high

[Redator]

Trading just shy of the key level of $45,000, at $44,913, the Dow Jones 30 trades higher in today’s session, boosted by news of a US-EU trade deal.

With US Q2 earnings season set to continue this week, most notably featuring Apple and Microsoft, the Dow trades only ~0.50% from all-time highs achieved in December 2024.

Dow Jones 30 (DJIA): Key takeaways from today’s session

• Bookending a period of co-operation between the two nations, and crucially ahead of the August 1st deadline, news of a successful US-EU trade agreement is positive for world equities, including the Dow
  
• Unlike the Nasdaq-100 and the S&P, the Dow Jones is yet to achieve fresh all-time highs since December of last year

Dow Jones 30 (DJIA): US-EU trade deal a significant positive for world equities

With news of a successful trade deal between the United States and the European Union breaking this morning, the week seems to be off to a harmonious start.

Albeit priced-in somewhat courtesy of commentary from White House official Scott Bessent last week, considering how significant the EU is as a US trading partner, the news can be viewed as overwhelmingly positive for near-term US equities support.

While the EU will be subject to a 15% tariff rate going forward, this is a significant improvement on the 30% tariff that would have been imposed if an agreement was not made before the latest deadline of August 1st, which is now only 96 short hours away.

If nothing else, the latest development on US trade relations has helped quell a general feeling of market uncertainty that would otherwise hurt speculative investments such as US equities, Dow included.

It’s worth noting, however, that the latest agreement perhaps suits some European Union members more than others, and questions remain about how recent developments will affect European solidarity.

While a narrative exists that the European Union membership removes sovereignty amongst its members, it would be fair to say that recent developments may vindicate this school of thought somewhat more.

Regarding Dow pricing, news that further trade deals are to be made ahead of deadline will offer immediate support. This goes double for China, arguably the most critical nation the US has yet reached an agreement with.

Dow Jones 30 (DJIA): Will US Q2 earnings be enough to renew Dow ATHs?

Having been generally positive so far, especially considering the chaos surrounding tariffs and zero Fed interest rate cuts, we now enter into week three of the US Q2 earnings season.

Especially in the case of large-cap stocks, how successful, or indeed unsuccessful, each report is in meeting expectations will continue to weigh on Dow performance, ultimately setting the narrative on the general health of the US economy.

Most notably, this week, Microsoft, Apple, Amazon, Meta, Visa, and Mastercard are all expected to release Q2 earnings results.

Read more on US earnings season: S&P 500 Technicals & Sentiment: What to Expect This Week

Dow Jones 30 (DJIA): Markets are 97.4% rates are to remain unchanged on Wednesday

While the current status quo of ‘wait-and-see’ is not likely to be changed in the upcoming interest decision on Wednesday, markets will be watching keenly for any clues on how the Fed might approach easing later this year.

According to CME FedWatch, markets still predict two rate cuts before year-end, in October and December, respectively. Naturally, any suggestion that rates are to be cut is better for economic growth, directly benefiting US equities.

CME FedWatch, 28/07/2025

The $1,000,000 question remains about inflation; however, recent tariff developments have offered many an opportunity for the Fed to defer interest rate cuts, citing unknowns around inflation.

While the upcoming decision will almost certainly keep rates unchanged, commentary offered as part of the policy statement remains as crucial as ever.

Dow Jones 30 (DJIA): Technical analysis (28/07/2025)

Dow Jones 30 (US30USD), OANDA, 25/07/2025

• According to the 14-period RSI on the daily timeframe, the current Dow rally still shows signs of life, albeit approaching ‘overbought’ territory
• Aiming higher, price action will face significant resistance around ~$45,060. If able to break and maintain above the level, this could also act as an area of support

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