Wall Street Cheers As Trump Agrees To US-UK Trade Deal

US stocks advanced on Thursday, buoyed by a new trade agreement between the United States and the United Kingdom that offered some tariff relief to British industries and bolstered investor sentiment. Markets also cheered President Donald Trump’s comments indicating potential progress in upcoming trade negotiations with China.

Tariff Easing Sparks Market Rally
In a move widely welcomed by markets, the US agreed to reduce import taxes on a set number of British vehicles and exempt certain steel and aluminium products from tariffs. In return, the UK pledged to slash its tariffs on US goods from 5.1% to 1.8%, increasing access to American exports.

However, the US will retain a 10% baseline duty on most British imports.

President Trump emphasised that this rate represents the lower threshold compared to other countries that maintain large trade surpluses with the U.S. “Some will be much higher because they have massive trade surpluses,” Trump said during a briefing on Thursday.

Stocks React: Dow and S&P 500 Climb
The Dow Jones Industrial Average rose 0.6%, led by gains in industrial and consumer discretionary sectors, while the S&P 500 climbed nearly 0.6%. The Nasdaq Composite also closed higher, though off its intraday peak.

Airline and aerospace stocks led the charge, following news that aircraft parts made by Rolls-Royce would be exempt from the new U.S. tariffs. The S&P 500 passenger airlines index surged 5.4%, with Delta Air Lines soaring 7.2%.

Read More 
Will The Indian Textile Industry Benefit From India-UK FTA Deal?

Boeing Co was the best performer on the Dow, gaining 3.3%, after US Commerce Secretary Howard Lutnick revealed that the U.K. will purchase $10 billion worth of Boeing aircraft as part of the trade deal, as per the report by Reuters. 

Trump Eyes China Talks Next
Trump also stated that he anticipates meaningful negotiations between the US and Beijing on trade this weekend, adding that he wouldn't be surprised if an agreement is reached, according to a Reuters report.
 

Market Outlook Amid Fed Concerns
Despite Thursday’s rally, the S&P 500 is still on track for a 0.4% decline for the week, while the Nasdaq is down 0.3%. The Dow, however, is eyeing its third straight weekly gain, up 0.1% so far.

Investors are also weighing the broader economic outlook. On Wednesday, the US Federal Reserve held interest rates steady, but flagged elevated risks of inflation and unemployment, signalling a cautious stance on monetary policy in the near term.

Sector Watch: Industrials, Energy, and Airlines Shine
On the sectoral front, industrials, consumer discretionary, and energy were top performers, benefiting from optimism around trade and potential export gains. In contrast, healthcare and utilities lagged as investors rotated into cyclical and growth-sensitive names, as per the Reuters report.

Though analysts are cautious about overstating the impact of the US -UK deal, Wall Street's positive reaction underscores investor appetite for any sign of trade de-escalation.