HFMarkets (hfm.com): Market analysis services.

[HFM]

Date: 08th May 2025.

 

Markets Rally as Fed Holds Rates, Trump Teases Major Trade Deal With UK.

 

US stocks surged midweek as investors reacted to a flurry of market-moving developments—from Federal Reserve policy decisions and trade deal speculation to AI regulations and geopolitical tensions.

 

Federal Reserve Holds Rates Amid Political Pressure

Despite mounting pressure from former President Donald Trump to lower interest rates ahead of a potential economic slowdown, the Federal Open Market Committee (FOMC) unanimously voted to maintain the benchmark interest rate in the 4.25% to 4.5% range. This decision follows a full percentage point cut made in late 2024.

 

‘Uncertainty’ remains the name of the game for the FOMC as well as the markets. Though the word was used only once in the statement, Chair Powell used it, or variations of it, many times in his presser, ultimately saying his gut tells him ‘uncertainty’ over the economy's path is extremely elevated.

 

Powell warned of ongoing risks from global trade tensions and tariffs, stating, ‘If sustained, large increases in tariffs could lead to higher inflation, slower growth, and increased unemployment.’ He acknowledged that the Fed remains vigilant, especially as uncertainties around international trade persist.

 

The major takeaway is that the Fed is firmly on the sidelines monitoring the many tariff-related unknowns regarding their ‘scale, scope, timing, and persistence’ and their impacts on the economy. The Fed is in no hurry and awaits clear evidence to dictate the appropriate policy response.

 

Federal Reserve Chair Jerome Powell reaffirmed the central bank’s independence on Wednesday, dismissing political influence from the White House. Addressing reporters, Powell emphasised, ‘President Trump doesn’t affect our doing our job at all,’ and reiterated that he has never—and will never—request a meeting with any US president.

 

 

 

 

 

Trump Sparks Market Rally With UK Trade Deal Tease

Equity markets jumped late Wednesday after Donald Trump posted on Truth Social that the US had secured a ‘MAJOR TRADE DEAL WITH A BIG, AND HIGHLY RESPECTED, COUNTRY.’ Sources familiar with the matter indicated the United Kingdom is expected to be named as the trade partner during a scheduled White House press conference Thursday morning.

 

US stock futures surged on the news:

 

• Dow Jones Industrial Average futures rose 0.6%
• S&P 500 futures gained 0.7%
• Nasdaq 100 futures climbed 1%
• Gold is down 0.7%, sliding to $3,336 — edging closer to the crucial 100-hour moving average at $3,330.

Expectations for a broader US-UK economic agreement added to investor optimism, alongside plans for high-level trade talks between the US and China in Switzerland. However, Trump’s statement that tariffs on Chinese imports would remain in place ahead of the negotiations tempered some enthusiasm.

 

Asian Markets and Geopolitical Concerns

Asian stock markets followed the US momentum on Thursday:

 

• Japan’s Nikkei 225 rose 0.2%
• Australia’s ASX 200 increased 0.2%
• South Korea’s Kospi added 0.3%
• Hong Kong’s Hang Seng surged 0.8%
• Shanghai Composite advanced 0.8%

However, ongoing geopolitical tensions, particularly the escalating conflict between India and Pakistan, introduced fresh risks. Pakistan has vowed retaliation for missile strikes it says were carried out by India, resulting in over 30 civilian deaths in Pakistan-administered Kashmir and Punjab. The situation has drawn international concern over the potential for wider instability in the region.

 

Nvidia, AMD Surge as AI Export Rules Get Revamped

Tech stocks, particularly in the semiconductor sector, also benefited from a regulatory shift. Nvidia (NVDA) closed up 3% following reports that the Trump administration will repeal AI chip export restrictions imposed by the Biden administration.

 

The US Commerce Department confirmed the policy reversal, describing the previous rules as ‘overly bureaucratic’ and vowing to implement a streamlined framework that ‘unleashes American innovation.’

 

Advanced Micro Devices (AMD) also climbed nearly 1.8% on the news, though both chipmakers saw their shares ease slightly in after-hours trading.

 

The Walt Disney Co. led the earnings-driven rally, soaring 10.8% after beating profit forecasts, raising guidance, and reporting over one million new streaming subscribers.

 

BoE Expected to Cut Today

The BoE is widely expected to lower the Bank Rate by another 25 bp to 4.25% on May 8. U.K. inflation is still expected to pick up again before retreating, but lower oil prices and a stronger pound will likely prompt the BoE to lower inflation forecasts with the updated Monetary Policy Report, which will pave the way for lower rates. And with growth risks intensifying thanks to US tariff jitters and the impact of the autumn budget, the chances of back-to-back cuts are rising, especially as U.K. rates remain relatively high.

 

Stagflation risks continue to linger, but BoE head Bailey warned last week that a trade war would hurt the U.K. economy, despite the fact that it is facing lower ‘reciprocal’ tariffs than others. Bailey stressed that ‘it is not just the relationship between the US and the UK, it is the relationship between the US, the U.K. and the rest of the world that matters, because the UK is such an open economy.’ ‘We have to take very seriously the risk to growth’, Bailey warned, adding that ‘fragmenting the world economy will be bad for growth.’

 

Outlook: Economic Growth Meets Policy Uncertainty

Despite global uncertainties, the Fed noted that the US economy continues to grow at a ‘solid pace.’ However, Powell cautioned that persistent tariff threats and rising inflation could put the central bank in a precarious position,risking a scenario of stagflation, where economic stagnation coincides with rising prices.

 

With trade negotiations looming, rate cuts paused, and geopolitical risks rising, investors will be closely monitoring headlines for clues on the next moves in markets and monetary policy.

 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

 

Please note that times displayed based on local time zone and are from time of writing this report.

 

Click HERE to access the full HFM Economic calendar.

 

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

 

Click HERE to READ more Market news.

 

Andria Pichidi

HFMarkets

 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

[HFM]

Date: 09th May 2025.

 

Markets Rally on Renewed Trade Optimism as Trump Softens Stance.

 

US equities and the dollar climbed to their highest levels in a month, as investors grew increasingly hopeful ahead of a key round of trade negotiations between Washington and Beijing. Talks are scheduled to take place in Switzerland over the weekend, with both sides seeking to reduce tensions and roll back punitive tariffs, currently at 145% on Chinese imports and 125% on US goods in response.

 

President Trump struck a more conciliatory tone, suggesting tariffs on China could soon be scaled back. ‘I think it’s going to be a substantive and friendly meeting,’ he said while unveiling a new trade deal with the UK. When asked about potential reductions, Trump said, ‘Right now you can’t go any higher. It’s at 145%, so we know it’s coming down.’

 

The shift in tone marks a turning point after a turbulent April, during which markets were rattled by growing recession fears and escalating trade rhetoric. Since Trump first hinted at easing duties late last month, investors have rotated back into US assets, fueling a strong rebound in risk sentiment.

 

‘You’re going to want to buy stocks now,’ Trump told reporters on Thursday, citing both the new UK deal and a recently enacted tax measure as reasons for investor optimism.

 

Equities Push Higher as Risk Appetite Builds

 

Wall Street posted a second straight day of gains: the Dow rose 0.62%, the S&P 500 added 0.58%, and the Nasdaq climbed 1.07%. In Europe, Germany’s DAX advanced 1.02%, nearing record highs, while the Euro Stoxx 600 rose 1.1%. Futures suggest more upside in US and European markets heading into the weekend.

 

 

 

 

 

Asian shares, however, delivered a mixed performance as investors stayed cautious ahead of the trade meeting. Japan’s Nikkei 225 gained 1.32%, Australia’s ASX 200 edged up 0.41%, while South Korea’s Kospi slipped 0.1% and Hong Kong’s Hang Seng fell 0.15%.

 

Despite the cautious tone, US futures posted modest gains, and oil prices continued to trend higher.

 

Fresh trade data from China added to the market narrative. April exports rose 8.1% year-on-year, beating expectations but down from March’s 12.4% pace. However, shipments to the US plunged over 20%, as the impact of steep US tariffs began to take hold.

 

Dollar Rebounds Sharply as Euro Falters

 

The US dollar index (DXY) surged above the 100 mark for the first time in nearly a month, gaining more than 1% as capital flowed back into dollar-denominated assets. The euro, which had previously benefited from safe-haven demand, dropped to 1.12—its lowest level since early April, after peaking above 1.15 in recent weeks.

 

Oil Jumps While Gold Pulls Back

 

Crude prices rallied to their highest levels in a month. WTI crude climbed over $60 per barrel, up 3.5% since Thursday’s open, and Brent crude broke through $63 per barrel. The gains were fueled by improving risk appetite and expectations of stronger global demand.

 

Gold, on the other hand, retreated for a second day as investors moved away from safety plays. COMEX futures fell 2.5% on Thursday, while spot gold slid 3.6% across two sessions, touching $3,313 per ounce before rebounding modestly. By Friday, spot prices stood at $3,324.75, up 0.6% on the day and nearly 3% for the week.

 

While the UK-US trade pact offered improved customs access for American exporters and some tariff relief for UK steel, autos, and aluminium, the deal was more limited in scope than initially promised. Analysts noted that without broader reforms or clearer economic direction, the agreement may do little to ease concerns over slowing global growth.

 

Bitcoin Surges on Trade Hopes and Coinbase Deal

 

Bitcoin (BTCUSD) surged past $103,000 on Thursday, marking its highest level since late January. The cryptocurrency rallied alongside equities after Trump signalled a more diplomatic approach to trade, highlighting interest from other nations to forge deals with the US.

 

 

 

 

 

A second catalyst came from Coinbase, which announced a $2.9 billion acquisition of Deribit, a major crypto derivatives platform. The news bolstered sector sentiment and contributed to Bitcoin’s 5% intraday gain, with the digital asset peaking at $102,147 by late afternoon ET.

 

The recovery follows a sharp decline to $75,000 in early April, triggered by Trump's aggressive tariff declaration on ‘Liberation Day.’ Since then, Bitcoin has rebounded on renewed optimism, with its performance echoing the strong correlation it shares with US tech stocks and broader risk assets.

 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

 

Please note that times displayed based on local time zone and are from time of writing this report.

 

Click HERE to access the full HFM Economic calendar.

 

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

 

Click HERE to READ more Market news.

 

Andria Pichidi

HFMarkets

 

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.