Hong Kong Stocks Jump as US-China Officials Plan Talks

Hong Kong stocks rallied after the US and China confirmed their top trade officials will meet in Geneva, though a deal remains unlikely. US futures held gains during Asian trading, while Asian currencies slipped after a recent surge, and India's rupee weakened amid escalating tensions with Pakistan. Investors also digested news of potential Chinese rate cuts and regulatory changes as markets awaited the US Federal Reserve’s policy update.

Equities

The FTSE 100 finished flat on Tuesday as markets took in the economic implications of further US tariffs and looked ahead to the Bank of England’s interest rate decision on Thursday. The FTSE 250 rose 0.6%, its ninth consecutive gain.

Precious metal miners topped the leaderboard, with Endeavour Mining up 5.2% and Fresnillo gaining 4.7%, following a sharp rise in gold prices. BP climbed 1.4% on reports that Shell may be considering a takeover. Deliveroo advanced 1.9% to a three-year high after it agreed to a $3.9 billion acquisition by US-based DoorDash. Anglo American slipped 3.1% after Peabody Energy said it may walk away from its planned purchase of the company’s Australian coal assets.

On the data front, the UK services sector contracted in April at the fastest pace since early 2022. The latest PMI survey pointed to a downturn driven in part by weaker export demand, as UK firms reported that new US tariffs were weighing on business sentiment and international orders. Meanwhile, the UK secured a free trade agreement with India—the most significant deal since Brexit—which was finalised in the same week President Trump announced 100% tariffs on foreign-produced films and hinted at pharmaceutical levies.

In the US, the S&P 500 fell 0.64% to end a nine-session winning streak, its longest since 2004. The Nasdaq dropped 0.74% and the Dow declined 0.24%. Losses followed Trump’s announcement of a 100% tariff on imported films, which hit major entertainment stocks. Netflix fell 1.9%, halting an 11-session rally, while Amazon dropped 1.9% and Paramount Global declined 1.6%.

Berkshire Hathaway slipped 5.1% after Warren Buffett confirmed plans to step down as CEO. Energy was the weakest sector, down 2%, following OPEC+’s decision to accelerate output increases. Skechers surged 24.3% after agreeing to a $9.4 billion take-private deal with 3G Capital. On the data side, the ISM services index rose in April, but the prices-paid component jumped to a two-year high, suggesting growing cost pressures linked to tariffs. Tyson Foods fell 7.7% after missing quarterly revenue estimates. Traders are now focused on Wednesday’s Federal Reserve meeting, where interest rates are expected to remain unchanged.

Forex & Commodities

The US dollar lost ground on Tuesday as traders grew uneasy about the Trump administration’s delays in finalising trade deals, particularly with China. The euro rose 0.5% to $1.1371 after Friedrich Merz was elected German Chancellor, following a tense and unsuccessful first vote. Sterling also gained, up 0.61% to $1.3378 ahead of Thursday’s Bank of England decision, where a 25 basis point rate cut is anticipated. The Canadian dollar strengthened 0.39% against the US dollar after Prime Minister Mark Carney told President Trump in Washington that Canada “is not for sale”.

Gold prices slipped 1.3% to $3,383.88/oz in early Wednesday trading, retreating from a 3% surge the previous session, as optimism over upcoming US-China trade talks reduced demand for safe-haven assets. US gold futures also fell about 1% to $3,391.80. Traders are keeping a close eye on the Federal Reserve’s meeting later today, where interest rates are expected to remain unchanged. Spot silver eased 0.7% to $33.01/oz, with modest declines also seen in platinum and palladium.

Oil prices firmed modestly, supported by signs of lower US output and renewed hopes that trade discussions between the US and China may ease pressure on global demand. Brent crude rose 0.7% to $62.59 a barrel, while WTI climbed 0.9% to $59.59. Production cuts from Diamondback Energy and Coterra Energy, prompted by recent price declines, are expected to curb output going forward. API data showed a 4.5 million barrel fall in US crude stocks last week, ahead of official government data due later today.