Tariff Talks Heat Up: UK Deal, China Talks Spark Rally as Stocks Climb, Gold Slides

Tariff Clarity Spurs Market Enthusiasm

Markets are trading with cautious optimism as the U.S. signals progress on key trade fronts. President Trump is set to announce a new trade framework with the UK today—his first deal since returning to office—while Treasury Secretary Scott Bessent heads to Geneva for preliminary discussions with Chinese officials. Traders are parsing these developments closely, with implications for equities, the dollar, bonds, and commodities.

UK Deal Could Unlock Sector-Specific Gains

The expected UK agreement will likely feature tariff reductions on automobiles and steel, though the baseline 10% tariff from April’s “Liberation Day” remains in place. This could support U.S. and British auto manufacturers by easing trade friction. Agricultural exporters may also benefit if the deal expands UK market access for American farm products.

Anticipation of this announcement is already pushing Dow futures higher, with potential upside for vehicle makers and exporters sensitive to UK demand. The deal’s structure and timeline will be key for traders assessing how soon the benefits may materialize across sectors.

U.S.–China Talks May Lower Tariff Pressure

While the Geneva talks with China are described as “preliminary,” the absence of hardline voices—most notably Peter Navarro—is encouraging. Discussions will focus on de-escalation rather than comprehensive reform, but even symbolic reductions in the steep 145% tariffs on Chinese imports could trigger a relief rally.

Sectors with high China exposure—tech, industrials, and consumer discretionary—stand to gain. Apple and Nvidia are names to watch, along with retailers such as Walmart and Target that rely on Chinese supply chains.

Interest Rate Bets Tied to Trade Progress

The Fed has directly linked tariff policy to inflation pressures, holding its benchmark rate steady at 4.25%-4.5%. If trade headwinds ease, inflation expectations could moderate, allowing the Fed to consider rate cuts. Bond markets are already reflecting this: any signs of easing could push the 10-year Treasury yield lower, offering support to both equities and fixed income assets.

Dollar Resilient Regardless of Outcome

The dollar remains well-supported, whether trade talks succeed or stall. Easing tensions could reinforce U.S. economic strength, drawing foreign capital, while ongoing uncertainty boosts the greenback’s safe-haven appeal. Watch the dollar-yuan and dollar-pound pairs for short-term moves tied to trade headlines.

Gold Faces Pressure as Risk Appetite Returns

With trade anxiety fading, gold is likely to come under pressure. Reduced inflation fears, a stronger dollar, and a rotation toward risk assets diminish the metal’s appeal. Gold miners and defensive sectors like utilities may underperform if investors lean into risk-on positioning.

Market Forecast: Bullish Bias with Event-Driven Volatility

Traders should brace for a bullish tilt in equities, led by tech, autos, and retailers, provided today’s UK deal delivers material tariff relief and Geneva talks hint at progress. Bond yields could drift lower on rate-cut expectations, while gold faces headwinds. Dollar strength persists as both risk and refuge play. Watch for detailed tariff schedules and firm commitments—these will define the staying power of the current risk rally.

More Information in our Economic Calendar.