DAX Index at historic highs. Progress in US-China talks triggered a rise in indices on Monday

Stocks in the US traded lower on Friday afternoon as investors became more cautious ahead of trade talks between the US and China. At Friday’s close, the Dow Jones Index (US30) decreased by 0.29% (for the week +0.18%). The S&P 500 Index (US500) was down 0.71% (for the week +0.05%). The Nasdaq Technology Index (US100) closed higher by 0.27% (for the week +2.07%). Sentiment briefly improved following the announcement of a trade agreement between the US and UK, but concerns remain that negotiations with China may not succeed.

On the corporate front, Pinterest rose by 5.4% amid strong ad revenue projections, while Expedia fell by 7.7%, missing expectations.

The US futures rose Monday as the US said “substantial progress” in trade talks with China after two days of negotiations in Switzerland over the weekend. The US officials highlighted a deal to reduce the trade deficit, while Chinese leaders characterized the outcome as reaching an “important consensus”. Asian stocks and European futures also rose.

In Canada, the April employment report showed a net gain of 7,400 jobs, beating expectations. The unemployment rate rose to 6.9%, the highest level since November, underscoring the vulnerability of the tariff-prone manufacturing sector. Market odds suggest the odds of a rate cut in June are more than even, after the Bank of Canada noted high levels of household debt and hedge fund activity at bond auctions in its Financial System Review.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.63% (up +1.54% for the week), France’s CAC 40 (FR40) closed 0.64% higher (+0.10% for the week), Spain’s IBEX35 (ES35) gained 0.48% (+0.34% for the week), and the UK’s FTSE 100 (UK100) increased by 0.27% (+0.68% for the week). On Friday, the Frankfurt DAX Index rose by 0.6%, surpassing the 23,500 mark and reaching a new all-time high, continuing Thursday’s gains and following the dynamics of global markets. The rise was driven by the US-UK trade agreement, which reinforced expectations of progress in a broader US-EU agreement.

Norway’s annualized consumer inflation rate eased to 2.5% in April 2025 from 2.6% in the previous month, matching market expectations. This marked the second consecutive month of slowing inflation.

Ukrainian and European leaders, backed by US President Donald Trump, agreed to an unconditional 30-day ceasefire starting May 12. The leaders threatened Russian President Vladimir Putin with new “massive” sanctions if he did not comply.

WTI crude oil prices rose by 1.8% to hit $61 a barrel on Friday, posting a weekly gain of more than 4%, as easing trade tensions between the US and China boosted market sentiment. Optimism was fueled by news that US Treasury Secretary Scott Bessent will meet with China’s vice premier in Switzerland on May 10, signaling possible progress in resolving trade disputes.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) rose by 3.57%, China’s FTSE China A50 (CHA50) gained 2.09%, Hong Kong’s Hang Seng (HK50) climbed 3.04%, and Australia’s ASX 200 (AU200) posted a positive 0.24%. Asian markets jumped at the open on Monday. The rally followed a significant rise in US futures amid signs of progress in trade talks between the US and China over the weekend. Investor sentiment was further boosted by easing geopolitical tensions, including a fragile ceasefire between India and Pakistan and Ukrainian President Zelensky’s willingness to meet with Putin.

Chinese consumer prices in April 2025 were 0.1% year-on-year, maintaining the same pace for the second month and in line with market expectations. This is the third consecutive month of consumer price deflation, driven by the combined impact of ongoing trade tensions with the US, weak domestic demand, and continued employment uncertainty. China’s producer prices in April 2025 came in at 2.7% y/y, slightly short of the market consensus expecting 2.6% y/y, following 2.5% y/y in March. It was the 31st consecutive month of producer price deflation and the sharpest pace since last October.

The Australian dollar climbed above $0.642 on Monday and rose for the second consecutive session as progress in US-China trade talks over the weekend boosted risk appetite. Markets now expect the Reserve Bank of Australia to cut the money rate to 3.1% by the end of the year, down from previous expectations of 2.85%. The RBA is expected to cut the rate again by 25 basis points at its meeting next week.