Dow Futures are on the rise amid reports of a potential trade deal between the U.S. and the U.K., alongside the forthcoming decision from the Federal Reserve. Dow Futures rise, supported by media reports indicating that the White House is poised to announce a trade agreement with the U.K. The Federal Reserve maintains its current interest rate levels, yet Fed Chair Jerome Powell cautions that the imposition of aggressive U.S. tariffs is “likely” contributing to inflationary pressures and increasing unemployment risks. Meanwhile, carmaker Toyota indicates that its annual operating profit may decline as a result of the levies.
U.S. stock futures are experiencing a modest increase as investors evaluate reports regarding a potential trade agreement between the U.S. and U.K., while also considering the interest rate remarks made by Federal Reserve Chair Jerome Powell. The Dow Futures contract increased by 221 points, or 0.5%, while S&P 500 futures rose by 41 points, or 0.7%, and Nasdaq 100 futures advanced by 202 points, or 1.0%.
The primary indices experienced an uptick on Wednesday, supported by news indicating that U.S. export limitations on artificial intelligence chips would be partially relaxed. Semiconductor stocks experienced a rally towards the end of the session, amid a period of volatility in the broader markets leading up to the Federal Reserve’s recent rate decision. In individual stocks, Walt Disney shares rose, pulling up the blue-chip Dow Jones Industrial Average, after the entertainment behemoth’s second-quarter earnings and outlook topped estimates despite ongoing worries over tariff-driven economic uncertainty.
President Donald Trump is expected to unveil the framework of a trade agreement with the U.K. on Thursday, as reported by various media outlets. The anticipated announcement, marking the first trade-related agreement achieved by the White House since the imposition of tariffs on both allies and adversaries in early April, is projected to outline a framework for a deal involving tariff modifications, as reported by the Wall Street Journal. In a post on social media on Wednesday, Trump indicated that the forthcoming statement will focus on a “MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY,” further asserting that it would be “THE FIRST OF MANY.”
Details of the agreement were not immediately clear, the New York Times reported, adding that both countries have discussed bringing down British tariffs on U.S. cars and farm products and scrapping British duties on U.S. tech firms. Officials at the White House are actively seeking to secure trade agreements with numerous nations amid a 90-day postponement of Trump’s intensified “reciprocal” tariffs. Nonetheless, in spite of the delay, numerous tariffs remain enforced, encompassing a universal 10% levy along with additional trade taxes on commodities such as steel, aluminum, and automobiles.
The Federal Open Market Committee, responsible for setting interest rates, opted to maintain current borrowing costs on Wednesday, citing rising concerns regarding inflation and unemployment risks. During a post-meeting press conference, Fed Chair Jerome Powell stated that Trump’s aggressive tariff agenda is “likely” to result in higher prices, hinder job growth, and negatively impact the overall economy. The combined indicators suggest a scenario akin to the phenomenon of “stagflation” within the largest economy globally.
Currently, the majority of Trump’s heightened “reciprocal” tariffs — excluding the substantial duties of at least 145% imposed on Chinese imports — have been postponed until July. Powell’s remarks indicate that Federal Reserve officials continue to express caution regarding the potential reimposition of tariffs later this year. As it approached its most recent rate decision, the Fed was contending with a landscape of somewhat inconsistent data. In the first quarter, U.S. gross domestic product, a crucial measure of economic performance, experienced a contraction. Nevertheless, alternative indicators suggest that consumer spending and the labor market continue to exhibit resilience.
Importantly, the Fed’s latest statement “gave no hint” that it was contemplating further reductions to rates, remarked Paul Ashworth, Chief North America Economist at Capital Economics. The target range for borrowing costs has remained at 4.25% to 4.5% since December. Powell also indicated that it was “not at all clear” what the appropriate response for monetary policy should be at this time given the uncertainty surrounding the tariffs. U.S. Treasury Secretary Scott Bessent is scheduled to engage with China’s leading economic official this weekend in Switzerland to discuss the ongoing trade war that is impacting the global economy.
Japanese carmaker Toyota Motor has warned that its profits could drop by a fifth in its current financial year due in large part to Trump’s tariffs. The world’s best-selling auto manufacturer stated that it now anticipates annual operating income to be 3.8 trillion yen, a decrease from 4.8 trillion yen in the previous fiscal year. CEO Koji Sato highlighted that the uncertainty surrounding the future of the tariffs has complicated planning efforts, reflecting sentiments expressed by various other companies during the recent quarterly earnings season. He remarked that the permanence of the tariffs is “not something we can decide”. The recent decline in the U.S. dollar, driven by the ramifications of the tariffs, could potentially impact Toyota’s income in the U.S. when integrated into the overall group earnings.
In other developments, gaming company Nintendo has forecasted an increase in full-year operating profit, despite the looming risk of trade-related supply chain issues that could impact the profitability of its new Switch 2 console. In the U.S. on Thursday, markets will be monitoring a range of earnings reports, including results from ConocoPhillips and Coinbase Global.
Oil prices experienced an uptick on Thursday, buoyed by optimism surrounding forthcoming discussions between the United States and China, which may result in an agreement between the two largest consumers of crude oil globally. Brent futures increased by 0.6% to $61.47 per barrel, while U.S. West Texas Intermediate crude futures saw a rise of 0.7% to $58.48 per barrel. In the interim, gold prices experienced a slight decline, attributed to the alleviation of trade tensions between China and the U.S., coupled with the strengthening of the dollar, which diminished the appeal of the yellow metal.