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Stocks, dollar dip as Trump passes spending bill, trade deal deadline nears

Stocks fell on Friday, as U.S. president Donald Trump passed his tax-cut bill and focused attention on his July 9 deadline to countries to sign trade agreements with the world's largest economy.

Dollar also fell against major currency, despite the fact that U.S. market were already closed for the holiday week. Traders considered the impact of Trump’s spending bill, which is expected to add $3.4 trillion in debt to the nation.

The pan-European STOXX 600 fell by 0.5%. Banks, mining stocks, and retailers were among the worst performers.

U.S. S&P futures dipped 0.6% after the overnight cash index had risen by 0.8% to a record closing high. Wall Street was closed Friday due to the Independence Day holiday.

Trump announced that Washington will begin sending letters on Friday to countries specifying the tariff rates they will face on their exports to United States. This is a significant shift from his earlier promises to reach scores of individual agreements before a deadline on July 9, when tariffs may rise dramatically.

Tony Sycamore is an analyst with IG. He said that investors are "now waiting for July 9" and the lack of optimism in the market for trade agreements has contributed to some of the weakness of equity markets, especially those export-dependent Asia, such as Japan and South Korea.

Investors cheered the surprising robustness of the U.S. employment report, which sent all three major U.S. equity indices soaring in a short session.

Sycamore stated that "the U.S. Economy is Holding Together Better Than Most People Expected, Which Suggestions to Me That Markets Can Easily Continue to Do Better (From Here)".

After Thursday's closing, the House narrowly passed Trump's signature 869-page Bill, which avoids the prospect of an immediate U.S. Government default, but adds trillions in debt to fund border security and military spending.

TRADE IS THE CENTRAL FOCUS FOR ASIA

Trump said that he expects "a couple" of more trade deals, after announcing on Wednesday a deal with Vietnam to add to the framework agreements with China as well as Britain.

Scott Bessent, the U.S. Treasury secretary, said this week that an agreement with India was near. The White House had once said that agreements with Japan and South Korea would be announced as soon as possible. However, it appears the White House has not made any progress.

The U.S. Dollar Index had its worst half-year since 1973, as Trump's chaotic implementation of sweeping tariffs raised concerns about the U.S. Economy and the safety Treasuries. However, the index rallied by 0.4% on Wednesday before retracing a portion of these gains on Thursday.

As of 1430 GMT, it was down by 0.1% to 96.94.

The euro rose 0.2% to $1.1778 while the sterling remained at $1.3662. British assets stabilized after investor panic over the past two days following a tearful speech by Finance Minister Rachel Reeves at parliament on Wednesday.

The U.S. Treasury Bond market was closed for the holiday on Friday, but the 10-year yields increased 4.7 basis points to 4.34%. Meanwhile, the 2-year yield rose 9.3 basis points to 3.882%.

The price of gold rose 0.4%, to $3,336 an ounce. This is on track to be a weekly increase as investors once again sought safe-haven assets because they were worried about the fiscal situation and tariffs in the United States.

Brent crude futures dropped 57 cents a barrel to $68.23, while U.S. West Texas Intermediate crude fell 66 cents a barrel to $66.34 as Iran reaffirmed their commitment to non-proliferation. (Reporting from London by Lawrence White and Tokyo by Kevin Buckland; Editing by Stephen Coates and Alexandra Hudson. Joe Bavier, Alex Richardson, and Stephen Coates)

(source: Reuters)