Stock futures in the US and Europe edged lower on Wednesday following cautious investor reaction to the latest round of trade discussions between the United States and China, Bloomberg reports.
While both sides signaled progress, the absence of concrete details from the talks left markets without a strong catalyst to extend recent gains.
Futures contracts tied to the S&P 500 and Euro Stoxx 50 each fell about 0.3%, reflecting tempered sentiment after the negotiations. In contrast, Asian equities posted modest gains, with Chinese markets outperforming. The MSCI Asia Pacific Index rose 0.4%, led by a 0.6% increase in the Shanghai Composite and a 1% gain in Hong Kong’s Hang Seng Index.
Currency markets saw the Bloomberg Dollar Spot Index strengthen 0.1%, while major currencies like the euro, yen, and pound were little changed. Gold prices advanced 0.4%, and US Treasury yields remained steady ahead of a key US inflation report due later in the day.
The US and China reached a preliminary framework aimed at de-escalating trade tensions, focusing on implementing the consensus reached earlier in Geneva. Although officials expressed optimism, including expectations that issues surrounding rare earth minerals would be resolved, the lack of specifics left market participants wary of further volatility.
“While both sides touted progress at the London talks, there is still work to be done to get a concrete agreement in place,” said Tim Waterer, chief market analyst at KCM Trade. “These factors may cap enthusiasm on Asian markets today.”
Despite this measured response, global stocks remain near record highs. The market rebound, driven in part by President Trump’s recent suspension of certain tariffs until July, has helped reverse losses from April lows.
Looking ahead, traders remain focused on a range of macroeconomic risks in the US, including Wednesday’s inflation report, speculation over potential leadership changes at the Federal Reserve, and ongoing unrest in cities like Los Angeles tied to immigration protests.
The May consumer price index (CPI) is projected to show a 0.3% month-over-month increase, compared to 0.2% in April. The core CPI, which excludes volatile food and energy prices, is expected to rise 2.9% year-over-year — the first acceleration this year. These figures may influence the Fed’s approach, with markets currently pricing in a single interest rate cut for 2025.
Elsewhere, rare earth and magnet-related stocks in China gained following news of the preliminary US-China deal, as markets viewed Beijing’s negotiation stance as effective. However, analysts noted the ongoing US-China technology rivalry, including export controls, remains a sticking point that could limit broader trade progress.
In commodities, West Texas Intermediate crude prices held steady, while bond markets were quiet. The yield on 10-year US Treasuries hovered at 4.48%, and Japan’s 10-year yield slipped slightly to 1.46%.
