Sterling Rises as Trump Teases UK Trade Deal

Sterling and UK stock futures climbed after President Trump hinted at a trade deal with a "BIG" country, widely believed to be Britain. Asian markets edged up, with Chinese blue chips and Hong Kong's Hang Seng gaining on hopes for a thaw in US-China trade tensions ahead of weekend talks. Meanwhile, global tensions escalated with fresh missile launches from North Korea and renewed hostilities between India and Pakistan, while defensive assets like gold and Bitcoin advanced.

Equities

The FTSE 100 fell 0.4% on Wednesday, dragged lower by declines in healthcare and real estate stocks. AstraZeneca dropped 1.8% and GSK fell 4.9% after the US Food and Drug Administration named Vinay Prasad as director of its biologics division. Prasad has previously criticised the agency’s leadership, which weighed on UK pharmaceutical shares.

Real estate stocks lost 1% following weak construction sector data, which showed a fourth straight month of contraction in April. Rentokil Initial declined 3.3% after announcing the retirement of its long-serving CEO.

JD Wetherspoon’s shares rose 6.1% after the pub group reported higher third-quarter sales. The FTSE 250 dipped 0.1%, but Barclays upgraded the index to ‘overweight’, citing expected support from upcoming Bank of England interest rate cuts.

In the US, major indices ended higher, lifted by a late rally in chip stocks. The S&P 500 gained 0.43% to close at 5,631.28, while the Dow Jones rose 0.7% to 41,113.97. The Nasdaq added 0.27% to 17,738.16.

The PHLX Semiconductor Index jumped 1.7% after Bloomberg reported that the Trump administration will roll back regulations on artificial intelligence chips, a move later confirmed by the Commerce Department.

Disney shares rose 10.8% after quarterly results beat expectations, boosting the Dow. Apple slipped 1.1% following reports that it is exploring new artificial intelligence search features for its Safari browser. Alphabet fell more than 7% on the day, pulling the S&P’s communication services sector down 1.8%—the weakest of the day’s performers.

Trading was choppy for most of the session after the Federal Reserve held interest rates steady, as expected. Fed Chair Jerome Powell said the outlook remains uncertain and that the central bank would not act without clearer economic data. Despite a cautious tone, markets continue to price in a 25-basis-point rate cut in July. Earlier optimism also stemmed from news that US and Chinese officials will meet in Switzerland this weekend for initial trade discussions.

Forex & Commodities

The US dollar firmed following the Federal Reserve’s decision to leave interest rates unchanged at 4.25%-4.50%. The greenback gained 1% against the yen, ending a three-day losing streak, and edged up 0.09% against the Swiss franc after hitting a multi-year low earlier in the week. The euro slipped 0.44% to $1.1316, while sterling weakened 0.52% to $1.3310 ahead of the Bank of England’s policy decision due later today, although it gained modestly versus the euro at 0.8508. The Fed struck a cautious tone, highlighting rising risks of inflation and unemployment and signalling a preference to wait for more clarity before adjusting rates.

Gold fell sharply, down 1.8% to $3,368.42 an ounce, as a stronger dollar and signs of easing US-China trade tensions reduced demand for safe-haven assets. US gold futures also slipped, settling 0.9% lower at $3,391.90. Traders were left underwhelmed by Fed Chair Jerome Powell’s post-meeting remarks, which reiterated the bank’s reluctance to act without clearer economic signals. Nonetheless, gold remains up nearly 29% this year, supported by ongoing central bank buying, with China’s central bank increasing reserves for a sixth consecutive month in April. Silver dropped 2.9% to $32.27, while platinum and palladium also declined.

Oil prices ticked higher, recovering from a more than $1 drop in the previous session. Brent crude rose 10 cents to $61.22 a barrel and West Texas Intermediate added 13 cents to $58.20, buoyed by optimism surrounding US-China trade talks scheduled for this weekend. However, weak US gasoline demand and an expected rise in OPEC+ production capped gains.