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US-China trade progress lifts global markets

Investor sentiment improved midweek as the US and China announced a framework agreement to revive their trade truce, easing tensions over rare earth mineral exports and semiconductor restrictions. US and Asia-Pacific equity markets advanced on the news, with tech stocks leading gains in the US and indices across Asia posting broad-based increases. European markets, however, remained mixed on Tuesday. Investors are now looking ahead to US inflation data, due out later Wednesday, for further market direction. The market expects the US Consumer Price Index (CPI) to tick up due to higher import costs from tariffs filtering through to retail prices.

  • Date
  • Auteur Shane Strowmatt, LGT
  • Temps de lecture 5 minutes

US-China trade talks
© Shutterstock

US and Chinese officials announced on Tuesday that they had reached a framework agreement to revive their trade truce and address China's export restrictions on rare earth minerals. The deal, finalised after two days of talks in London, aims to implement the Geneva consensus from last month, which sought to ease retaliatory tariffs. While the agreement resolves some export controls, including US restrictions on semiconductors, it does not fully address deeper trade disputes, such as US tariffs and China's state-led economic practices. Both nations now face an August 10 deadline to negotiate a more comprehensive deal or risk a sharp escalation in tariff rates.

Asia-Pacific markets rise on trade optimism

Asia-Pacific markets advanced on Wednesday as the progress in US-China trade talks boosted investor sentiment. Japan’s Nikkei 225 was up 0.5%, while Korea’s Kospi surged 1.1%, hitting a 42-month high. Australia’s S&P/ASX 200 edged up 0.2%. Hong Kong’s Hang Seng Index climbed 1% and mainland China’s CSI 300 advanced 0.8%, reflecting broad-based optimism in the region.

US indices rise on positive trade sentiment

US stock indices gained on Tuesday as well, reflecting the positive sentiment coming from the trade negotiations. The Dow Jones Industrial rose 0.3% to 42,866.87 points, while the S&P 500 and Nasdaq 100 climbed 0.6% and 0.7%, respectively, with the latter nearing the 22,000-point mark. Technology stocks led the gains, with Tesla surging 5.7% following recent tensions involving its CEO.

European stocks mixed

European equity markets saw cautious trading on Tuesday, with the EuroStoxx 50 closing 0.2% lower, despite paring earlier losses. Germany’s DAX fell 0.8%. France’s CAC 40 managed a modest gain of 0.2%, contrasting with a 0.1% decline in the Swiss Market Index. Auto sector shares outperformed in Europe, rising 1.8%. Conversely, financials and banks lagged, with UBS shares dropping nearly 5% on concerns over new capital regulations.

UK unemployment rises to highest since 2021

The UK unemployment rate increased to 4.6% in the three months to April, its highest level in nearly four years, according to data released on Tuesday. Pay growth slowed to 5.2%, marking the weakest pace since September 2024, while job vacancies fell to their lowest level in four years, reflecting a softening labour market. The slowdown comes amid rising social security contributions and minimum wage increases, prompting investors to anticipate further interest rate cuts by the Bank of England later this year. Sterling and gilt yields fell following the news, underscoring market concerns over the economic outlook.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Inditex and Oracle. Annual general meetings at Caterpillar, Freeport-McMoRan, and Nasdaq.

Economic data in focus: US Consumer Price Index (14:30).

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Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.