US Stock Markets Surge Over 1% on US-UK Trade Deal and Bank of England Rate Cut

US • Business • 05/08 17:01
US Stock Markets Surge Over 1% on US-UK Trade Deal and Bank of England Rate Cut

U.S. stock markets rose over 1% on Thursday, May 8, driven by a new U.S.-UK trade agreement and a Bank of England interest rate cut. The trade deal includes tariff reductions, a $10 billion UK purchase of Boeing aircraft, and exemptions for British aerospace components. The Bank of England cut rates by 0.25% to 4.25%, aiming to mitigate global trade tensions. Major indexes, including the Dow Jones, S&P 500, and Nasdaq, saw significant gains, with aerospace and energy sectors leading the rise.

Key Updates

3h ago

UK Government Reassures Public: Hormone-Treated US Beef Banned Despite New Trade Deal

The UK government has confirmed that hormone-treated beef will remain banned despite a new trade deal with the US that increases the tariff-free quota of US beef to 13,000 metric tonnes. Environment Secretary Steve Reed and Chief Secretary to the Treasury Darren Jones emphasized that only beef meeting UK standards will be allowed. The deal has raised concerns among British farmers and consumer groups about enforcement and potential impacts on local agriculture. US officials view the agreement as a significant boost for American beef exports, while discussions on hormone-treated beef continue.

11h ago

US Lifts 25% Tariffs on UK Steel and Aluminium: Trade Deal Eases Pressure on Struggling Industry

On May 8, 2025, the UK and US reached a trade agreement removing 25% tariffs on British steel and aluminium exports, easing pressure on the UK steel industry. The tariffs, imposed in 2018 under Trump, had strained the sector. While the deal is welcomed, it requires the UK to meet US conditions on steel supply chain security and production facility ownership. The agreement includes a quota system, and its full benefits depend on further clarity regarding implementation timelines and conditions.

19h ago

Japan Seeks Concessions on US Auto Tariffs Amid New US-UK Trade Agreement

Japan has reiterated its demand for the removal of U.S. tariffs on automobiles following the US-UK trade agreement, which includes a reduced 10% tariff on UK vehicles. Economic Revitalization Minister Ryosei Akazawa emphasized Japan's unchanged stance and the importance of eliminating tariffs imposed by the Trump administration. Japan, a major auto exporter to the U.S., faces a 25% tariff on its vehicles and is preparing for trade talks with the U.S. in mid-May. The Japanese government is analyzing the US-UK deal to inform its negotiation strategy, aiming for a comprehensive agreement.

05/09 02:31

U.S. Commerce Secretary Howard Lutnick: Trade Deals with South Korea and Japan to Face Delays Compared to UK Agreement

U.S. Commerce Secretary Howard Lutnick stated that trade negotiations with South Korea and Japan will be more complex and time-consuming than the recent U.S.-UK framework agreement. Following President Trump's May 8 announcement of the UK deal, Lutnick highlighted the intricate economic ties with Japan and South Korea, involving sensitive sectors like automobiles and electronics. The UK agreement, which includes tariff adjustments, serves as a model but not a comprehensive free trade deal. Lutnick's remarks indicate that tariff relief for Asian partners is not imminent, reflecting the challenges in securing similar agreements.

05/09 00:30

Bank of England Governor Andrew Bailey Urges UK to Rebuild EU Trade Ties Amid New US Tariff Deal

Bank of England Governor Andrew Bailey urged the UK to strengthen trade ties with the EU, highlighting the economic benefits of reversing the post-Brexit trade decline. His comments coincide with UK-EU negotiations to reset trade and security relations and follow a new US-UK agreement reducing tariffs on British exports. The UK is considering concessions to the EU, such as access for EU fishing vessels and alignment with SPS rules, to ease trade friction. Meanwhile, the EU is preparing potential retaliatory tariffs against the US amid ongoing transatlantic trade tensions.

05/08 21:00

EU Approves €5 Billion French Plan to Boost Wine and Spirits Exports to US Amid Tariff Tensions

On May 8, 2025, the European Commission approved a €5 billion French government scheme to support wine and spirits exports to the U.S. The initiative, running until July 8, 2025, provides re-insurance to cover commercial and political risks amid U.S. tariff threats. This measure aims to protect French exporters during a volatile trade period. Concurrently, the EU is preparing retaliatory tariffs on up to €95 billion of U.S. goods if negotiations fail, highlighting ongoing trade tensions and the EU's strategic response to U.S. tariffs.

05/08 20:31

US and UK Announce Preliminary Agreement to Reduce Tariffs on British Cars and Metals, Aiding Key Industries

The U.S. and U.K. have reached a preliminary agreement to reduce tariffs on British cars, steel, and aluminum, announced by President Donald Trump and Prime Minister Keir Starmer. The deal includes reducing auto tariffs from 27.5% to 10% for up to 100,000 vehicles annually and eliminating 25% tariffs on steel and aluminum, with a 13,000-metric-ton quota for tariff-free steel. While hailed as historic, no formal agreement is signed, and details remain under negotiation. The agreement aims to benefit key U.K. industries and protect jobs but stops short of a comprehensive trade pact.

05/08 18:31

President Trump and UK PM Starmer Announce Landmark Trade Deal: US Reduces Tariffs on UK Cars; Over 5 Million US Student Loan Borrowers Face Consequences

On May 8, 2025, President Donald Trump and UK Prime Minister Keir Starmer announced a trade agreement reducing U.S. tariffs on the first 100,000 UK vehicles from 27.5% to 10% and eliminating tariffs on UK steel and aluminum. The UK will lower tariffs on U.S. goods and purchase $10 billion in Boeing aircraft. Concurrently, the U.S. Department of Education resumed collections on defaulted student loans, affecting 5.3 million borrowers, with potential wage garnishment and loss of federal benefits following a five-year pause.

05/08 17:30

Trump Imposes 10% Baseline Tariff on Imports, UK Secures Preferential Terms Amid New Trade Policy

President Donald Trump announced a new trade policy imposing a 10% baseline tariff on most imports to the U.S., effective early April. Countries with large trade surpluses face higher tariffs, with China hit by a 145% rate. The UK secured a special deal maintaining the 10% rate, citing historical ties. The policy aims to correct unfair trade practices and boost domestic manufacturing. The U.S. is negotiating with over 70 countries to avoid higher tariffs, while domestic businesses express concerns over increased costs and market unpredictability.

05/08 17:01

US Stock Markets Surge Over 1% on US-UK Trade Deal and Bank of England Rate Cut

U.S. stock markets rose over 1% on Thursday, May 8, driven by a new U.S.-UK trade agreement and a Bank of England interest rate cut. The trade deal includes tariff reductions, a $10 billion UK purchase of Boeing aircraft, and exemptions for British aerospace components. The Bank of England cut rates by 0.25% to 4.25%, aiming to mitigate global trade tensions. Major indexes, including the Dow Jones, S&P 500, and Nasdaq, saw significant gains, with aerospace and energy sectors leading the rise.

Wall Street Gains on Trade Optimism

The Dow Jones Industrial Average rose 516.11 points, or 1.26%, to close at 41,630.08. The S&P 500 gained 68.03 points, or 1.21%, ending the session at 5,699.31, while the Nasdaq Composite advanced 280.94 points, or 1.58%, to 18,019.10. The Russell 2000 index of small-cap stocks also climbed 2%, reaching a one-month high.

Investor sentiment was lifted by the announcement of a bilateral trade agreement between the U.S. and the UK, the first such deal since President Donald Trump paused global tariff escalations last month. The agreement includes a range of tariff adjustments and trade facilitation measures aimed at improving market access for both countries.

Key Provisions of the US-UK Trade Deal

The trade agreement outlines several significant changes to existing tariff structures and trade practices:

  • The UK will reduce its average tariff on U.S. goods from 5.1% to 1.8%, enhancing access for American exports including ethanol, beef, and machinery.
  • The U.S. will maintain a 10% baseline tariff on most UK imports but will reduce auto tariffs from 27.5% to 10% for up to 100,000 vehicles annually.
  • Tariffs on UK steel and aluminum exports to the U.S. have been eliminated, reversing the 25% duties imposed in 2024.
  • Rolls-Royce aircraft engines and related parts will be exempt from U.S. tariffs, allowing tariff-free exports to American aerospace firms.
  • The UK has agreed to purchase $10 billion worth of Boeing aircraft, a move that sent Boeing shares up 3.5% during the session.

Commerce Secretary Howard Lutnick confirmed the aircraft order, describing it as a private-sector transaction. Boeing’s backlog already includes over 149 aircraft destined for UK buyers, and the new order is expected to add to that pipeline.

Market Reaction: Aerospace and Energy Lead Gains

The S&P 500’s aerospace and airline sectors saw notable gains. The S&P Passenger Airlines Index rose 5.3%, while Boeing shares climbed 3.5%. Rolls-Royce, whose engines are now exempt from U.S. tariffs, saw its stock rise over 3.7% during the day.

Energy stocks also led the broader market, with the S&P Energy Index up 2.4%, supported by a rise in crude oil prices. Semiconductor stocks gained 1.9%, continuing their upward trend from the previous session.

Bank of England Cuts Interest Rates

In a separate development, the Bank of England (BoE) announced a 0.25 percentage point cut to its main interest rate, bringing it down to 4.25%. The move, aimed at cushioning the UK economy from the effects of global trade tensions, marks the fourth rate cut since August 2024.

The decision was made amid concerns over the economic impact of U.S. tariff policies. The BoE’s Monetary Policy Committee was divided, with two members voting for a larger 0.5% cut and two preferring to hold rates steady. The central bank also revised its growth forecast downward, projecting a 0.3% slowdown over the next three years.

The rate cut was widely anticipated and is expected to provide some relief to UK businesses and consumers facing higher import costs due to the U.S. tariffs.

Broader Economic Context

The trade deal comes at a time of heightened global uncertainty over trade policy. President Trump has signaled that the 10% baseline tariff on UK goods is not a model for other countries, suggesting that higher tariffs may be applied elsewhere. Talks with China are expected to resume over the weekend, with Trump stating that tariffs on Chinese imports could reach as high as 145%.

Despite the lingering uncertainty, Thursday’s developments were seen as a positive step toward stabilizing transatlantic trade relations. The agreement also includes provisions for streamlined customs procedures, which are expected to reduce delays and administrative burdens for U.S. exporters.

Sector Highlights and Corporate Movers

  • Tesla led gains among megacap stocks, rising 4.7%.
  • Tapestry Inc. added 4.1% after raising its annual forecasts.
  • Fortinet fell 8.2% following a weaker-than-expected revenue forecast.
  • Warner Bros. Discovery gained 4.9% amid reports of a potential corporate split.
  • Krispy Kreme shares dropped over 24% after the company withdrew its full-year guidance.

Labor Market and Fed Outlook

On the macroeconomic front, U.S. jobless claims fell more than expected last week, indicating continued strength in the labor market. The Federal Reserve held interest rates steady on Wednesday, citing risks of inflation and unemployment. Traders are now pricing in a potential rate cut by September, with a total of 73 basis points of easing expected by the end of 2025.

References

People Also Ask...

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