Global markets reacted cautiously on Wednesday to the latest developments in trade talks between the US and China. Investors are awaiting more clarity on the framework and long-term validity of the agreement.
Stock markets and the US dollar rose slightly with cautious optimism, while bond investors remained on the sidelines ahead of a major US inflation report and a large Treasury bond auction. This report is expected to provide early signals of price increases due to tariffs.
In a statement from London, negotiators announced that they had agreed on a trade framework. This framework will be presented to national leaders for further negotiation.
However, details have not yet been shared.US Commerce Secretary Howard Lutnick suggested that there would be solutions regarding rare earth elements and magnet restrictions within this framework, but refrained from giving details.
Australian Commonwealth Bank currency strategist Carol Kong said, “Even without concrete results, markets are reassured as long as the dialogue continues.” However, he added that he was skeptical:
“A comprehensive trade agreement usually takes years, so I don’t have much faith that the London framework will cover everything.”
Meanwhile, the legal situation remains complicated. A federal appeals court ruled on Tuesday to keep President Donald Trump’s broad tariffs in effect. This decision comes as the lower court continues its review of the attempt to halt the tariffs—which increases uncertainty.
Furthermore, Elon Musk has expressed regret for his controversial posts about Trump. This is expected to ease tensions in the political atmosphere and pressure on Tesla (TSLA.O) shares.
US investors remain cautious, considering previous trade-related volatility. S&P 500 and Nasdaq futures fell 0.2%.
In contrast, Asian and European markets showed slight gains. The MSCI Asia-Pacific index excluding Japan rose 0.6%, while the European STOXX 600 index increased 0.14%.
