Markets rallied after the US and China agreed on May 12 to sharply reduce tariffs for 90 days, aiming to ease trade tensions. US tariffs on Chinese goods will drop from 145% to 30%, while China’s will fall from 125% to 10%. This follows the recent US–UK trade deal and boosted global market confidence. The S&P 500 surged 3.3% Monday, and the Nasdaq 100 re-entered a bull market. Additionally, markets welcomed lower-than-expected US inflation data, with futures for the S&P 500 and Nasdaq slightly up on Tuesday’s premarket trading. Investors are hoping the new data will pave the way for the Fed’s rate cut in June 2025. Last week, the Fed held rates steady at 4.25%–4.50%, citing increased uncertainty. Services activity improved slightly in April, but manufacturing remained weak. While the tariff pause is welcome news, investors remain wary about longer-term inflation and trade stability.
European stocks extended their gains for a fourth week, with the STOXX Europe 600 rising 0.2% amid easing global trade tensions. Germany’s DAX jumped 1.8%, and Italy’s FTSE MIB surged 2.7%, while France’s CAC 40 and the UK’s FTSE 100 posted slight declines. The BoE cut its key interest rate by 0.25% to 4.25%, but the narrow vote and cautious tone reduced expectations for further cuts this year. German industrial output rose 3% in March, beating expectations as manufacturers accelerated production before tariff changes.
