Dow Futures exhibited a lackluster performance as the trading week approached its conclusion, with market participants assessing the implications of prospective new U.S. trade agreements. On Thursday, sentiment experienced an uplift due to a newly established trade agreement between the U.S. and U.K. Attention is now directed towards the forthcoming discussions between American and Chinese officials scheduled for this weekend. Elsewhere, artificial intelligence-darling Nvidia is reportedly planning to downgrade its China-focused chip in a bid to meet stringent U.S. export controls. U.S. stock futures remained near equilibrium on Friday, as investors evaluated the ramifications of a newly announced trade agreement between the U.S. and Britain.
The Dow Futures contract experienced a decline of 41 points, representing a decrease of 0.1%. In contrast, S&P 500 futures saw a modest increase of 3 points, also reflecting a rise of 0.1%. Meanwhile, Nasdaq 100 futures recorded an uptick of 38 points, equivalent to a gain of 0.2%. On Thursday, the primary indices on Wall Street experienced an uptick, driven by a sense of optimism regarding the recent U.S. agreement with the UK, which may contribute to alleviating global trade tensions.
Despite the retention of a baseline 10% U.S. tariff on imported British items, the UK has announced a reduction in its duties to 1.8% from 5.1% and will provide enhanced access to U.S. goods. Plane parts made by engine manufacturer Rolls-Royce were also exempted from U.S. levies, bolstering airline stocks like Delta Air Lines, which spiked by 7.2%. The sector-wide S&P 500 passenger airlines index experienced an increase of 5.4%. Boeing shares advanced as well after Commerce Secretary Howard Lutnick stated that the UK had agreed to purchase $10 billion of aircraft from the jetmaker.
The U.S. dollar exhibited strength in the wake of the announcement, as analysts at ING noted that the greenback was gaining from “Trump shifting to market-appeasing mode” after his previously aggressive — and now partially postponed — tariffs had unsettled investor confidence last month. Despite the increased fanfare surrounding Trump’s announcement, analysts observed that Thursday’s declaration was somewhat lacking in substance, offering more of a framework than a comprehensive trade agreement. Nonetheless, optimism persists that this agreement could serve as a precursor to additional accords during the current 90-day suspension of Trump’s heightened “reciprocal” tariffs.
During a conversation in the Oval Office, with U.K. Prime Minister Keir Starmer on speakerphone, Trump remarked that Britain had secured a “good deal,” suggesting that other trading partners might face increased tariffs due to their larger trade surpluses with the U.S. “This rush to demonstrate progress on ‘deals’ reveals a rising desperation within the administration to rollback tariffs before they impact gross domestic product growth and inflation,” stated Paul Ashworth, Chief North America Economist at Capital Economics, in a note. “That remains positive news, nonetheless.”
Trump previously imposed extensive tariffs of up to 50% on goods from numerous countries during a White House event in early April, contending that these actions were essential to enhance government revenues, restore lost manufacturing jobs, and rectify perceived trade imbalances. Although their implementation has been delayed by a few days, numerous tariffs remain effective, including the broad 10% levies and duties on various products such as steel, aluminum, and auto parts.
Numerous economists have cautioned that the tariffs may induce a “demand shock” in the global economy, potentially undermining overall economic activity. The U.S. experienced a contraction in gross domestic product during the first quarter; however, indicators suggest resilience in both consumer spending and the labor market. Markets are currently directing their attention towards significant discussions scheduled for this weekend involving U.S. Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer, alongside their Chinese counterparts in Switzerland. Importantly, China was excluded from Trump’s tariff suspension and is now subject to U.S. tariffs of no less than 145%. Beijing has enacted its own reciprocal tariffs of 125%, raising alarms about a deepening trade conflict between the globe’s two largest economies.
On Thursday, Trump indicated that the forthcoming discussions in Geneva over the weekend are likely to be substantive, expressing his expectation that the elevated tariffs will ultimately be reduced. China’s Vice Foreign Minister expressed the country’s complete confidence in its ability to manage trade issues with the U.S., noting that the severe measures of the Trump administration’s tariff agenda are not sustainable. Beijing has previously characterized the U.S. tariffs as a tactic of “coercion.”
Nvidia is set to introduce a less-powerful variant of its H20 artificial intelligence chip in China in the coming two months, in response to the tightening of U.S. export regulations, according to a report by Reuters on Friday. The semiconductor giant has communicated its decision to several prominent Chinese clients, including providers of cloud computing services, as reported by Reuters, referencing three sources with knowledge of the situation.
The H20 represents the most advanced chip that Nvidia is permitted to market in China, constrained by the export regulations established during the Biden administration. The Trump administration has recently indicated its intention to implement new regulations concerning technology exports to China, which will include requirements for Nvidia to secure a license for exporting its chips to the nation. The reduction of the H20’s computing power and the significant cut in its memory capacity is anticipated to enable Nvidia to circumvent the revised regulations. The chip is at the forefront of China’s AI development efforts and is utilized by a variety of companies, including AI startup DeepSeek and major internet players such as Baidu and Alibaba.
Oil prices experienced a modest increase on Friday, building on the gains from the prior session as trade tensions appeared to diminish in anticipation of discussions between the leading oil consumers, the U.S. and China, alongside the recent announcement of a trade agreement with Britain. Brent futures increased by 1.2% to $63.60 per barrel, while U.S. West Texas Intermediate crude futures saw a rise of 1.3% to $60.69 per barrel. Both contracts concluded with an increase of nearly 3% on Thursday. Despite these gains, oil prices continued to hover near four-year lows, as concerns about economic uncertainty and its implications for crude demand persisted.