Stocks rise as Trump signals US-UK 'trade deal' ~ EconomyLens.com

London (AFP) – Stock markets mostly rose Thursday as US President Donald Trump was set to unveil a trade deal with Britain, boosting hopes for other countries’ tariff negotiations. After the turbulence sparked by Trump’s “Liberation Day” tariffs on April 2, markets have settled in recent weeks on optimism that countries will reach agreements with Washington to avoid his potentially damaging levies.

Trump said on Thursday that “this should be a very big and exciting day for the United States of America and the United Kingdom.” He stated that the US-UK agreement was “full and comprehensive” and would be the first of “many other deals.” UK Prime Minister Keir Starmer said he would give an “update” later in the day, with speculation over whether the announcement would be a finalised deal or a framework for further negotiation.

“The trade deal news, which itself is not a big deal, yet it is big in the sense that it is ‘the first’ and sets the table for the market that it should expect more deals in coming weeks and months,” said Briefing.com analyst Patrick O’Hare. “From that vantage point, it is providing a sentiment boost.” Investors are particularly looking to see if the 10 percent base tariff that Trump imposed on Britain and other countries is cut, according to City Index and FOREX.com analyst Fawad Razaqzada.

Cutting those tariffs would boost equity markets, but “the real game-changer would be progress with China. And that’s where it gets murky.” Top Chinese and US negotiators are set to meet on Saturday and Sunday for their first talks since Trump unveiled his tariffs assault. The gathering has fueled hopes for a dialing down of tensions between the world’s economic superpowers, which has seen Washington impose levies of 145 percent on China and Beijing retaliate with 125 percent tolls of its own. However, there are concerns that little substantial progress will be made.

“It is clear the market is already pricing in some level of trade optimism…but without actual deals (outside of the US-UK) inked, it’s hard to justify further upside,” Razaqzada said. While London and Washington close in on a deal, the EU warned it would target US products, including planes and cars, worth 95 billion euros in retaliation for Trump’s tariffs if their own negotiations fall flat.

Wall Street’s main stock indices climbed at the opening bell with the Dow adding 0.5 percent. However, London’s blue-chip FTSE 100 index dipped into the red in afternoon trading, shedding 0.1 percent, after the Bank of England trimmed its main interest rate by a quarter point to 4.25 percent but warned that US tariffs are weighing on global growth. The pound rose against the dollar.

Frankfurt led European equity gains after data showed German industrial production jumped more than expected in March, a boost for Europe’s biggest economy. Paris also climbed, tracking gains in Tokyo, Hong Kong, and Shanghai. Elsewhere, the Swedish and Norwegian central banks kept their rates unchanged, with both hinting that future cuts are possible despite economic uncertainty in the wake of US tariffs.

That comes after the US central bank on Wednesday paused rate cuts and warned of higher risks to its inflation and unemployment goals in a likely reference to Trump’s tariff rollout. Trump again hit out at Federal Reserve boss Jerome Powell for not cutting rates quickly enough, calling him a “fool,” despite comments last month roiling markets over fears the president could try to oust him. Analysts do not expect the Fed to cut rates until July at the earliest.

– Key figures at around 1330 GMT –

New York – Dow: UP 0.5 percent at 41,335.25 points

New York – S&P 500: UP 0.7 percent at 5,668.21

New York – Nasdaq Composite: UP 1.0 percent at 17,910.84

London – FTSE 100: DOWN 0.1 percent at 8,549.40

Paris – CAC 40: UP 0.9 percent at 7,694.78

Frankfurt – DAX: UP 0.9 percent at 23,322.06

Tokyo – Nikkei 225: UP 0.4 percent at 36,928.63 (close)

Hong Kong – Hang Seng Index: UP 0.4 percent at 22,775.92 (close)

Shanghai – Composite: UP 0.3 percent at 3,352.00 (close)

Euro/dollar: UP at $1.1307 from $1.1301 on Wednesday

Pound/dollar: UP at $1.3335 from $1.3286