(Bloomberg) — Stock futures signaled a rebound on Wall Street as positive signals from initial US-Japan trade talks stirred optimism agreements can be reached to avoid higher levies on American trading partners.
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S&P 500 contracts climbed 0.9%, indicating a bounce back after Wednesday’s 2.2% slide. Europe’s Stoxx 600 index declined ahead of the European Central Bank’s interest rates decision on a busy day of corporate earnings.
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President Donald Trump said there was “big progress” in talks to strike a deal for Japan. The yen weakened after the country’s chief trade negotiator said currencies weren’t discussed, allaying concerns the US would push for a stronger exchange rate. Treasury yields climbed after Federal Reserve Chair Jerome Powell reiterated his commitment to keeping inflation in check. A gauge of the dollar climbed.
Following the turmoil triggered by the announcement of broad US levies earlier this month, investors are focusing more on developments in country-specific trade negotiations. Key questions surround China, after Beijing indicated Wednesday it has several conditions for agreeing to talks with the Trump administration.
“Hopes for good trade talks between the US and other countries after initial progress with Japan is one of the main drivers for US equity futures turning to green territory,” said Mathieu Racheter, Julius Baer head of equity strategy. “But that comes after quite a drop yesterday, so I wouldn’t read too much into the daily price action. The path of least resistance still remains to the downside.”
The ECB is expected to cut rates for the seventh time later Thursday, after Trump’s tariffs darkened the economic outlook. With trade negotiations still in flux, President Christine Lagarde is unlikely offer clear indications on where rates will go next.
Meanwhile, Powell on Wednesday signaled a wait-and-see approach to tariffs, pushing back on hopes the central bank would act quickly to soothe investor fears. His comments, along with concerns over the impact of tariffs on the tech sector, helped end a two-day consolidation in stocks.
“The only ‘Fed put’ that the Fed could envisage is if there was a risk of market dislocation, which is not the case at the moment,” said Enguerrand Artaz, a fund manager at La Financière de l’Echiquier. “When you look at the data, there is no need to intervene. Markets going down is not a reason in itself to intervene, especially not at these levels of valuation.”
In earnings news, Taiwan Semiconductor Manufacturing Co.’s US-listed shares rallied in premarket trading after the main chipmaker for Nvidia Corp. and Apple Inc. forecast sales for the second quarter that beat the average analyst estimate.
Shares in Hermès dropped after sales at the start of the year were hurt by a slowdown in Chinese luxury demand. Siemens Energy AG surged as much as 14% after the company boosted its revenue and net income outlook.
On the trade front, the US and Japan kicked off tariff negotiations with an aim to reach a deal as soon as possible, top Japan negotiator Ryosei Akazawa said. Preparations are underway for a second round of discussions later this month, he said.
Countries are racing to negotiate deals with the US to avert high import taxes Trump imposed — and then quickly paused — on about 60 trading partners. That move put a 24% across-the-board tariff on Japanese imports on hold, though a 10% baseline charge still applies — as well as 25% levies on cars, steel and aluminum.
“The trajectory of US-Japan trade talks will continue to be closely monitored, not just for their bilateral implications, but also as a potential framework for how the US may approach trade relationships with other allies,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management.
The Trump administration is preparing to pressure nations to curb trade with China in negotiations over US tariffs, according to people familiar with the matter. In an apparent effort to counter US pressure on nations to limit trade ties with Beijing, Chinese President Xi Jinping promoted the idea of an “Asian family” and called for regional unity.
In commodities, gold hit a record earlier Thursday on demand for havens, before turning lower. oil rose for a second day after the US vowed to reduce Iran’s energy exports to zero.
Some of the main moves in markets:
Stocks
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The Stoxx Europe 600 fell 0.6% as of 10:05 a.m. London time
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S&P 500 futures rose 0.9%
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Nasdaq 100 futures rose 0.9%
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Futures on the Dow Jones Industrial Average rose 0.8%
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The MSCI Asia Pacific Index rose 1%
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The MSCI Emerging Markets Index rose 0.7%
Currencies
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The Bloomberg Dollar Spot Index rose 0.1%
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The euro fell 0.2% to $1.1374
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The Japanese yen fell 0.6% to 142.74 per dollar
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The offshore yuan was little changed at 7.3027 per dollar
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The British pound was little changed at $1.3241
Cryptocurrencies
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Bitcoin was little changed at $84,340.79
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Ether rose 1.2% to $1,591.87
Bonds
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The yield on 10-year Treasuries advanced four basis points to 4.31%
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Germany’s 10-year yield advanced two basis points to 2.53%
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Britain’s 10-year yield advanced one basis point to 4.61%
Commodities
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Aya Wagatsuma, Julien Ponthus and Anand Krishnamoorthy.
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