By Sinéad Carew and Marc Jones
NEW YORK/LONDON (Reuters) – Global equities rose on Thursday, with Wall Street outperforming, while the dollar and Treasury yields also gained after the United States and United Kingdom outlined a trade deal.
Cryptocurrencies were also bolstered by the U.S.-UK trade agreement, which was the first pact announced in the month since U.S. President Donald Trump started a 90-day pause on trade tariffs to give room for negotiation.
The pact, unveiled by Trump and British Prime Minister Keir Starmer, leaves in place a 10% tariff on goods imported from the UK but lowers prohibitive U.S. duties on UK car exports. Britain agreed to lower its tariffs to 1.8% from 5.1% and provide greater access to U.S. goods.
Investors were encouraged as they waited for planned talks between U.S. and Chinese officials in Switzerland over the weekend, potentially a first step in dialing down the damaging trade war between the world’s two biggest economies.
“There’s optimism growing around trade deals, not only this UK deal that was announced today, but around what might happen over the weekend,” said Mona Mahajan, head of investment strategy at Edward Jones, adding that the S&P 500 has risen sharply since the lows of April.
“During that time period, the sectors that have been leading the way higher have been pro-cyclical, pro-growth parts of the market, like financials and even discretionary to some extent.”
On Wall Street, at 02:52 p.m. the Dow Jones Industrial Average rose 513.68 points, or 1.25%, to 41,627.65, the S&P 500 rose 70.15 points, or 1.25%, to 5,701.43 and the Nasdaq Composite rose 314.61 points, or 1.77%, to 18,052.77.
For the first time, the S&P 500 rose above the intra-day peak of April 2, the last session before Trump’s so-called Liberation Day announcement of blanket tariffs on the biggest U.S. trading partners. The CBOE volatility index, also known as Wall Street’s fear gauge, touched its lowest level since April 2.
MSCI’s gauge of stocks across the globe rose 4.60 points, or 0.55%, to 848.63. Earlier the pan-European STOXX 600 index closed up 0.4%.
On Wednesday, the U.S. Federal Reserve took a wait-and-see stance on interest rates and warned that risks of higher inflation and higher unemployment had risen as it navigates uncertainty caused by Trump’s trade policies.
In currencies, the U.S. dollar gained against the safe-haven yen and Swiss franc with market nerves calmed by the U.S.-UK agreement, while sterling reversed gains made after an interest rate cut from the Bank of England. Sterling weakened 0.14% to $1.3277.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.75% to 100.64.
“There is optimism that this could be a template for other deals to come, however, this is not the trade deal that is going to dramatically change how the U.S. economy responds,” said Will Compernolle, macro strategist at FHN Financial in Chicago.
The euro was down 0.67% at $1.1223 while against the Japanese yen, the dollar strengthened 1.43% to 145.88.
Sweden and Norway’s central banks hinted they could also cut rates later in the year. The Swedish crown weakened 0.58% versus the dollar to 9.727.
Bitcoin gained 4.75% to $101,365.21, while ethereum rose 14.73% to $2,063.37.
In government bonds, the yield on benchmark U.S. 10-year notes rose 9.4 basis points to 4.369%, from 4.275% late on Wednesday, while 30-year bond yields rose 5.9 basis points to 4.8305%.
The 2-year note yield, which typically moves in step with Fed interest rate policy, rose 10 basis points to 3.893%, from 3.793% late on Wednesday.
Crude futures rose, buoyed by hopes of a breakthrough in trade talks between the United States and China, the world’s two largest oil consumers.
U.S. crude settled up 3.17%, or $1.84 at $59.91 a barrel while Brent settled at $62.84 per barrel, up 2.81%, or $1.72, erasing the previous day’s losses.
Demand for safe-haven gold weakened as the UK-U.S. deal raised hopes for deals with other countries.
Spot gold fell 1.7% to $3,307.02 an ounce. U.S. gold futures fell 2.29% to $3,304.10 an ounce.
(Reporting by Sinéad Carew, Gertrude Chavez-Dreyfuss, Marc Jones; Editing by Chizu Nomiyama, Will Dunham and Nia Williams)
