May 8, 2025

The Pulse: Global Economic and Market News for Thursday, May 8, 2025

Global financial markets rallied on May 8, 2025, buoyed by optimism over newly announced trade agreements and the prospect of easing tariff tensions. President Donald Trump announced a trade deal with the United Kingdom and hints at potential tariff reductions with China, spurring a risk-on sentiment across equities. At the same time, central banks around the world responded to ongoing policy uncertainty and inflation risks.

U.S. Markets and Trade Developments

• The Dow Jones Industrial Average climbed 0.7% (up 284.97 points to 41,113.97), the S&P 500 rose 0.6%, and the Nasdaq Composite gained about 1%, marking the second consecutive day of gains for major U.S. indices9101.

• President Trump announced a U.S.-U.K. trade agreement, which is expected to reduce tariffs on select goods, particularly automotive and steel imports. This reduction in tariffs could potentially boost the U.S. economy by increasing the competitiveness of these industries. While a 10% baseline tariff on U.K. imports will remain, the move was seen as a positive step toward reducing global trade friction3101.

President Trump's suggestion of potential tariff reductions on Chinese imports, if upcoming negotiations in Switzerland are successful, further fueled market optimism. This news provides hope for a positive outcome from the negotiations.

• Technology and semiconductor stocks led the rally, with chipmakers like Nvidia, Broadcom, and AMD advancing on expectations of relaxed export restrictions for AI semiconductors310.

Central Bank Actions and Global Economic Outlook

• The Federal Reserve kept its benchmark interest rate steady at 4.25%- 4.5% on Wednesday, citing heightened risks of inflation and unemployment due to tariff uncertainty. Chair Jerome Powell indicated a “wait-and-see” approach, with markets now expecting possible rate cuts later in the year 3510.

• The Bank of England cut its main interest rate by 25 basis points, citing lower inflation and the economic risks of U.S. tariffs. Governor Andrew Bailey noted that increased U.S. tariffs could redirect goods to the U.K., potentially lowering prices and giving the central bank more flexibility to support growth65.

• Other major central banks, including the European Central Bank and the Reserve Bank of New Zealand, are also adjusting policy in response to shifting trade and inflation dynamics5.

Global Economic Indicators

• The IMF projects global growth at 3.3% for 2025 and 2026 but warns that risks are tilted to the downside amid policy uncertainty and renewed inflation pressures2.

• S&P Global’s latest PMI bulletin shows global economic expansion continued in April but at its slowest pace in nearly 18 months. Export volumes and business optimism declined, while prices charged for goods and services rose at an accelerated rate, reflecting the impact of recent tariff changes4.

Despite the drop in American workers' confidence in finding new employment, U.S. labor market data remains resilient. April nonfarm payrolls exceeded expectations, with the unemployment rate at 4.2%, providing reassurance about the stability of the economy.

Sector and Corporate Highlights

• Warner Bros. Discovery shares surged on speculation of a potential split of its cable networks from its studio and streaming operations10.

• Palantir rebounded 7.8% after recent losses, while analysts downgraded Uber’s stock despite positive expansion news. The downgrade may be due to concerns about Uber's profitability in the face of increasing competition and regulatory challenges10.

• Bitcoin rose above $101,000, and oil prices climbed, while gold prices retreated as investors shifted away from safe-haven assets amid renewed risk appetite710.

Disclosure

This article is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any securities. All information is based on publicly available sources as of May 8, 2025. The author holds no positions in the securities mentioned. Readers should consult financial professionals before making investment decisions. For official disclosure guidance, refer to the U.S. Securities and Exchange Commission (SEC).

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The Pulse: Global Economic and Market News for Thursday, May 8, 2025

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