By Mike Dolan

LONDON (Reuters) - What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

The glass appears half full once again.

With midyear approaching, the main Wall Street stock indexes are back within a hair's breadth of new records, helped along by a weakening dollar, the prospect of lower borrowing rates, increasing trade optimism and a renewed focus on the artificial intelligence theme.

Throw in some positive tax and regulatory twists, and now we’re likely to see new highs for the S&P 500 and Nasdaq later today.

It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines.

Today's Market Minute

* The United States has reached an agreement with China on how to expedite rare earth shipments to the U.S., a White House official said on Thursday, amid efforts to end a trade war between the world's biggest economies.

* European Union leaders discussed new proposals from the United States on a trade deal at a summit in Brussels on Thursday, with Commission President Ursula von der Leyen not ruling out tariff talks could fail and saying "all options remain on the table".

* Iran would respond to any future U.S. attack by striking American military bases in the Middle East, Supreme Leader Ayatollah Ali Khamenei said on Thursday, in his first televised remarks since a ceasefire was reached between Iran and Israel.

* U.S. Treasury Secretary Scott Bessent on Thursday asked Republicans in Congress to remove a "retaliatory tax" proposal that targets foreign investors from their sweeping budget legislation, as lawmakers struggled to find a path forward on the bill.

* What will be the biggest pain trades in the second half of 2025? ROI columnist Jamie McGeever discusses the most vulnerable positions.

Wall St flirts with new record

While still underperforming the MSCI's all-country index for the year so far, and lagging euro zone stocks by some 20% in dollar terms in 2025, the S&P500 has all but completed a remarkable 20% round trip from the peak of February to the troughs of April and back.

The VIX 'fear index' ebbed to its lowest in four months, while gold prices slipped to their lowest in almost a month.

With more than 40% of S&P500 revenues coming from overseas, the dollar's slide to 3-year lows this week spotlights a 10%-plus currency tailwind in 2025. The greenback remained near the year's lows on Friday.

And even though President Donald Trump's harrying of Federal Reserve Chair Jerome Powell unnerves many about the long-term inflation impact of threatening Fed independence, it has stepped up bets about a resumption of interest rate cuts - and most clearly after Powell's term ends next year.