Key Points
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A trade deal with the UK has been announced, though it is more limited in scope.
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The market is still happy, since this could mean more trade deals are to come.
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The optimism is cooling off, so the stock market could still close in the red.
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The stock market closed higher today after President Donald Trump announced a “full and comprehensive” trade deal with the UK. Wall Street has seen some bearishness and uncertainty beforehand due to the Trump administration promising major trade deals for weeks without fruit. This time, though, a trade deal has indeed happened, and Wall Street thinks this could be the start of many more to come.
Yesterday was also quite eventful. The Federal Reserve decided to hold the key interest rate steady between a range of 4.25% and 4.5%. It said that there was increasing uncertainty regarding the economic outlook and saw risks of higher unemployment and inflation.
More importantly, there was news that the US and China were scheduled to discuss trade. However, Trump said that he wasn’t open to reducing tariffs before negotiations took place.
Here’s a market update as of 10:00 A.M (ET) today.
- The S&P 500 is up 28.84 points, or 0.51%.
- The Nasdaq Composite is up 126.65 points, or 0.71%.
- The Dow Jones Industrial Average is up 188.11 points, or 0.46%.
Trade Deal With the UK
UK government sources have said that this agreement is more of a “heads of terms” or a framework for ongoing discussions instead of a comprehensive deal. Key issues such as US access to UK food markets, the removal of tariffs on steel and aluminum, and the baseline 10% global tariff reportedly remain unresolved. The pact is expected to rely heavily on future commitments and will leave in place the existing 10% baseline tariff Trump has imposed on most countries.
Both nations were working to establish reduced tariff quotas, particularly for the steel and automotive sectors, which have faced 25% US tariffs. In return, the UK is expected to lower its tariffs on American vehicles and reduce a digital sales tax that impacts US technology firms. The UK has reportedly resisted lowering its food standards to grant US producers greater market access.
The UK was not affected by the increased “reciprocal” tariffs Trump announced in April for several partners because it imports more goods from the US than it exports; however, it still faces a 25% tariff on all imported steel, aluminum, vehicles, and auto parts from the US.
According to a CNN reporter, “Trump’s trade announcement with the UK will be limited in scope, heavy on future commitments & leave the existing 10% universal tariffs in place, a US & UK official tell.”
Macros
- US Wholesale Inventories month-over-month rev. 0.4% vs. 0.5% forecasted.
- US Wholesale Sales month-over-month at 0.6% vs. 0.9% forecasted.
- US Initial Jobless Claims at 228,000 vs. 230,000 forecasted.
- US Continued Jobless Claims at 1.879 million vs. 1.895 million forecasted.
Other Assets
- Gold is down 0.8% to $3,363.
- Crude Oil Futures are up 2.45%.
- Natural Gas Futures are up 0.9%.
- Bitcoin is up 2.3% to $99,344.
The image featured at the top of this post is ©Openverse.