US CPI in Focus After Dollar Holds Steady on Trade Talks

Markets were cautious after US and Chinese negotiators agreed on a draft framework to resolve rare earth export restrictions, but the dollar remained steady ahead of key inflation data. US and European stock futures slipped 0.2% to 0.6% as investors awaited clarity on whether the April tariffs would remain in place. Treasury yields were little changed, with focus on today’s 10-year bond auction and the potential impact of tariffs on upcoming CPI figures.

Equities

The FTSE 100 rose 0.2% on Tuesday, closing just shy of its record high from March. Gains were led by housebuilders after softer UK labour market data raised expectations of a rate cut from the Bank of England later this summer.

Bellway climbed 7.9% after raising its forecast for the number of homes it will build this year. Vistry added 9.4% and Persimmon was up 6%, buoyed by sentiment across the sector. Energy stocks gained 3.5% in line with stronger oil prices.

Hochschild Mining dropped almost 23% after announcing a six-week suspension at its Mara Rosa mine in Brazil, citing lower-than-expected gold production. Aberdeen rose 6.3% after J.P. Morgan upgraded the fund manager to “overweight” from “neutral”.

In the US, the S&P 500 rose 0.55% to 6,038.81 as optimism grew over ongoing trade talks between Washington and Beijing. The Nasdaq gained 0.63% to 19,714.99, while the Dow added 0.25% to close at 42,866.87.

Tesla led the way among large-cap stocks, jumping 5.6% as investors grew confident in a resolution to the US-China tariff dispute, which has had a heavy impact on global supply chains this year. Alphabet rose 1.4% after Reuters reported that OpenAI is preparing to use Google’s cloud services to support rising computing demands. Microsoft dipped 0.4%.

Among the steepest fallers in the S&P 500 was J.M. Smucker, down 15.6% after the maker of Jif peanut butter issued a full-year profit forecast below market expectations. Insmed shares surged almost 29% after the company said its experimental treatment for pulmonary hypertension delivered positive results in a mid-stage trial, improving both blood pressure in the lungs and exercise capacity.

Snap slipped 0.1% after revealing plans to release its first smart glasses for general consumers next year, intensifying competition with Meta in the wearables space.

Forex & Commodities

The US dollar edged higher on Wednesday after US and Chinese officials concluded two days of trade talks in London, agreeing on a framework to ease recent restrictions. The dollar index, which measures the currency against six peers, rose 0.17% to 99.129. It pushed the euro down 0.08% to $1.1416 and was stable against the yen at 145.05. China’s onshore yuan held at 7.1867 per dollar, while the offshore yuan traded at 7.1875, close to two-week lows.

Sterling slipped 0.1% to $1.3484 as markets focused on the UK’s upcoming multi-year spending review. Chancellor Rachel Reeves is expected to outline departmental budgets for 2026 to 2029, with capital investment plans stretching to 2030. Analysts said tight fiscal conditions may limit the scope for gilt yields to move lower without future tax increases. Gilt yields were marginally higher on the day.

Gold rose 0.5% to $3,337.99 an ounce as traders looked for safe assets ahead of US inflation data due later today. Futures were up by the same margin at $3,359.20. Analysts noted that until the US and Chinese presidents formally approve the new trade framework, some uncertainty remains. Platinum gained 1.4% to $1,238.97, palladium was up 1% to $1,070.88, while silver dipped 0.1% to $36.52.

Oil prices eased slightly. Brent crude was down 15 cents at $66.72 a barrel and WTI slipped 10 cents to $64.88. OPEC+ is set to add 411,000 barrels per day to output in July. Analysts expect Saudi demand could absorb some of this increase, but seasonal patterns may limit price support later in the year.