Nikkei nears record highs as trade optimism fuels global rally

​​​Nikkei 225 approaches historic peaks on trade sentiment

​The Japanese benchmark has staged an impressive rally, climbing to within touching distance of its all-time high as trade optimism swept through Asian markets. The surge follows confirmation of fresh trade agreements between the US and key Asian partners, including Japan, the Philippines, and Indonesia.

​The strength in Japanese equities reflects growing confidence that trade tensions may be easing. Investors have been positioning for potential economic benefits from improved trade relations, particularly given Japan's export-heavy economy. The Japanese yen's recent stability has also provided a supportive backdrop for exporters.

​However, traders should remain cautious at these elevated levels. Previous attempts to break through historic highs have often resulted in profit-taking, and the technical setup suggests some consolidation may be due before any sustained breakout develops.

​US stocks hit fresh records as earnings season delivers

​The S&P 500 posted another record close as strong corporate earnings continued to underpin market sentiment. Alphabet's better-than-expected results provided particular momentum for technology stocks, lifting Nasdaq 100 futures and pointing to further gains ahead.

​FTSE 100 joins global rally with fresh record highs

​The FTSE 100 has also pushed to new record territory, benefiting from the same trade optimism that has lifted markets globally. The UK benchmark's performance represents a significant turnaround from earlier concerns about economic growth and political uncertainty.

​The index's move to fresh highs has been supported by strength across multiple sectors, with exporters particularly benefiting from improved trade sentiment.

​Trump to visit Federal Reserve

​Markets showed more subdued trading as news emerged of an unexpected visit by President Trump to the Federal Reserve (Fed) ahead of the upcoming policy meeting. This development has raised questions about potential political pressure on Chair Powell and the central bank's independence.

​The surprise visit comes at a crucial time for monetary policy, with markets closely watching for signals about the Fed's future direction. While the central bank has maintained its commitment to data-driven decisions, any perception of political influence could create volatility in bond and currency markets.

​Trade deal progress lifts global market sentiment

​Diplomatic sources have indicated that the EU and US are nearing a broad trade agreement, with tariffs potentially settling at 15% rather than the threatened 30% levels. This development has provided significant relief to global markets, which had been pricing in more punitive trade measures.

​The prospect of reduced trade tensions has been particularly beneficial for export-oriented sectors and emerging market currencies. European stocks have responded positively to the news, with automotive and industrial companies leading gains on expectations of improved trade flows.

​ECB policy pause expected as rate cut cycle slows

​The European Central Bank (ECB) is widely expected to hold interest rates steady at its upcoming meeting, marking a pause after seven consecutive cuts. Markets are pricing in the possibility of just one more rate reduction by December, suggesting the easing cycle may be nearing its end.

​This shift in monetary policy expectations has implications for European assets, particularly the euro and government bonds. A more hawkish stance from the ECB could provide support for the single currency, which has struggled against the US dollar in recent months.

​Commodities mixed as growth outlook improves

​Oil prices have climbed on renewed optimism about global demand growth, supported by falling US inventories and expectations of improved economic activity from trade deal progress. The energy sector has been one of the key beneficiaries of the improving sentiment, with crude futures posting solid gains.

​Gold has edged lower despite dollar weakness, as improving risk appetite has reduced safe-haven demand. The precious metal's decline suggests investors are becoming more comfortable with risk assets, though geopolitical uncertainties continue to provide some underlying support for defensive positions.