US stocks closed firmly higher on Monday, extending the strong gains seen the previous week. A softer stance on tariffs from the US government shifted market attention towards the growing prospect of multiple interest rate cuts by the Federal Reserve this year. The S&P 500 and Nasdaq 100 each climbed around 0.50%, reaching fresh record highs, while the Dow Jones Industrial Average added over 200 points. Contributing to the upbeat sentiment, White House officials confirmed that the US and China had formally agreed to avoid a return to retaliatory tariffs, which had previously peaked at 145%.

The South African rand held steady on Monday following a mixed set of domestic data releases from the South African Reserve Bank, and National Treasury. Market participants were also looking ahead to forthcoming jobs data from the US. Meanwhile, the JSE All Share Index (SAALL) rose by 0.59% to close at 96 430 points, continuing its positive momentum from the previous session.

In the UK, the FTSE 100 traded flat to marginally higher, eyeing a third consecutive day of gains. Investor sentiment was buoyed by the implementation of a new UK-US trade agreement, which reduces tariffs on British car exports from 27.50% to 10% and removes duties on aerospace goods such as engines and aircraft components. However, a baseline 10% car tariff remains in place, and a zero-tariff agreement on core steel products is still under negotiation. Separately, the UK's Q1 GDP growth was confirmed at 0.70%.

Across Europe, markets closed mostly lower as investors evaluated the potential impact of US tariffs on key trading partners. The STOXX 50 fell by 0.40% to 5 305, while the broader STOXX Europe 600 also declined 0.40% to 542. Despite the pullback, US officials reported progress in ongoing trade negotiations with China and the European Union. Meanwhile, Canada scrapped its proposed Digital Services Tax following comments by former President Trump, who stated over the weekend that he would terminate all trade discussions with the country.

In Asia, Japan’s Nikkei 225 gained 0.84% to close at 40 487 on Monday, capping a 6.64% gain for June—its best monthly performance since February 2024. The benchmark also reached an 11-month high, tracking the global rally in equities, particularly in the US, amid diminishing tariff concerns and expectations of deeper Fed rate cuts.

Meanwhile in China, the Shanghai Composite Index rose 0.59% to 3 444, breaking a two-day losing streak. The rebound came despite continued weakness in manufacturing data, which heightened expectations of further government stimulus. Official figures revealed a third consecutive monthly contraction in manufacturing activity, with companies facing intensifying price competition and subdued consumer demand, compounded by higher US tariffs.

In commodities, WTI crude oil futures declined to around $65.20 per barrel, following their steepest weekly drop in more than two years. The fall was driven by easing geopolitical tensions in the Middle East and speculation that OPEC+ may further boost output. In contrast, gold prices rose to approximately $3 290 per ounce, supported by a weaker US dollar. This came after prices had hit a one-month low earlier in the session, as easing Middle East tensions and progress in global trade talks stabilised sentiment.