Morning Note: An update on market news.

Market News

The dollar rose and US equity-index futures jumped – S&P 500 (+2.5%) and Nasdaq 100 (+3.5%) – as China announced it will lower tariffs on US goods to 10% from 125% for 90 days, while the US will cut tariffs on Chinese goods to 30% from 145%. This followed trade talks over the weekend where “substantial progress” was made. Scott Bessent said neither the US nor China want to decouple. China says it is committed to maintain a multi-lateral trade system. The two sides may conduct working-level consultations on relevant economic and trade issues.

Safe haven assets have gone into reverse. The yield on 10-year US Treasuries has risen to a 1-month high of 4.44%, while gold has tumbled to $3,230 an ounce.

In Asia this morning, equities were also firm: Nikkei 225 (+0.4%); Hang Seng (+3%); Shanghai Composite (+1.0%). The dollar weakened against the yuan and currencies sensitive to China’s economy like the Aussie dollar. Indian and Pakistani shares jumped after their countries’ ceasefire.

The FTSE 100 is currently 1.0% higher at 8,631, with defensive stocks lagging. In particular, the Pharmaceutical sector is trading lower – AZN (-4%); GSK (-3%) – as Donald Trump said he will sign an executive order on cut US prescription drug prices by as much as 80%. Sterling trades at $1.3210 and €1.1860.

Brent Crude moved above $65 a barrel, although gains remained capped by OPEC+ plans to accelerate output hikes in May and June. A potential US-Iran nuclear deal also added pressure, as it could ease concerns over global oil supply shortages.

Source: Bloomberg