Stocks gain as Trump plans 'major' trade deal announcement

by Anand Krishnamoorthy

European stocks and Wall Street futures rose as President Donald Trump revealed plans to unveil a “major” trade deal Thursday, boosting optimism that the US was making headway in negotiations. 

Europe’s Stoxx 600 index gained 0.2% and contracts for the S&P 500 climbed 0.7% after Trump teased the announcement in a Truth Social post, without identifying the country involved. The US is expected to announce an agreement with the United Kingdom, according to people familiar with the matter. London’s FTSE 100 index edged higher. Bitcoin jumped 2.7% to $99,413, the highest in more than two months, as sentiment toward riskier assets improved. The dollar and Treasury yields climbed.

“The details of the deal will be critical as a possible template for negotiations with other countries,” said Rajeev De Mello, global macro portfolio manager at Gama Asset Management. “It’s a positive for UK equity markets and for the sterling, and possibly for other very close friends of the US.”

Market turbulence has calmed significantly since the early weeks of April, partly thanks to Trump’s trade concessions, but also following a string of US economic reports that bolstered investor sentiment. A key focus is how trade talks with China will pan out this weekend in Switzerland after the US president slapped levies of more than 100% on imports from China and it retaliated with similar moves.

In his social media post, Trump said the upcoming deal will be with representatives of a big and highly respected country. “The first of many,” he wrote. The pound strengthened, before giving up the gains.

Bloomberg Macro Strategist Mark Cudmore says:

A US-UK accord won’t help investors ascertain how broader tariff-related trade negotiations will go. In fact, the lesson might be an outright negative, because it will highlight quite how long these deals take, and that will be anticlimactic for a market that’s betting on US trade conditions ameliorating rapidly. So this is a win for the UK only, and we will continue to wait for the first signs of success from Trump’s aggressive tariff tactics, which will disappoint expectant US stock investors.

The president had earlier said he was unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade. Stocks got a lift Wednesday after China and the US announced plans to hold trade talks in Switzerland this weekend.

On the monetary policy front, Federal Reserve Chair Jerome Powell assuaged concerns about the US economy while warning that the risks of higher unemployment and faster inflation have risen. The Fed held interest rates steady on Wednesday. How long that reassuring outlook will last as Trump’s trade policies play out is the biggest question confronting central bankers. 

“The Fed is not really sure where tariffs are going to land, which is important, and when they land they’re not really sure what the consequences are going to be on growth versus inflation,” said William Dudley, the former New York Fed president, on Bloomberg Television. “This is not just about the central scenario, it’s also about risk management. Try not to do the wrong thing so that you can respond effectively as things actually unfold.”

In the UK, the Bank of England is expected to cut interest rates by a quarter percentage point Thursday and may signal that another move is likely in June, potentially putting the central bank on course for its first back-to-back reductions since 2009 as the trade war darkens the outlook for growth.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.2% as of 8:18 a.m. London time
• S&P 500 futures rose 0.7%
• Nasdaq 100 futures rose 1.1%
• Futures on the Dow Jones Industrial Average rose 0.5%
• The MSCI Asia Pacific Index fell 0.5%
• The MSCI Emerging Markets Index fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%
• The euro fell 0.2% to $1.1283
• The Japanese yen fell 0.4% to 144.42 per dollar
• The offshore yuan fell 0.1% to 7.2374 per dollar
• The British pound fell 0.1% to $1.3275

Cryptocurrencies

• Bitcoin rose 2.4% to $99,144.75
• Ether rose 6.2% to $1,910.34

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.29%
• Germany’s 10-year yield was little changed at 2.48%
• Britain’s 10-year yield declined one basis point to 4.45%

Commodities

• Brent crude rose 0.3% to $61.33 a barrel
• Spot gold fell 0.9% to $3,334.57 an ounce

This story was produced with the assistance of Bloomberg Automation.

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