US equity futures storm higher, and are back to their post-Liberation Day highs on positive trade news (Imminent "comprehensive" trade agreement with UK the first of his promised deals; removal of chip export restrictions) and a neutral Fed (economy has strength to wait to see trade war impact hit hard data) even as China again reiterated that the US should cancel unilateral tariffs ahead the first official meeting between the countries this weekend amid reports the US is considering exempting child-related goods from its 145% tariffs on China. As of 8:00am ET, S&P futures rose 0.9% while Nasdaq futures are 1.2% higher, both near session highs. Elsewhere FTSE +40bps, DAX +1.2%, CAC +1%, Shanghai +28bps, Hang Seng +37bps, Nikkei +41bps. Intel rose more than 3% in premarket trading, while peers such as Nvidia and Micron also gained on news Trump will rescind restrictions regulating the export of semiconductors to various countries. Outside of tariffs, Norway and Sweden central banks left rates unch (expected) while we get the BoE this morning (25bps cut expected). US Bond yields are 4-5bp higher across the curve and USD is poised to have its best day 6 sessions with DXY +50bp. Today’s macro data focus is on jobless claims, NY Fed 1-year inflation expectations, and labor costs.
In premarket trading, Mag 7 stocks climb as the Trump administration plans to rescind some Biden-era AI chip curbs as part of a broader effort to revise global semiconductor trade restrictions (Nvidia +1.6%, Alphabet +1.9%, Meta +2%, Tesla +1.3%, Apple +1%, Amazon +1.6%, Microsoft +0.9%). Cryptocurrency-exposed stocks rise as Bitcoin approaches the $100,000 mark for the first time since February as global trade tensions show signs of easing. AppLovin climbs 14% after the AI-powered advertisement platform reported first-quarter results that beat expectations. Arm Holdings tumbled 9% after giving a disappointing sales forecast for the current quarter, stoking concerns about a tariff-fueled slowdown for the chip industry. Here are some other notable premarket movers:
Global markets were lifted after Trump administration’s plan to rescind some Biden-era curbs on chipmakers and news of a trade agreement with Britain, which followed news that US and Chinese officials will meet this weekend to discuss trade. Investors are waiting to see if crippling levies mooted by Trump will be negotiated down, averting lasting damage to economic growth and corporate profits.
"The fear has been of higher prices, company profit margins being squeezed, and the economy going into recession as a result of higher tariffs," said Kenneth Broux, a strategist at Societe Generale. “If you start unwinding all of that, it’s got to be bullish for risk assets.”
In the UK, gilt yields rose about five basis points, reversing an earlier slide, after the BOE reduced interest rates to 4.25% in a decision made before the US trade deal was announced. However, the BOE upgraded its annual growth forecast for 2025 while two officials voted not to cut rates this time due to inflation risks and a recent easing in financial conditions.
For Neil Birrell, chief investment officer at Premier Miton Investors, the split BOE vote “goes to show the scale of the uncertainty that exists amongst a key group, namely the actual setters of policy. It’s going to be difficult to make a call on future policy on the back of that.”
Meanwhile, while there was little international fallout from the conflict between India and Pakistan, investors were monitoring signs of escalation. Pakistan’s main equity index shed as much as 8.8%, while India’s Nifty 50 Index lost as much as 01.1%. The Indian rupee slid over 1% against the dollar.
The trade headlines also lifted Europe’s Stoxx 600 index by about 0.9%, as tech, industrials and travel are the best-performing European sectors. Chip stocks including ASML were among the top gainers. Siemens Energy rose after it said the impact of tariffs was going to be limited, while Danish container giant Maersk declines after cutting its forecast amid trade war. Britain’s domestically focused FTSE 250 index rose to a two-month high. Here are the biggest winners:
Earlier in the session, stocks in Asia declined, on course to end a four-day run of gains, as earnings caution in Japan outweighed optimism over signs of easing trade tensions. The MSCI Asia Pacific Index fell 0.6%, reversing an earlier 0.3% gain. Japanese firms Nintendo Co. and Toyota Motor Corp. were among the biggest drags, with the carmaker expecting a $1.3 billion profit hit in just two months on tariffs. Nintendo projected weaker-than-expected initial sales of the Switch 2. Trading was halted in Pakistan after its benchmark KSE-30 Index slumped on intensifying military conflict with India. Indian stocks were slightly lower. Markets were in the green in Hong Kong, China and South Korea as signs of progress in trade negotiations supported sentiment. The confirmation of US-China trade talks starting this weekend, and Thursday’s report that the US is about to announce a deal with the United Kingdom, boosted optimism that the global tariff war has entered a de-escalation stage. Foreign investor flows into Asian stocks excluding China and Japan reached $3 billion so far this week, according to Bloomberg-compiled data.
In FX, the dollar was 0.2% higher against a basket of peers, benefiting also from the Federal Reserve’s signal that it’s in no hurry to ease monetary policy. The Fed held interest rates steady as expected on Wednesday, and warned that higher tariffs could raise inflation and unemployment. The pound climbed after the Bank of England cut interest rates as expected, but stuck to signaling “gradual and careful” moves in the coming months.
In rates, treasuries are cheaper across the curve as US stock futures rally; rate-sensitive two-year Treasury yields rose about five basis points as traders trimmed the odds of a July cut to around 80%. US yields are 3bp-4bp higher across maturities with intermediate tenors leading losses, flattening 5s30s spread by 1.5bp and unwinding a portion of Wednesday’s steepening move. 10-year at 4.30%, just off day’s high. Supply also a factor, with an auction of 30-year bonds ahead at 1pm New York time. Gilt futures fell to session lows after Bank of England cut rates to 4.25% as expected in a three-way split. UK front-end yields cheaper by about 5bp, flattening the gilt curve after the BOE rate decision. The week’s Treasury auction cycle concludes with $25 billion 30-year new issue, following strong demand for 10-year notes Tuesday. WI 30-year yield near ~4.795% is about 2bp richer than last month’s, which stopped through by 2.6bp. Investors will now monitor weekly jobless data, which is expected to show claims slipped marginally in the latest week to 230,000.
In commodities, oil climbs 1.4% higher to near $58.86. Bitcoin rose toward the $100,000 mark for the first time since February. Spot gold falls about $10 to near $3,350/oz.
Looking ahead, the US economic calendar includes 1Q nonfarm productivity and weekly jobless claims (8:30am), March wholesale inventories (10am) and April New York Fed 1-year inflation expectations (11am)
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A more detailed look at global markets courtesy of Newsquawk
APAC stocks were mostly higher amid some trade optimism and following the mildly positive handover from Wall St where price action was choppy in the aftermath of the FOMC meeting as the Fed kept the FFR at 4.25-4.50%, as expected, and noted that risks to the economic outlook increased further, while Fed Chair Powell reiterated a wait-and-see approach and ruled out a pre-emptive cut during the presser. ASX 200 marginally gained amid strength in gold miners, industrials and tech but with the upside capped by weakness in the top-weighted financial sector after Big 4 bank ANZ's earnings. Nikkei 225 was underpinned by recent currency weakness and trade deal optimism, although a return to the 37,000 level remained elusive. Hang Seng and Shanghai Comp remained positive following the previous day's PBoC's policy loosening, but with further upside in the mainland limited after recent comments from US President Trump, who was unwilling to lower tariffs to get China to the table.
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European bourses (STOXX 600 +0.3%) opened mostly firmer and have traded with an upward bias throughout the European morning. European sectors are mixed; Tech takes the top spot, joined closely by Industrials whilst Healthcare lags. Tech benefits from post-earning strength in Infineon (+3%) - despite missing on headline metrics and highlighting that it sees 2025 rev. slightly lower Y/Y due to tariff impact. US equity futures (ES +0.8%, NQ +1%) are broadly in the green, in-fitting with the broader risk tone as markets await Trump’s trade announcement.
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DB's Jim Reid concludes the overnight wrap
In a Trump 2.0 world it often seems like the news flow doesn't really get going until after the US market closes and today is another example of that as overnight Mr Trump has teased that a "major trade deal" will be announced today at 10am DC time (15:00 BST). This must be the very big announcement he flagged on Tuesday. The media are all lining up behind the deal being with the UK. Given that full trade deals take years to negotiate, this will likely be a framework and it will be interesting to see whether the 10% baseline tariff stays as that will provide an important template for negotiations with other countries and a good guide to the long-term tariff strategy of the US.
Asian equity markets and European/UK futures are responding positively to the news that comes a couple of days before trade talks between Washington and Beijing over the weekend. Across the region, the Hang Seng (+1.10%) is leading gains with the CSI (+0.75%) and the Shanghai Composite (+0.38%) also higher. Elsewhere, the Nikkei (+0.28%), the KOSPI (+0.49%) and the S&P/ASX 200 (+0.21%) are also edging higher. S&P 500 (+0.84%) and NASDAQ 100 (+1.16%) futures are building on a strong close that we will discuss below. Euro Stoxx futures are +0.80% and FTSE futures +0.75%. Sterling is around half a percent higher.
This news has slightly overshadowed the Fed last night, where as widely expected, the FOMC kept the fed funds rate on hold for a third meeting running at 4.25-4.50%, while sticking to a patient tone amid heightened uncertainty. The prepared statement noted that uncertainty had “increased further” as risks of both “higher unemployment and higher inflation have risen”. In the press conference Chair Powell acknowledged opposing pressures on its dual mandate stemming from larger-than-expected tariffs announced so far and offered little guidance on the policy path ahead. Powell emphasized the elevated uncertainty but also noted that the economy remains resilient and repeated that policy is well positioned to respond, while pushing back on the idea of pre-emptive rate cuts. Our US economists continue to expect the next rate cut to come in December, with risks tilted towards earlier cuts if unemployment rises more sharply. See their full reaction here.
Rates initially saw a moderate rally following the Fed decision, but this then reversed as Powell emphasised a wait-and-see approach. The next rate cut is now 80% priced by the July meeting while the amount of Fed cuts priced by December declined by -3.1bps yesterday to 78bps, though this move had already played out pre-FOMC. 2yr Treasury yields were little changed (-0.6bps to 3.78%), while 10yr yields declined -2.6bps to 4.27%. This morning in Asia, Treasury yields have reversed higher again with 2yr (+2.3bps) and 10yr (+1.9bps) yields settling at around 3.80% and 4.29% respectively as we go to print.
Equities saw a muted response to the Fed decision, but the S&P 500 managed to post a +0.43% gain by the close thanks to a late rally following a Bloomberg report that the Trump administration is planning to rescind Biden-era AI chip curbs as part of a broader move to revise semiconductor trade restrictions. The reporting helped the Philadelphia semiconductor index rise +1.74% on the day, with Nvidia +3.10% higher.
However, the overall Mag-7 underperformed (-0.26%) as Alphabet (-7.26%) and Apple (-1.14%) lost ground following comments by a senior Apple executive that the company was “actively looking at” revamping its Safari web browser to focus on AI-powered search engines. The comments came amid a DoJ lawsuit against Alphabet that could threaten the companies’ partnership that makes Google the default offering in Apple’s browser. In addition to highlighting the anti-trust cases against big tech, the news is a reminder that while the Mag-7 stocks have benefited immensely from AI optimism, their existing business models also face risks from AI-driven disruption.
Ahead of the Fed’s decision, European markets experienced a risk-off move, with the STOXX 600 (-0.54%) posting its biggest decline in four weeks. The moves occurred across the continent, and even the FTSE 100 (-0.44%) moved lower, ending its record winning run of 16 consecutive gains. A remarkable stat. Let's see what today's trade deal does for the UK. Otherwise, France’s CAC 40 (-0.91%) saw a particular underperformance, losing ground for a third day running, and Germany’s DAX was down -0.58%. And the risk-off tone was echoed on the rates side, as yields on 10yr bunds (-6.6bps), OATs (-6.4bps) and BTPs (-7.9bps) all took a sharp turn lower. The moves also got a boost from the latest decline in oil prices, with Brent crude down -1.66% on the day to $61.12/bbl. The peak this year was $82.03/bbl on January 15.
Looking forward, central banks will stay in the spotlight today, as the Bank of England are announcing their own policy decision. It’s widely expected they’ll deliver a 25bp cut today, which would take the Bank Rate down to 4.25%, and continue the pattern of quarterly rate cuts that we’ve had since August. As with the Fed, it’s their first decision since Liberation Day, so all eyes will be on the new forecasts, and our UK economist thinks that meaningful changes are likely. He expects them to cut their growth projections as the unfolding trade shock hits GDP. And he also sees the inflation forecasts being revised lower thanks to stronger sterling and lower energy prices.
Finally on the geopolitical side, there’s been increasing market attention on the situation between India and Pakistan. In terms of the latest, Pakistan said yesterday that they would retaliate against India’s air strikes, and Pakistan’s KSE-100 equity index closed -3.02% lower. By contrast, Indian equities have been much less affected, and the NIFTY 50 index was up +0.14%. This morning, the NIFTY 50 (-0.04%) is fairly flat. The situation has raised fears about an escalation between the two counties, and it represents another example of how the Global South is likely to prove increasingly important for the global backdrop.
To the day ahead, and one of the main highlights will be the Bank of England’s latest policy decision, along with the subsequent press conference with Governor Bailey. Separately, the Bank of Canada will release their Financial Stability Report, and we’ll hear from Governor Macklem too. Elsewhere, US data releases include the weekly initial jobless claims, as well as nonfarm productivity for Q1.