Tuesday Afternoon Coffee - Markets Update - 13 May 2025 - Markets Rise as Inflation Eases, Tariff Truce Fuels Optimism

The Trade Academy Team
May 13
3 min read

Markets Update: U.S. stocks climbed on Tuesday and the dollar retreated after fresh inflation data came in softer than expected, offering investors some relief amid a tentative pause in the U.S.-China tariff dispute.

Global Markets Roundup: 13 May 2025

The Bureau of Labor Statistics reported that consumer prices rose 0.2% in April, slightly below expectations, bringing the annual rate down to 2.3% from 2.4%. The figures lifted investor sentiment, reinforcing hopes that the Federal Reserve can proceed cautiously on interest rates.

U.S.-China Tariff Truce Boosts Risk Appetite

Markets were further buoyed by a breakthrough in trade negotiations. Washington and Beijing agreed to a 90-day tariff truce, with the U.S. lowering tariffs on Chinese goods to 30% from 145%, and China reducing duties on U.S. imports to 10% from 125%. The temporary easing rekindled investor appetite for equities, commodities, and digital assets.

Stocks Gain Despite Dow Dip

Wall Street finished mostly higher on the day. The S&P 500 advanced 54.07 points, or 0.92%, to 5,898.13, while the Nasdaq Composite jumped 329.41 points, or 1.76%, to 19,038.10. The Dow Jones Industrial Average, however, slipped 177.27 points, or 0.42%, to 42,233.19, dragged down by a steep decline in UnitedHealth after the company withdrew its annual forecast and announced a leadership change.

Dollar Slips, Euro Strengthens

The dollar fell broadly on the softer inflation data, with the Dollar Index DXY retreating 0.69%. The euro EURUSD rose 0.85% to $1.1181, reflecting investor re-calibration of interest rate expectations. Traders have now reduced their bets on Fed rate cuts this year to 56 basis points, down sharply from over 100 basis points in April, when trade tensions were at their peak.

Global Markets Mixed, Commodities Rebound

European shares edged up 0.1%, marking a fourth straight session of gains and hovering near their highest levels since late March. Japan's Nikkei rose 1.43% to 38,183.26, while MSCI’s Asia-Pacific index ex-Japan fell 0.51%. Emerging market stocks slipped 0.37%.

Commodity prices rallied. U.S. crude rose 2.81% to $63.69 a barrel, while Brent crude climbed 2.57% to $66.63. Spot gold gained 0.41% to $3,246.82 per ounce, while U.S. gold futures settled 0.6% higher at $3,247.80.

Treasuries Steady as Yields Climb

Bond yields continued their ascent. The yield on the 10-year U.S. Treasury rose 4.8 basis points to 4.505%, while the 2-year yield edged up 1.9 basis points to 4.021%, reflecting the market’s reduced expectations for aggressive Fed action.

Commodities Surge on Trade Hopes, Inflation Relief

Spot gold rose 0.41% to $3,246.82 an ounce, while U.S. gold futures settled 0.6% higher at $3,247.80. The metal continued to benefit from strong safe-haven demand and lower interest rate expectations. Crude prices climbed sharply. U.S. benchmark WTI crude rose 2.81% to $63.69 per barrel, while Brent crude gained 2.57% to $66.63. The pause in tariffs stoked hopes for stronger demand and reduced supply chain disruptions.

Outlook

While the 90-day tariff pause has eased short-term pressures, economists warn it doesn’t change the broader landscape. Fitch Ratings estimates that even after the agreement, the effective U.S. tariff rate stands at 13.1%—down from 22.8%, but still well above historical norms. As markets digest the trade developments and inflation trends, all eyes remain on upcoming Fed commentary and the next round of economic data to gauge the policy path ahead.

Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.

General news - Information source from multiple newswires.

The article and the data is for general information use only, not advice!

The Trade Academy Team