Wall Street Rises Following Initial Trade Agreement

NEW YORK:  U.S. stocks increased on Thursday as investors welcomed a new trade deal finalised between the United States and Britain, while U.S. President Donald Trump indicated that forthcoming discussions with China would be more significant than previously anticipated. Britain consented to reduce its tariffs to 1.8  per cent from 5.1 per cent and offer increased access to U.S. products as part of the agreement, while a 10 per cent standard tariff on goods arriving from the UK into the U.S. still applies. Airline stocks surged following the U.S.-UK deal that excluded Rolls-Royce-manufactured plane components from tariffs, resulting in the S&P 500 passenger airlines index finishing up 5.4 per cent, driven by a 7.2 per cent increase in Delta Air Lines.  U.S. Commerce Secretary Howard Lutnick announced that the UK would purchase $10 billion worth of Boeing aircraft, causing the planemaker's stock to rise by 3.3 per cent, making it the top performer on the Dow.

Trump mentioned that he anticipates meaningful discussions between the U.S. and Beijing regarding trade this weekend and would not be shocked if an agreement is made. "It reacted favorably today to the announcement regarding the UK." "Trump is a performer, so when he claimed that the discussions this weekend in Geneva will be substantial, you must trust his statement, but the outcome is uncertain," stated Scott Welch, chief investment officer at Certuity in Potomac, Maryland. "The market seeks a reason to relax and trust that a more sensible resolution can be achieved rather than merely descending into a full-scale global trade war." The Dow Jones Industrial Average increased by 254.48 points, or 0.62 per cent, reaching 41,368.45, the S&P 500 rose by 32.66 points, or 0.58 per cent, to 5,663.94, while the Nasdaq Composite climbed by 189.98 points, or 1.07 per cent, to 17,928.14. At the sector level, consumer discretionary, industrials, and energy excelled, whereas healthcare and utilities underperformed.

ALSO READ: Gold Rallies Rs 1,000 To Reclaim Rs 1 lakh/10 Gm Amid Cross-Border Tensions

The Russell 2000 small-cap index, which is focused on the domestic market, increased by 1.9 per cent, closing at its peak level since April 2, the date when the tariffs were first revealed. Semiconductor shares closed up 1 per cent, extending the previous session's 1.7 per cent gain after a spokesperson indicated that the Trump administration intended to revoke and amend a regulation that restricted the export of advanced artificial-intelligence chips. On Wednesday, the U.S. Federal Reserve maintained interest rates and indicated increased risks of inflation and unemployment, complicating the economic outlook for the largest economy in the world. Markets continue to anticipate an initial reduction of at least 25 basis points by the Fed during its July meeting, although expectations have decreased to 60 per cent from 92 per cent a week prior, as per CME's FedWatch Tool.

On the economic side, weekly initial jobless claims decreased more than anticipated last week, indicating to some analysts that the labour market is still stable; however, another report revealed that worker productivity fell in the first quarter for the first time in almost three years. Among others, U.S.-listed stocks of Arm fell 6.2 per cent after the chipmaker projected first-quarter revenue and earnings below Wall Street expectations. Tapestry increased by 3.7 per cent after the luxury firm elevated its yearly projections, while Krispy Kreme's stock fell 24.7 per cent following the restaurant chain's recent decision to retract its full-year outlook. On the NYSE, advancing issues surpassed decliners with a ratio of 1.82-to-1, while on the Nasdaq, the ratio was 2.15-to-1. The S&P 500 achieved 18 new 52-week highs and five new lows, whereas the Nasdaq Composite saw 58 new highs and 98 new lows. Trading volume on U.S. exchanges reached 16.85 billion shares, slightly below the 16.86 billion average for the entire session over the past 20 trading days