Daily summary: Tariff easing boosts stock markets and US dollar

7:09 PM 12 May 2025
  • American indices are on the upside today on the wave of calming relations between the US and China. The main S&P 500 index is gaining over 3% today, breaking through the level of 5800 points, the Dow Jones is gaining 2.6%, and the most pronounced increases can be seen on the Nasdaq (+4.2%) and the Russell 2000 small-cap index (+3.6%).
  • The upward momentum is driven by Mag7 companies. Amazon and Meta Platforms shares are doing particularly well, adding almost 8%.
  • As a result of the weekend negotiations, the US and China announced a reduction in mutual tariffs for 90 days by 115 percentage points. This means that tariffs on products from the US will be 10%, and tariffs on Chinese products 30% (this value includes the so-called fentanyl tariffs). Improving trade relations between these countries is a key element in eliminating the risk that has been weighing on the market in the last month.
  • The market reacted immediately. Raw materials rebounded dynamically, except for gold, which is losing over 3% today. The VIX "fear" index, which reflects market volatility, fell over 14% today.
  • The continued shift towards the risk-on strategy, in addition to increases in the main stock indices, is also reflected in the quotations of "safe haven" assets. In addition to declines in gold prices, we are also seeing increases in the yields of US bonds, which in the case of 10-year debt securities climbed above 4.45%.
  • Today's Trump regulation, which is a step towards reducing drug prices in the US, turned out to be milder than the market had previously expected. Hence, shares of drug manufacturers in the US are gaining. Eli Lilly is growing by about 3.7%, Pfizer is gaining 3.5%, and Bristol-Myers Squibb is growing by over 4%.
  • Infineon Technologies AG lowered its full-year forecast and said it expects a small decline in revenue in fiscal 2025 after factoring in currency headwinds and the estimated impact of tariffs.
  • The US dollar is dominating the forex market today. The appreciation of the world's reserve currency has caused opposite reactions in the Japanese yen and the Swiss franc, which were the biggest losers today.
  • In the commodities market, we see increases in oil prices. OIL futures are up around 2% today, holding slightly above $65, and OIL.WTI is up 2.1%, rising to over $62. Friday's gains are almost entirely erased by gas futures, which are down around 3.8% today.
  • Coffee futures are breaking out of short-term consolidation, falling around 3.6% today, bringing the price of the futures to their lowest level since mid-April. Slightly better sentiment can be seen on the cocoa market, although contracts there are also losing about 0.5%.
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