US stocks gained and the dollar strengthened amid trade optimism following the US-UK agreement and President Trump's comments on China - Newsquawk Asia-Pac Market Open

• US stocks gained with sentiment underpinned by trade-related optimism after US President Trump confirmed a US-UK trade framework agreement and commented that China tariffs cannot go higher and will come down, which provided some encouragement ahead of US-China trade talks this weekend in Switzerland. Furthermore, the NY Post also reported that the US is weighing lowering China tariffs to as low as 50% from 145% as an olive branch for negotiations with China, although stocks closed off today's best levels amid reports that President Trump is pushing for a new top tax rate on the highest earners.
• USD strength persisted post-FOMC in which the greenback gained against all major peers as buyers stepped in amid a slow reintegration of confidence in the US economy with sentiment supported by trade-related optimism, while the data releases were mixed although Initial Jobless Claims fell and Unit Labour Costs accelerated.
• Looking ahead, highlights include Japanese Household Spending & Labour Cash Earnings, Chinese Trade Data, Supply from Australia.

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LOOKING AHEAD

• Highlights include Japanese Household Spending & Labour Cash Earnings, Chinese Trade Data, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks gained with sentiment underpinned by trade-related optimism after US President Trump confirmed a US-UK trade framework agreement and commented that China tariffs cannot go higher and will come down, which provided some encouragement ahead of US-China trade talks this weekend in Switzerland. Furthermore, the NY Post also reported that the US is weighing lowering China tariffs to as low as 50% from 145% as an olive branch for negotiations with China, although stocks closed off today's best levels amid reports that President Trump is pushing for a new top tax rate on the highest earners.
• SPX +0.58% at 5,664, NDX +0.98% at 20,064, DJI +0.62% at 41,368, RUT +1.85% at 2,026.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said UK PM Starmer was on the phone and that he reached a breakthrough deal with the UK, which will reduce non-tariff barriers and increase access for beef and ethanol, while it will fast-track US goods through customs and things will move quickly both ways. Trump stated the final details will be written up in the coming weeks and they will receive new market access for US chemicals and machinery.
• US President Trump posted on Truth "Together with our strong Ally, the United Kingdom, we have reached the first, historic Trade Deal since Liberation Day. As part of this Deal, America will raise $6 BILLION DOLLARS in External Revenue from 10% Tariffs, $5 BILLION DOLLARS in new Export Opportunities for our Great Ranchers, Farmers, and Producers, and enhance the National Security of both the U.S. and the UK through the creation of an Aluminum and Steel Trading Zone, and a secure Pharmaceutical Supply Chain."
• US President Trump thinks the 10% baseline is set and is not a template for future deals, while he added that 10% is a low number and others will be higher. Furthermore, he said a template of 10% is probably the lower-end and he won't do a similar deal with cars.
• UK PM Starmer said the US deal is a tribute to US-UK history and the deal will boost trade and create jobs, while he added the deal is a fantastic platform, including on the tech side. It was also reported that UK Trade Secretary Reynolds said cutting 10% US base tariffs is subject to further talks and beef imports from the US would comply with UK rules.
• US President Trump said they have many meetings planned and every country wants a deal, while he added that Treasury Secretary Bessent’s meeting with China will be interesting and that China wants to make a deal very badly.
• US President Trump said China tariffs can't get any higher than 145% and know it's coming down. Trump also said they are going to have a large share of the chipmaking market, as well as noted that China talks will be substantive and China wants to do something. Furthermore, he wants to compete in China and wants China to let US business in, while he intends to make a deal with Europe and will be dealing with them.
• US weighs a plan to slash China tariffs to as low as 50% from 145% as soon as next week, according to the New York Post citing sources. The report noted that sources close to the negotiations said US officials are discussing a proposal to lower President Trump’s punishing levy on China goods to between 50% and 54% as they begin what promise to be lengthy talks to hammer out a trade agreement, while trade taxes on neighbouring south Asian countries would be cut to 25%. Furthermore, a source said they are going to be bringing it down to 50% while the negotiations are ongoing regarding tariffs on China.
• US Commerce Secretary Lutnick said the deal adds USD 5bln of opportunity for US exporters and that the US 10% tariff stays on.
• USTR Greer said this is the framework, when asked about UK trade deal and that other countries should look to this as a model. Greer said they will have more deals in the weeks and months to come and when 90-days are up, they will see other deals, according to CNBC.
• US President Trump administration officials are reportedly mulling fast-tracking deals with Gulf wealth funds, according to Bloomberg.
• Wall Street executives with ties to the White House said the India-Pakistan tensions slowed the trade pact with India and is the reason the UK is coming first, while deals on deck include South Korea and Japan with talks said to be "moving along", according to FBN.
• FBN's Gasparino posted "Wall Street execs with contracts in the White House say the plan for trade deals on tap — India, Japan, South Korea and Australia— is to have tariffs at or around 10 per (cent) like UK. China, of course, is another story".
• EU Commission launches public consultation on possible countermeasures as a response to US tariffs in which it proposes potential countermeasures on up to EUR 95bln of US imports in response to US tariffs in the event negotiations fail. The list put to consultation concerns imports from the US covering a broad range of industrial and agricultural products, while the Commission is also consulting on possible restrictions on certain EU exports of steel scrap and chemical products to the US worth EUR 4.4bln.
• German Chancellor Merz and US President Trump agreed on the need to quickly resolve trade disputes during a phone call.

NOTABLE HEADLINES

• US President Trump renewed criticism on Fed Chair Powell in a post on Truth Social and stated " Oil and Energy way down" and there is "virtually NO INFLATION, Tariff Money Pouring Into the U.S".
• US President Trump reportedly privately urged House Speaker Johnson to raise the top tax rate and close the carried interest loophole. It was later reported that Trump is pushing for a new tax bracket in which individuals making USD 2.5mln or USD 5mln jointly would go to 39.6%, according to Punchbowl's Sherman.
• US President Trump said better go out and buy stocks now.
• US VP Vance said Fed Chair Powell is 'way too late' in helping fight back against some trade deals.
• US Treasury Secretary Bessent said the world needs American leadership for stablecoins and other digital assets to thrive globally, while he added that the Senate missed an opportunity to provide that leadership by failing to advance the GENIUS Act.
• NY Fed SCE (April): one-year ahead inflation expectations 3.6% (prev. 3.6%), Three-year ahead 3.2% (prev. 3.0%), 5-year ahead 2.7% (prev. 2.9%).

DATA RECAP

• US Wholesale Invt(y), R MM (Mar) 0.4% vs. Exp. 0.5% (Prev. 0.5%)
• US Wholesale Sales MM (Mar) 0.6% vs. Exp. 1.9% (Prev. 2.4%, Rev. 2.0%)
• US Productivity Prelim (Q1) -0.8% vs. Exp. -0.7% (Prev. 1.5%, Rev. 1.7%)
• US Unit Labor Costs Prelim (Q1) 5.7% vs. Exp. 5.1% (Prev. 2.2%, Rev. 2.0%)
• US Initial Jobless Claims w/e 228.0k vs. Exp. 230.0k (Prev. 241.0k)
• US Continued Jobless Claims w/e 1.879M vs. Exp. 1.886M (Prev. 1.916M, Rev. 1.908M)

FX

• USD strength persisted post-FOMC in which the greenback gained against all major peers as buyers stepped in amid a slow reintegration of confidence in the US economy with sentiment supported by trade-related optimism, while the data releases were mixed although Initial Jobless Claims fell and Unit Labour Costs accelerated.
• EUR was pressured amid the firmer buck and retreated beneath the 1.1300 handle, while the EU commission released its list of provisional countermeasures towards the US if talks fail, including a broad range of industrial/agricultural products and restrictions on certain EU exports of steel scrap and chemical products.
• GBP was initially supported following the BoE rate decision to cut rates by 25bps via a 7-2 vote split in which Mann and Pill unexpectedly voted to keep rates unchanged but Dinghra and Taylor voted for a larger 50bps cut, while the US and UK also announced a trade agreement which removes the 25% tariff on UK steel and aluminium, as well as cuts US tariffs on British cars from 27.5% to 10% with further details of the agreement to be written up in the coming weeks. Nonetheless the gains in GBP were gradually reversed as the stronger dollar dominated the FX space.
• JPY weakened which saw USD/JPY briefly return to the 146.00 handle amid the positive risk appetite and upside in US yields.
• Norwegian Policy Rate was kept at 4.5%, as expected, while the outlook implies that the policy rate will most likely be reduced in 2025.
• Swedish Riksbank Rate 2.25% vs. Exp. 2.25% (Prev. 2.25%). Riksbank said it is somewhat more probable that inflation will be lower instead of being higher than in the March forecast, which could suggest a slight easing of monetary policy going forward.

FIXED INCOME

• T-notes were pressured as risk appetite heightened on trade optimism, while Powell's wait-and-see message saw the curve flatten.

COMMODITIES

• Oil prices edged higher throughout the session with prices buoyed by risk sentiment and trade optimism.
• OPEC April output fell 30k BPD from March to 26.60mln BPD, according to a Reuters survey which showed output edged lower despite the planned output hike.
• Russia is to increase supply of oil, gas and LNG to China in 2025, according to RIA citing Deputy PM Novak.
• US and Russian officials reportedly held discussions about the US assisting in reviving Russian gas sales to Europe, while US involvement could give them visibility and control over how gas flows resume to the EU, according to Reuters citing sources.
• Codelco copper production rose 14.8% Y/Y in March to 123,200 metric tons, while Escondida copper production rose 18.9% to 120,600 metric tons and Collahuasi copper production fell 29.3% Y/Y to 35,200 metric tons.

GEOPOLITICAL

MIDDLE EAST

• Israeli Air Force launched raids on an important Hezbollah target in southern Lebanon, according to Al Jazeera.
• IDF asked to recruit more than 100,000 soldiers in reserve duty in preparation for expanding its operation in the Gaza Strip.
• US Treasury issued new Iran-related sanctions which targets two individuals, several entities and vessels.
• IRGC commander said Iran does not seek nuclear weapons and has removed them from its military doctrine, while he added they are ready for war on any scale if they are exposed to any threats, according to Sky News Arabia.

RUSSIA-UKRAINE

• US President Trump said he just concluded a rare earth deal with Ukraine and will be speaking with Ukrainian President Zelensky soon. Trump later commented that he doesn't think he will talk to Russian President Putin in Saudi Arabia.
• US VP Vance said the US would walk away from Russia and Ukraine talks if it concludes Russia is not engaging in 'good faith', according to a Fox News interview.
• German spokesperson said Chancellor Merz spoke with US President Trump by phone and agreed to cooperate on ending the war in Ukraine.

OTHER

• Pakistan Defence Minister said an Indian drone incursion makes a Pakistan attack on India 'increasingly' certain, while he added there is hardly any space left to de-escalate and the conflict is entering a blind alley. Furthermore, he said they will target Indian military installations in any Pakistani retaliation.
• Pakistan Deputy PM said Pakistan encountered 75-80 Indian fighter jets and shot down 5 jets.
• Indian military said three military stations in proximity to the international boundary in Jammu and Kashmir were targeted by Pakistan using missiles and drones, but added that there were no losses.

ASIA-PAC

NOTABLE HEADLINES

• China is weighing housing market overhaul to curb pre-sales, according to Bloomberg.

EU/UK

NOTABLE HEADLINES

• BoE cut the Bank Rate by 25bps to 4.25% (exp. 4.25%) in a 7-2 vote (exp. 9-0) as Mann and Pill voted for unchanged, while Dinghra and Taylor voted for a larger 50bps cut. BoE reiterated that "monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium-term have dissipated further.
• BoE Governor Bailey said interest rates are not on autopilot and he welcomes the US-UK trade deal which will help reduce uncertainty. BoE Governor Bailey later commented that a 3.5% terminal rate implied by current market pricing is "not unreasonable", according to Bloomberg.