Futures Edge Higher Following Tamer-Than-Expected Inflation Data

The major U.S. index futures are currently pointing to a modestly higher open on Tuesday, with stocks poised to add to the substantial gains posted in the previous session.

The futures edged higher following the release of a Labor Department report showing consumer prices in the U.S. rose by slightly less than expected in the month of April.

The Labor Department said its consumer price index inched up by 0.2 percent in April after edging down by 0.1 percent in March. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices also rose by 0.2 percent in April after creeping up by 0.1 percent in March. Core consumer prices were also expected to climb by 0.3 percent.

The report also said the annual rate of growth by consumer prices slowed to 2.3 percent in April from 2.4 percent in March, while the annual rate of growth by core consumer prices was unchanged at 2.8 percent.

The slightly tamer-than-expected inflation data may ease concerns about President Donald Trump’s new tariffs on U.S. trade partners leading to higher prices.

Stocks moved sharply higher during trading on Monday, more than offsetting the modest weakness seen in the previous week. With the strong upward move, the Nasdaq and the S&P 500 reached their best closing levels in over two months.

The major average saw further upside going into the close, reaching new highs for the session. The Nasdaq soared 779.43 points or 4.4 percent to 18,708.34, the S&P 500 spiked 184.28 points or 3.3 percent to 5,844.19 and the Dow surged 1,160.72 points or 2.8 percent to 42,420.10.

The rally on Wall Street came following news of a U.S.-China trade deal that drastically reduces the massive tariffs on each other’s goods.

The White House said the agreement calls for the U.S. and China to each lower tariffs by 115 percent while retaining an additional 10 percent tariff.

The U.S. will retain tariffs imposed in response to the fentanyl national emergency, resulting in an effective tariff rate on Chinese goods of 30 percent.

In previous tit-for-tat moves, tariffs on U.S. and Chinese goods had spiked as high as 125 percent and 145 percent, respectively, which Treasury Secretary Scott Bessent had described as the “equivalent of an embargo.”

The White House said the 34 percent reciprocal tariffs on U.S. and Chinese goods will be suspended for 90 days beginning Wednesday, May 14th.

Both nations also agreed to establish a mechanism to continue important discussions about trade and economics, the White House said.

“While the trade spat has only been dialed back for 90 days, it’s a major breakthrough as far as investors are concerned,” said Russ Mould, investment director at AJ Bell. “The fact the two countries were talking was already a major win given they’ve been at each other’s throats during the first and second Trump presidential terms.”

“Some people thought the best-case outcome from the weekend’s discussions would be an agreement to simply keep talks going,” he added. “Therefore, to have reached an initial deal so quickly and one that rolls back tariffs by a large amount is a pleasant surprise.”

Semiconductor stocks turned in some of the market’s best performances amid a broad based rally, with the Philadelphia Semiconductor Index soaring by 7.0 percent to its best closing level in well over two months.

Substantial strength was also visible among transportation stocks, as reflected by the 7.0 percent spike by the Dow Jones Transportation Average. The average also reached a two-month closing high.

Computer hardware stocks also showed a significant move to the upside, driving the NYSE Arca Computer Hardware Index up by 6.5 percent.

Networking, biotechnology and banking stocks also saw considerable strength, while gold stocks were among the few groups to buck the uptrend, moving sharply lower along with the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are climbing $0.77 to $62.72 a barrel after jumping $0.93 to $61.95 a barrel on Monday. Meanwhile, after plummeting $116 to $3,228 an ounce in the previous session, gold futures are rising $17.90 to $3,245.90 an ounce.

On the currency front, the U.S. dollar is trading at 148.14 yen compared to the 148.36 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.1115 compared to yesterday’s $1.1087.

Asia

Asian stocks ended mixed on Tuesday, as initial euphoria over the U.S.-China trade deal faded and investors lowered their bets of Federal Reserve rate cuts this year.

Uncertainty lingered and there was apprehension over whether anything durable would come out of the trade talks after a 90-day tariff suspension.

Ratings agency Fitch said that the U.S. effective tariff rate is now reduced to 13.1 percent from 22.8 percent prior to the agreement but still at levels unseen since 1941 and much higher than the 2.3 percent it was at the end of 2024.

Global free trade is in crisis, the head of the World Trade Organization chief said while meeting Japanese Prime Minister Shigaru Ishiba earlier today.

The dollar wobbled ahead of closely monitored U.S. inflation data due later in the day.

Gold rose nearly 1 percent after hitting a more than one-week low in the previous session. Oil prices held steady after reaching a two-week high in the previous session as fears of a U.S. recession eased.

China’s Shanghai Composite Index edged up 0.2 percent to 3,374.87 despite a majority of defense company shares falling sharply following the ceasefire announcement between India and Pakistan.

Meanwhile, in his first public remarks since U.S.-China trade talks over the weekend, Chinese President Xi Jinping told leaders from Latin America and the Caribbean that “bullying or hegemonism only leads to self-isolation.”

Hong Kong’s Hang Seng Index tumbled 1.9 percent to 23,108.27, with Alibaba, JD.com and Baidu leading losses.

Japanese markets hit a three-month high as a weaker yen boosted exporters such as electronics makers and auto stocks. Sony advanced 1.7 percent and Nissan Motor jumped 3 percent. In the tech sector, Tokyo Electron soared 4.9 percent.

The Nikkei 225 Index jumped 1.4 percent to 38,183.26. The broader Topix Index settled 1.1 percent higher at 2,772.14, rising for a 13th straight day and posting its longest winning streak in 16 years.

Seoul stocks ended on a flat note after a choppy session. The Kospi finished marginally higher at 2,608.42, with Samsung SDI and LG Energy Solution rising 2-3 percent.

Australian markets eked out modest gains to reach an 11-week high, with tech and energy stocks leading the way.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 8,269, rising for a fifth straight session ahead of a possible RBA rate cut. The broader All Ordinaries Index gained 0.5 percent to close at 8,510.70.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index advanced 0.9 percent to 12,786.74.

Europe

European stocks have moved modestly higher on Tuesday, extending gains for a fourth day running amid signs of progress in U.S.-China trade talks.

A cautious undertone prevailed after U.S. President Donald Trump said that the European Union is “nastier than China” and “we’ve just started with them” – signaling tough trade negotiations.

Currently, the French CAC 40 Index, the U.K.’s FTSE 100 Index and the German DAX Index are all up by 0.1 percent.

In economic news, U.K. retail sales grew strongly in April largely due to the timing of Easter and good weather conditions, data from the British Retail Consortium showed.

Total retail sales increased 7.0 percent on a yearly basis in April in contrast to the 4.0 percent decline in the same period last year.

The U.K. unemployment rate rose to 4.5 percent in the three months to March, in line with expectations, from 4.4 percent in the preceding period, according to the Office for National Statistics.

Pharmaceutical and agricultural company Bayer AG has soared after posting a reporting than expected drop in quarterly adjusted profit and confirming 2025 targets.

Meanwhile, Germany’s top reinsurers Hannover Re and Munich Re have tumbled after reporting heavy losses stemming from the wildfires that engulfed Los Angeles.

LEG Immobilien SE has also moved sharply lower as the real estate firm reported posted lukewarm like-for-like rental growth in the first quarter of 2025.

Vonovia, which specializes in owning and managing residential real estate estates, has slumped after launching an unsecured convertible bond offering totaling 1.3 billion euros in principal.

U.S. Economic News

Consumer prices in the U.S. rose by slightly less than expected in the month of April, according to a report released by the Labor Department on Tuesday.

The Labor Department said its consumer price index inched up by 0.2 percent in April after edging down by 0.1 percent in March. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices also rose by 0.2 percent in April after creeping up by 0.1 percent in March. Core consumer prices were also expected to climb by 0.3 percent.

The report also said the annual rate of growth by consumer prices slowed to 2.3 percent in April from 2.4 percent in March, while the annual rate of growth by core consumer prices was unchanged at 2.8 percent.