Efforts to secure a renewed trade agreement between Canada and the United States have gained traction, following Ottawa’s decision to withdraw its proposed digital services tax. The move, announced on Sunday, was widely seen as a concession to U.S. President Donald Trump and a key step toward advancing the stalled negotiations.
The revival of the Canada–US trade talks has buoyed investor sentiment, helping global markets hover near record highs despite ongoing economic uncertainties.
Tax Withdrawal Clears Key Hurdle
Canada’s retraction of the digital services tax comes amid intense pressure from the White House, which has been pushing for what President Trump describes as “reciprocal” trade arrangements. The talks, originally set to conclude by July 9, now aim for a broader agreement by July 21. Some officials have even hinted that the full deal could be finalized by the September 1 Labor Day holiday.
A screen displays news on S&P 500 and NASDAQ stock market indices as traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 27, 2025. REUTERS/Jeenah Moon
Markets React to Trade Progress
Investor optimism around the trade negotiations helped lift North American futures on Monday. Nasdaq futures rose 0.5%, while S&P 500 e-minis gained 0.4%. Tech giants such as Nvidia, Alphabet, and Amazon continued to draw strong demand, reflecting overall confidence in the sector.
Despite the positive signals from trade talks, analysts remain cautious. Reported by Reuters, “Markets continue to look resilient, though we note that we haven’t seen equity valuations look more expensive since 2000,” said Kevin Gardiner, global investment strategist at Rothschild & Co
Eyes on U.S. Jobs Data and Fed Policy
Cathy Grose, a retired teacher from Cochrane, Alberta, Canada, holds an anti-U.S. President Donald Trump sign at a protest near the location of the G7 Summit in Banff, Alberta, Canada, June 16, 2025. REUTERS/Evan Garcia
Alongside trade developments, markets are closely watching for key U.S. non-farm payrolls data due Thursday. The report is expected to show a gain of 110,000 jobs in June and a slight increase in unemployment to 4.3%. These figures could play a pivotal role in determining whether the Federal Reserve moves to cut interest rates as early as July.
The potential for rate cuts has already impacted the U.S. dollar, which dipped 0.2% on Monday. The euro climbed to $1.1721—its highest level since 2021—while the dollar also slipped against the yen and sterling.
Broader Economic Picture
While trade optimism supports market performance, concerns remain over the U.S. budget deficit. A sweeping tax-cut and spending bill under consideration in the Senate could add $3.3 trillion to the national debt over the next decade, according to the Congressional Budget Office. This has raised questions about sustained foreign appetite for U.S. Treasuries.
Bond markets appeared steady for now, with 10-year Treasury yields falling to 4.25%.
Global Market Snapshot
European markets were mixed, with a slight downturn in broader indices but gains in defense stocks following last week’s NATO pledge to boost defense spending. In Asia, markets closed on a varied note: Chinese blue chips gained 0.4% amid modest improvements in manufacturing and services, while Hong Kong and Japanese markets moved in opposite directions.
Commodities and Currency Movements
FILE PHOTO: Canada’s Minister of Industry Melanie Joly speaks to a group of workers after touring the ArcelorMittal Dofasco steel plant in Hamilton, Ontario, Canada June 6, 2025. REUTERS/Carlos Osorio/File Photo
In commodities, gold rose 0.5% to $3,289 an ounce, still below April’s peak of $3,500. Oil prices inched higher, with Brent crude trading at $68 per barrel and U.S. crude at $65.7, despite recent losses driven by potential OPEC+ output increases.
