With the Israel-Iran ceasefire holding, investors turned attention back to the wider economy and President Donald Trump’s tariff blitz.
Trump imposed a 10% tariff on goods from nearly every country at start of April, but he delayed higher rates on dozens of nations until July 9 to allow for talks.
The US leader yesterday said the US had signed a deal relating to trade with China, without providing further details.
China said today that Washington would lift “restrictive measures”, while Beijing would “review and approve” items under export controls.
“While details remain sparse, the announcement removed another layer of uncertainty from the global risk environment,” said David Morrison, analyst at financial services firm Trade Nation.
“Investors welcomed the confirmation as a positive signal for supply chains and global trade, even if the implementation timeline remains vague,” he added.
US treasury secretary Scott Bessent added today that Washington could reach key tariff deals with over a dozen partners in the coming months and have its trade agenda wrapped up by early September.
The US is focusing on agreements with 18 key trading partners.
“If we can ink 10 or 12 of the important 18, there are another important 20 relationships, then I think we could have trade wrapped up by Labour Day (Sept 1),” Bessent told Fox Business.
Wall Street opened higher, with both the S&P 500 and Nasdaq Composite pushing into record territory.
The gains came despite the US Federal Reserve’s preferred inflation measure – the core personal consumption expenditures price index – coming in at a higher-than-expected 0.2% increase in May.
“Today’s inflation report shouldn’t be enough to give markets a significant scare, but it probably dashes the slim hopes investors had for a July rate cut,” said eToro US investment analyst Bret Kenwell.
“Further, it may give investors a bit of hesitation with stocks surging into record high territory as we near quarter-end,” he added.
European stock markets also rose, with the Paris CAC 40 leading the way, boosted by a rise in luxury stocks.
Traders brushed off data showing that inflation edged up in France and Spain in June, even as it added to speculation that the European Central Bank may pause its interest rate-cut cycle.
In Asia, Tokyo rallied more than one percent to break 40,000 points for the first time since January, while Hong Kong and Shanghai equities closed lower.
Weaker dollar
The dollar held around three-year lows today as traders bet on US interest rate cuts, especially after Trump hinted at replacing Fed chief Jerome Powell.
The prospect of lower borrowing costs sent the Dollar Index, which compares the greenback to a basket of major currencies, to its lowest level since March 2022.
Weak economic data yesterday – showing that the world’s top economy contracted more than previously estimated in the first quarter and softer consumer spending – further fuelled rate cut expectations.