The United States and China announced a breakthrough in trade talks on Monday, agreeing to pause most of the tariffs imposed on each other’s products for a period of 90 days. As part of the deal, both nations will significantly reduce their mutual tariffs— the US will cut tariffs on Chinese goods from 145% to 30%, while China will cut tariffs on American imports from 125% to 10%.
In a joint statement, both emphasised the need for a “sustainable, long-term, and mutually beneficial” economic partnership. The news sparked optimism across global financial markets: Dow futures surged over 2%, S&P 500 futures climbed close to 3%, and Nasdaq Composite futures rose more than 3.5% during the afternoon trading session. Major Asian indexes also responded positively, with Hong Kong’s Hang Seng index closing up nearly 3%.
In the UK, unemployment ticked up slightly to 4.5% in the three months to March. Earnings growth also decreased to 5.6%, although it still continues to strongly outpace UK inflation (which currently sits at 2.6%). Modestly weaker wage growth is likely to reassure the Bank of England’s monetary policy committee, which cut interest rates by a quarter point last week to 4.25% but has expressed concern about the continued strength of pay.
U.S. inflation cooled more than expected in April, dropping to its lowest level since early 2021 — a positive signal for consumers and markets alike. The Consumer Price Index fell to 2.3%, down from 2.4% in March, surprising analysts who had predicted no change. The decline was largely driven by a 1.3% drop in fuel prices, as oil markets reacted to global trade tensions.
Despite ongoing tariff pressures, the economy has shown resilience. Core inflation, which strips out food and energy, remained steady at 2.8%, in line with expectations. The combination of easing headline inflation and stable core prices has reinforced market confidence that the Federal Reserve could still cut interest rates twice this year — potentially as early as September.
Finally, Nvidia’s CEO announced on Tuesday that it is set to deliver more than 18,000 of its cutting-edge Blackwell AI chips to Saudi company Humain. The announcement came during a high-profile White House-led visit to Saudi Arabia, which included President Donald Trump and top U.S. business leaders. The deal not only highlights the soaring demand for the tech chip giant’s hardware but also illustrates how U.S. tech innovation is being used as a powerful diplomatic lever on the global stage.
Still to come this week we have U.S. retail sales and consumer sentiment, as well as Japan and UK GDP.
Nicola Tune, Portfolio Specialist
