Markets rise on trade deal hopes, Dollar steady
LONDON: Global shares rose on Thursday, buoyed by US President Donald Trump's pledge of a potential first trade agreement, likely with Britain, while the dollar firmed as markets lowered expectations for near-term US interest rate cuts.
European markets opened stronger, with Germany's DAX gaining 1 per cent, London's FTSE up 0.3 per cent, and the pound rising against the euro, driven by renewed trade optimism. Wall Street futures also climbed nearly 1 per cent, though investors are cautious, awaiting details on whether Trump's 10 per cent baseline tariffs might be rolled back.
Attention is also turning to planned US-China talks in Switzerland this Saturday, which could mark a first step towards easing the damaging trade tensions between the world's two largest economies.
The US Federal Reserve kept interest rates steady at 4.25-4.5 per cent for a third consecutive meeting, highlighting the risks of rising inflation and unemployment. This cautious tone reduced the probability of a June rate cut to 20 per cent, with a July move now priced at 70 per cent, down from near-certainty just a week ago.
Bond markets reacted with 10-year US Treasury yields edging up to 4.29 per cent, while Germany's 10-year yield - the euro area benchmark - also rose slightly to 2.48 per cent. The dollar index regained momentum, rising 0.5 per cent in European trading to just above the key 100-point level.
The pound climbed as much as 0.5 per cent before easing to $1.3315, with attention shifting to the Bank of England's widely expected quarter-point rate cut. Analysts at PGIM anticipate three further cuts this year as the BoE navigates global economic pressures.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, while Japan's Nikkei rose 0.4 per cent and Chinese blue chips gained 0.5 per cent, continuing to recover ground lost since Trump's recent tariff moves.
Technology stocks also saw significant movement, with Nvidia rising 3 per cent on potential AI chip export rule changes, while Alphabet fell 7.2 per cent amid speculation that Apple is developing a competing AI-powered web browser.
Oil prices also edged higher, with US crude up 0.7 per cent to $58.50 per barrel and Brent crude gaining 0.6 per cent to $61.50, reflecting renewed trade optimism. Gold rose 0.3 per cent to $3,374.50 per ounce, though still below its recent peak. __ Reuters
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