Market Commentary: Tuesday 13th May

US equity futures have cooled slightly overnight after the S&P 500 rallied above Liberation Day levels yesterday, amid the ongoing de-escalation between the US and China. Markets have recovered strongly—particularly in Asia, where stocks are heading for their highest close since October.

Further positive signals have come from China, as its central bank fixed the yuan stronger, sending USD/CNH to a six-month low. This makes Chinese exports more expensive and imports cheaper. Currency fixing was a hot topic during Trump’s first term, and it appears to be resurfacing.

Today, we have US CPI, which will be closely watched. Market pricing for Fed rate cuts has shifted, with expectations now closer to two cuts this year, down from three last week. A similar trend is being seen elsewhere—in the UK, just two cuts are now priced in over the next 12 months amid easing trade tensions.

Oil has picked up to just under $62 a barrel on the improving global trade outlook, while gold is trading close to $3,250 amid the improved sentiment.

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