The Dow Jones Industrial Average rose by 0.62%, the tech-focused Nasdaq increased by 1.07%, and the broad S&P 500 gained 0.58% during the session.
“A trade agreement—even in the form of a statement of intent—is what investors were expecting,” commented Chris Zaccarelli of Northlight Asset Management in an analytical note.
Former President Donald Trump announced a preliminary truce in his global trade war, characterized as a “historic” commitment with the British government, although the specifics suggest a limited scope.
The commitment, which has been under negotiation for weeks, is expected to boost British imports from the U.S. by “several billion dollars,” especially concerning beef, ethanol, and nearly all products produced by American farmers, stated Trump.
On the British side, Prime Minister Keir Starmer remarked on the deal’s significance for the British automotive and steel industries. Specifically, the U.S. will reduce the 25% tariff on imported vehicles to 10% for British cars, according to Downing Street.
A British government source clarified to AFP that this is not a free trade agreement between the two long-standing allies, but rather a “general conditions document” leading to a commitment and a framework for more detailed discussions at a later date.
“The United Kingdom might be the first domino to fall, the first of many trade agreements to be concluded,” acknowledged Sam Stovall of CFRA in statements to AFP.
“If the U.S. government concludes other agreements, it will contribute to healing a stock market battered this year,” added Chris Zaccarelli.
Trump has indicated that both China and the European Union want to make deals with him.
“Market operators are now particularly focused on Geneva, where the U.S. and China will discuss their differences this weekend,” observed José Torres of Interactive Brokers in an analytical text.
Trump forecasted that negotiations with Beijing will be “substantial,” insisting that the Chinese market “opens up” to American companies.
Moreover, investors remain optimistic following the Federal Reserve’s decision to maintain its benchmark interest rate.
During the press conference after the meeting where this was decided, the central bank’s president, Jerome Powell, “simply reminded that the Fed remains dependent on economic statistics, which continue to be good,” reassuring investors, according to Sam Stovall.
In terms of indicators, weekly unemployment benefit claims were lower than the previous week and even fell below economists’ forecasts.
Among listed companies, and on the day the Anglo-American trade understanding was revealed, Boeing closed up 3.4% after the Commerce Secretary stated that a British airline would announce a $10 billion order for the aircraft manufacturer.
