Global Markets Rally as U.S.–China Tariff Truce Extended; Focus Shifts to Key U.S., UK Economic Data
Global markets started the day on a strong note after the United States and China agreed to extend their tariff truce by another 90 days, giving negotiators more time to finalize a trade deal. The move, which avoids the imposition of triple-digit duties on each other’s goods, eased investor concerns even though markets had largely anticipated the extension. Japanese stocks surged to all-time highs, while other Asian markets followed suit, buoyed by the improved trade sentiment.
In Australia, the ASX hovered near record levels despite the Australian dollar dipping slightly. The Reserve Bank of Australia’s widely expected 25-basis-point interest rate cut was met with measured market reaction as traders digested the news. Meanwhile, attention is shifting toward upcoming U.S. and UK economic data, with the figures expected to play a key role in shaping monetary policy directions for the rest of the year.
In the UK, investors await labour market data due later on Tuesday, with July pay growth projected to remain steady at 5%. Recent reports, however, indicate hiring intentions among British businesses have fallen to their lowest since the pandemic, and starting salaries are rising at the slowest pace in over four years. This follows a controversial quarter-point rate cut by the Bank of England last week, which was opposed by four of its nine policymakers.
The decision has left traders skeptical about any further cuts this year, bolstering the pound’s near-term outlook. Nevertheless, economic concerns persist, and speculators have shifted sharply bearish on sterling, holding short positions worth $2.78 billion according to U.S. Commodity Futures Trading Commission data. This marks a swift reversal from the bullish sentiment seen earlier in the year.
In the United States, all eyes are on the upcoming inflation report, which will be scrutinized for signs of how tariffs under President Trump’s policies are impacting consumer prices. The data could influence the Federal Reserve’s decision-making on rate cuts, adding another layer of anticipation for markets already buoyed by the extended U.S.–China truce.
Source: Reuters