NEW YORK — U.S. stock markets closed sharply higher Thursday, buoyed by news of a major U.S.-U.K. trade deal, while President Donald Trump Donald Trump hinted that major trade talks with China could follow as early as this weekend.
The agreement provides for a significant reduction in British tariffs, dropping from an average of 5,1% to 1,8% on American products. In return, the United States will maintain a base tariff of 10% on British imports. This agreement has greatly benefited American companies, particularly in the aerospace sector, with a $10 billion British order for Boeing aircraft, sending the manufacturer's stock up 3,3%.
Airlines also benefited from the tariff exemption on Rolls-Royce aircraft parts, boosting the S&P Airline Index by 5,4%, with Delta Air Lines alone gaining 7,2%. The Dow Jones Industrial Average ended up 0,62%, the S&P 500 by 0,58%, and the Nasdaq by 1,07%, boosted in particular by the technology sector.
The market was also encouraged by Donald Trump's optimistic comments on the planned talks with China. He suggested that an agreement could be reached sooner than expected, fueling hopes of an easing of global trade tensions. "The market is looking for an excuse to believe in a way out of the crisis, rather than an escalation in the trade war," summarized Scott Welch, chief investment officer at Certuity.
Meanwhile, the Federal Reserve's continued hold on interest rates has provided moderate support, although signs of inflation and an economic slowdown persist. Despite this, 60% of investors still expect a rate cut as early as July, according to the CME's FedWatch tool.
Sector-wise, stocks tied to consumer discretionary, industrials, and energy posted the best performances. The Russell 2000, which is more sensitive to the domestic economy, jumped 1,9%, reaching its highest level since early April.
Finally, a few individual stocks stood out: Arm Holdings fell 6,2% after disappointing guidance, while Tapestry rose 3,7% thanks to an increase in its annual forecast. Conversely, Krispy Kreme plunged 24,7% after withdrawing its financial outlook for the year.
