Midday Market Roundup for Friday, May 9, 2025

Good afternoon. Here are the top four global financial and economic topics shaping markets at midday, Friday, May 9, 2025:

1. Global Markets Rally on Hopes for Tariff Rollbacks

This week, world equity markets extended their recovery, fueled by optimism that the U.S. may gradually reduce some of the tariffs imposed during April’s trade shock. Investors were encouraged by Thursday’s limited trade agreement between the U.S. and the U.K., which maintained a 10% tariff on British exports but reduced U.S. tariffs on British automotive goods and increased agricultural access for both sides. This deal has sparked hopes that similar negotiations with other trading countries could lead to further easing of trade barriers. U.S. stock futures held onto gains, the dollar reached its highest level in a month, Treasury yields climbed to a two-week high, and the MSCI World Index returned to positive territory for the year, even as major Wall Street indices remain down for 2025 ([Reuters]1; [Financial Times]8; [Morningstar]4).

2. U.S.-China Trade Talks in Focus as Policy Shifts Loom

Attention now turns to the upcoming U.S.-China trade negotiations in Switzerland this weekend, a pivotal event that could significantly shape the global economic landscape. Investors are eagerly awaiting signs of progress toward reducing the most punitive reciprocal tariffs. Chinese officials have privately expressed concern about the economic impact of U.S. tariffs, especially as some of China’s trading partners are striking deals with Washington. Analysts at Morgan Stanley and Moody’s Analytics expect any tariff reductions to be gradual, possibly lowering rates from current highs but still leaving significant trade barriers in place. Beijing has already stepped up policy support to counteract the drag from tariffs, and April export data showed resilience, partly due to re-routing shipments through third countries ([Reuters]1; [Morningstar]2; [Financial Times]8).

3. U.S. Inflation and Consumer Data Awaited

Markets are closely watching for April inflation figures and retail sales data, due next week, to gauge the impact of tariffs on consumer prices and spending. Economists expect inflationary pressures to remain elevated, with some evidence of pre-emptive price hikes as companies react to tariff uncertainty. ING economist James Knightley notes that June could be when price increases become more pronounced. The University of Michigan’s preliminary May consumer sentiment survey and April’s retail sales report will be key indicators of how households are responding to higher prices, job market concerns, and reduced household wealth ([Morningstar]2; [Reuters]1).

4. Central Banks and Global Policy Moves

Central banks are responding to shifting economic conditions. The U.S. Federal Reserve left interest rates unchanged at its May meeting, signaling no rush to cut rates as it weighs the risks of higher inflation and unemployment due to trade policy. Mexico’s central bank is expected to cut rates by 50 basis points to 8.50% to stimulate a sluggish economy, with further cuts likely if inflation allows. The Reserve Bank of Australia is also expected to lower its cash rate, potentially beginning a broader easing cycle. Meanwhile, Malaysia’s first-quarter GDP growth is set for an upward revision, reflecting robust domestic demand despite external risks ([Morningstar]2; [Financial Times]8).

Sources:

1. Reuters – Global Markets View USA:
   https://www.reuters.com/markets/us/global-markets-view-usa-2025-05-09/
2. Morningstar – Week Ahead for FX & Bonds:
   https://www.morningstar.com/news/dow-jones/202505097641/week-ahead-for-fx-bonds-focus-on-trade-news-us-inflation-retail-sales-data
3. Morningstar – Top Financial Services News of the Day:
   https://www.morningstar.com/news/dow-jones/202505094543/news-highlights-top-financial-services-news-of-the-day-friday-at-7-am-et
4. Reuters – Global Markets Repeat Wrapup:
   https://www.reuters.com/markets/global-markets-repeat-wrapup-3-2025-05-09/
5. Financial Times – Global Economy:
   https://www.ft.com/global-economy

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