Market Momentum Builds on Global Trade Progress
U.S. stock markets surged on Thursday following the announcement of a new trade agreement framework between the United States and the United Kingdom. This deal marks the first major breakthrough since broad tariffs were introduced earlier this year. The agreement lowers tariffs on essential U.K. exports, including steel, aluminum, automobiles, and aerospace components. While its immediate economic impact may be modest due to the scale of bilateral trade, investors viewed the move as a sign of broader cooperation and a potential catalyst for renewed negotiations with China.
President Trump hinted that the U.S. may ease tariffs on Chinese goods depending on the progress of upcoming talks in Switzerland. These developments have helped to reduce geopolitical uncertainty and sparked fresh investor optimism.
Wall Street Closes Higher Across the Board
The Nasdaq Composite led the day’s gains with a 1.1% rise to close at 17,928.1. The S&P 500 climbed 0.6%, ending at 5,664, while the Dow Jones Industrial Average gained 255 points, or 0.6%, to close at 41,368.6.
Investors showed broad interest across sectors. Consumer discretionary and industrial stocks outperformed, while defensive sectors like healthcare and utilities trailed. Technology stocks were a major driver, with Tesla gaining 3.1% and Palantir rebounding by 7.8%, helping to offset losses in firms like Arm and Eli Lilly.
Labour Market Remains Solid
Initial jobless claims came in at 228,000, matching analyst expectations. Although household financial sentiment is beginning to soften, the labor market remains a source of strength in the U.S. economy.
Asian and European Markets React
Mixed Reaction Across Asia
Most Asian equity markets gained on Friday, lifted by enthusiasm over the U.S.-UK trade deal and hopes of reduced U.S.-China tensions. Japan and South Korea led the advances, while China’s Shanghai Composite and Hong Kong’s Hang Seng slipped due to lingering concerns over the effects of U.S. tariffs on their trade balances.
European Equities Post Gains
European stock markets ended Thursday with gains. The STOXX 50 rose 1.1%, while the broader STOXX 600 increased by 0.4%. Leading the rally were technology and financial stocks, including ASML, UniCredit, Santander, and Intesa Sanpaolo, all of which saw gains of over 3%. However, Mercedes-Benz fell by 6% after announcing a dividend cut, and Novo Nordisk dropped 4% on a weaker-than-expected drug guidance.
Currency and Commodity Highlights
The U.S. dollar strengthened over the week, buoyed by optimism surrounding the U.S.-UK trade deal and fading expectations of near-term interest rate cuts by the Federal Reserve. In contrast, the euro weakened by 0.6%, falling to $1.1217.
Oil prices held steady after a more than 3% rise in the previous session. Brent crude edged up by 7 cents to $62.91 per barrel, while U.S. West Texas Intermediate crude also rose by 7 cents to $59.98. Markets continue to monitor the effects of U.S. sanctions on Iran and possible OPEC+ production adjustments.
Global Trade and Economic Outlook
U.S. Trade Agenda Expands
Commerce Secretary Howard Lutnick confirmed that several new trade agreements are in development, though the 10% tariff level will remain for the time being. Trade talks are ongoing with the European Union, Japan, and India. Speculation around tariff reductions for China and South Asian countries has surfaced, but the White House described these reports as unfounded and emphasized that no decisions have been made.
Strong Chinese Export Data
Despite ongoing trade tensions, China’s exports grew 8.1% year-on-year in April, surpassing expectations. While its overall trade balance narrowed more than forecasted, the slower decline in imports points to resilient domestic demand. With upcoming trade discussions scheduled between Chinese and American officials, President Trump has indicated a willingness to consider reducing tariffs based on the outcomes.
Political Instability in Romania
S&P Global has issued a warning about Romania’s rising political instability following the collapse of its coalition government and the emergence of eurosceptic leadership. These developments risk worsening economic imbalances, increasing the likelihood of recession, and limiting access to European Union funds and international financing.
Corporate Highlights and Earnings Recap
Positive Developments
Lyft increased its share buyback program to $750 million and exceeded expectations with its first-quarter profits. The company reported strong demand and a 37% rise in rides in Indianapolis.
Pinterest impressed investors by raising its revenue forecast, thanks to higher ad spending driven by its AI tools and strong engagement among Gen Z users. The stock surged 15.6% in after-hours trading.
Anheuser-Busch InBev delivered a 7.9% rise in first-quarter operating profit, outperforming estimates despite a 2.2% decline in global volume. Growth in South America and effective cost controls contributed to the results.
Mixed to Negative Earnings
Expedia missed its revenue target, posting $2.98 billion versus the expected $3.01 billion. Despite weak U.S. consumer spending, the company saw growth in international travel, particularly in Asia-Pacific and Europe.
Peloton reported a larger-than-expected third-quarter loss but raised its revenue guidance for 2025. The company is focusing on growing its subscriber base for digital workout content.
Coinbase’s revenue came in at $2.03 billion, below expectations, and its shares fell after operating expenses jumped 51% due to increased marketing and crypto asset losses.
Monster Beverage experienced a surprise 2.3% decline in net revenue, impacted by higher aluminium tariffs and soft energy drink demand.
Infineon Technologies revised its full-year revenue forecast downward amid global tariff uncertainty, despite reporting steady order flow.
Industry Developments and Strategic Moves
British Airways owner IAG is expanding its fleet with a mix of 30 Boeing 787s and 30 Airbus aircraft, with a $10 billion purchase agreement for Boeing jets confirmed by the U.S. government.
BYD is aiming to sell half its vehicles outside of China by 2030, focusing on Europe and Latin America as it navigates trade restrictions in the U.S. The company’s affordable EV and hybrid offerings have fueled its rapid growth, positioning it as a competitor to global automotive giants.
Google shares experienced a sharp decline following comments by Apple’s Eddy Cue about shifting search behaviors. However, analysts at Jefferies believe this was an overreaction, noting Google’s dominant 90% search market share and continued strength in AI services.
Uber Technologies was downgraded by Wedbush from Outperform to Neutral. Analysts cited limited short-term catalysts and macroeconomic headwinds as reasons for caution, despite Uber’s strong management execution.
What’s Ahead
Investors will be watching for comments from key Federal Reserve officials today, including Williams, Barr, Goolsbee, and Waller. These speeches could provide valuable insight into the Fed’s policy direction. In the commodities space, traders are awaiting the Baker Hughes rig count and CFTC data to assess market sentiment.
Market sentiment continues to be shaped by shifting trade dynamics, corporate earnings, and central bank commentary. With new agreements in the pipeline and ongoing negotiations with China, the next few weeks may offer more clarity on the trajectory of global growth and investment.
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