General Market Analysis – 09/05/25

US Markets Higher on Trade Optimism – Nasdaq up 1%

US markets drove higher in trading yesterday as President Trump announced his first trade deal to the market. Overall market optimism increased as news of a deal between the US and the UK hit newswires. All three of the major US indices pushed higher—the Dow up 0.62%, the S&P up 0.58%, with the Nasdaq outstripping them both to close up 1.07% on the day. The dollar and US Treasury yields all popped higher—the DXY up 0.78% to 100.62, whilst 2-year yields gained 9.8 basis points to 3.874% and the 10-year added 10.9 basis points to 4.378%. Oil prices surged higher on news of improving talks between the US and China—Brent up 3.37% to $63.18 and WTI up 3.77% to $60.26—whilst gold dropped 1.79% to $3,306.02 as haven flows pulled back.

Geopolitics Still Reigns Supreme

Geopolitical updates and trade updates from the US in particular have dominated market sentiment for the last six months, and this week has been a great example of how much of an influence they are having on moves. We have had two key central bank updates this week, and the market moves around them have been largely overshadowed by tariff updates, and this pattern looks set to continue. The Federal Reserve Bank kept rates on hold, whilst the Bank of England cut rates, with both making strong references to tariff updates—the irony that the BOE cut rates on trade concerns literally hours before a trade deal was announced was not lost on many. However, markets had much stronger moves in the aftermath of trade updates on the newswires than on updates from major central banks, and that is concerning for some traders who feel that we will have more volatile conditions ahead until those factors are reversed.

Central Bankers in Focus Today

Asian markets are set to open on the front foot today after positive trade updates from President Trump and the US administration helped to bolster markets overnight. There is little in the way of data scheduled today, although we do hear from a raft of central bankers, particularly later in the day. The main focus for the London session will be when we hear from Bank of England Governor Andrew Bailey, which will have a strong influence on sterling products, coming the day after the bank cut rates. The initial focus for the New York session will be north of the border when Canadian employment numbers are released shortly after the open; employment change is expected to show a 4k increase in jobs, with the unemployment rate pushing up to 6.8%. Later in the day, we are set to hear from a raft of Fed speakers, including Kugler, Goolsbee, Waller, Williams, Cook, Hammack, and Musalem, and anything significantly away from Wednesday’s FOMC meeting update could see some volatility in markets into the weekend.

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