Stock gain as trade, Fed optimism rises

by Sujata Rao and Robert Brand

European stocks gained, with Germany’s benchmark hitting a record high, as tariff tensions eased and a European Central Bank policy maker suggested another interest-rate cut may be in store next month.

The Stoxx Europe 600 rose 0.4%, on track for a fourth weekly advance. The ECB should cut its interest rate in June if its new forecasts confirm an outlook of disinflation and waning growth momentum, according to Governing Council member Olli Rehn. Germany’s DAX Index became the first major European gauge to surpass its March record high, recouping all losses sparked by US President Donald Trump’s trade war.

US equity futures edged higher ahead of trade talks between the world’s two biggest economies, after a framework agreement with the UK stirred up optimism over more tariff relief. Treasuries were steady after Thursday’s selloff, and the dollar’s two-day rally stalled. Gold snapped two days of declines to rise 0.6%.

Investors are focused on the outcome of the weekend trade talks after US President Donald Trump said he believed the negotiations might result in tangible progress, with China making concessions. US stocks gained Thursday as Trump pitched his trade agreement with the UK as the first step in his effort to overhaul the global economy.

“We’ve had positive noises on the tariff front with a trade deal with the UK and noise that the US and China are talking, which was positive for risk assets,” said Daniel Loughney, head of fixed income at Mediolanum Investments. “To keep the rally going we need to see some actual movement on China in terms of tariff negotiations.”

A gauge of Asia-Pacific shares rose 0.7%, putting it line for a fourth straight week of gains. Indian stocks and bonds extended a slide after hostilities with Pakistan escalated.

Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer are set to meet in Switzerland with Chinese Vice Premier He Lifeng. Trump said that if talks went well, he could consider lowering the 145% tariff he has imposed on many Chinese goods.

Meanwhile, China’s exports rose more than forecast in April even as shipments to the US slumped sharply in the first month after Trump hit its goods with tariffs more than 100%.

“There’s a greater degree of optimism that there’ll be some rollback of the very extreme increases in tariffs that were introduced,” said Marc Franklin, a senior portfolio manager at Manulife Investment Management. “But if the optimism has got to a point where people think there’ll be a quick and easy solution to the China-US negotiations or engagement, then that well may well be proven unfounded.”

In such a scenario, market volatility will return, he said.

In US pre-market trading, Lyft Inc. shares jumped as much as 7.7% after the ride-hailing company reported better-than-expected gross bookings and announced an expanded share buyback. Cloudflare Inc. shares rose as much as 10% after the software company’s strong first-quarter revenue.

And in Europe, Commerzbank AG climbed 2.4% after first-quarter profit unexpectedly rose as the German lender set aside less money than expected for souring loans amid the trade war.

In commodities, oil climbed, reflecting optimism about the potential for further US trade deals. Iron ore and copper eked out weekly advances.

 Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 9:32 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures rose 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index rose 0.6%
• The MSCI Emerging Markets Index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1249
• The Japanese yen rose 0.4% to 145.28 per dollar
• The offshore yuan was little changed at 7.2462 per dollar
• The British pound rose 0.1% to $1.3262

Cryptocurrencies

• Bitcoin rose 1.2% to $103,869.03
• Ether rose 12% to $2,452.7

Bonds

• The yield on 10-year Treasuries was little changed at 4.37%
• Germany’s 10-year yield advanced five basis points to 2.58%
• Britain’s 10-year yield advanced five basis points to 4.60%

Commodities

• Brent crude rose 1.3% to $63.65 a barrel
• Spot gold rose 0.6% to $3,324 an ounce

This story was produced with the assistance of Bloomberg Automation.

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