The Morning Edge: US and UK Strike Limited Trade Deal as Global Tariff Negotiations Begin

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Global Sentiment: Risk-on
Factors:  Trade talk Optimism; India-Pak geopolitical tension

TODAY’S WATCHLIST
  -  China trade data 
  -  BoE Governor Bailey speaks

THE BIG STORY 
President Trump and UK Prime Minister Keir Starmer announced a modest bilateral trade agreement Thursday that maintains the US's 10% baseline tariffs on British goods while offering targeted concession including reduced auto duties and expanded agricultural access. The deal, hailed by both leaders as a "breakthrough," marks the first in what Trump promises will be a wave of renegotiations following his sweeping tariff measures. However, the President emphasized that this agreement should not set expectations for other talks, warning that partners with large trade surpluses—like China—may face tougher terms. The announcement came as US. negotiators prepared for high stakes talks with China in Switzerland, underscoring the administration's piecemeal approach to reshaping global trade.

The UK secured lower US auto tariffs and maintained exemptions from Trump’s 25% auto import tax but failed to remove the 10% baseline duty or address Washington’s objections to Britain’s digital services tax. With the July 9 deadline looming for paused 50% tariffs on 57 other trading partners, the agreement offers a glimpse into Trump’s strategy: claiming political wins with incremental deals while maintaining his broader protectionist framework. 

DATA
US initial jobless claims fell by 13,000 to 228,000 last week, below forecasts of 230,000, as New York’s spring break-related surge reversed with a 15,089 decline in unadjusted filings. While the labour market shows resilience, tariff risks loom over sectors like transport and hospitality that drove recent volatility. The data suggests underlying stability, though seasonal distortions and trade pressures cloud the trend.

WHAT HAPPENED OVERNIGHT
US stocks climbed on Thursday as markets welcomed a new US-UK trade deal slashing British tariffs to 1.8% from 5.1% while maintaining US import levies, with Trump hinting at substantive upcoming China talks. Airlines led gains, soaring 5.4% as Rolls-Royce parts won tariff exemptions—Delta surged 7.2%—while Boeing jumped 3.3% on a $10bn UK aircraft order. The accord signals potential momentum for tariff resolutions ahead of critical negotiations. 

US Treasury yields surged to multi-week highs, with the 10-year note jumping 11.3bps to 4.388% and the 30-year bond up 8.1bps to 4.853%, as the US-UK trade deal fuelled bets on further tariff resolutions reducing Fed rate-cut urgency. BNY Mellon's John Velis noted fading trade risks could limit Powell's need for aggressive easing, reshaping policy expectations. 

The US dollar strengthened broadly on Thursday, supported by safe-haven demand and firm Treasury yields. The dollar index rose 0.77% to 100.66, while the euro fell 0.67% to $1.1223. The greenback gained 1.46% against the yen to 145.92 and climbed 1.01% versus the Swiss franc to 0.832, while sterling slipped 0.42% to $1.3239.

Brent crude oil prices rebounded on Thursday, lifted by optimism around potential progress in US-China trade negotiations. US crude rose 3.17% to settle at $59.91 a barrel, while Brent climbed 2.81% to $62.84, recovering all of Wednesday’s losses. Hopes of easing trade tensions between the world’s top oil consumers supported market sentiment. 

Day’s Ledger

Economic Data:

• China April trade data
• AMFI will release the mutual fund industry data for April.
• RBI to auction ₹160 billion worth of 6.92% 2039 bonds and ₹160 billion of 6.90% 2065 bonds.
• RBI OMO buy of five gilts worth ₹250 billion.
• India weekly forex reserve data

Corporate Actions

• Jan-Mar Earnings:  ABB India, ABM International, Aditya Vision, Alkyl Amines Chemicals, Bank of IndiaBirla Corporation, Cera Sanitaryware, Dhanlaxmi Bank, Dr. Reddy's Laboratories, Eveready Industries India, Grindwell Norton, Intellect Design Arena, Jupiter Life Line Hospitals, K.P.R. Mill, Lloyds Enterprises, Manappuram Finance, Motherson Sumi Wiring India, Navin Fluorine International, Paisalo Digital, Ponni Sugars (Erode), PTC India Financial Services, Raj Oil Mills, Relaxo Footwears, Reliance Power, Selan Exploration Technology, Shakti Pumps (India), Smartlink Holdings, Sutlej Textiles and Industries, Swiggy, Synergy Green Industries, The Great Eastern Shipping Company, Thermax, Tourism Finance Corporation of India, and Tree House Education & Accessories,
• Navin Fluorine International to consider fund raising
• Infibeam Avenues to consider fund raising 
• BEML to consider dividend

Policy Events

• BoE Governor Bailey speaks
• US FOMC Member Williams speaks 
• US Fed Waller speaks   

TICKERS

• Asian Paints' earnings dip in the March quarter due to rising competition and weakening demand.
• Bharat Forge sees sharper-than-expected declines in PAT and sales for the January-March period.
• Escorts Kubota’s January-March PAT falls 8% QoQ, but exceeds Street expectations.
• Havells receives approval for land allocation to build an electronics unit in Uttar Pradesh.
• IIFL Finance’s PAT drops 44% due to lower interest income and higher provisions.
• Kalyan Jewellers posts a 36% YoY PAT growth in the January-March quarter, boosted by higher revenue.
• L&T’s PAT surpasses estimates on one-time gain and stable margins.
• Lupin secures USFDA approval for HIV drug Raltegravir and earns 180-day exclusivity.
• Mastek teams up with UAE’s Zulekha Healthcare for digital transformation.
• Pidilite’s January-March consolidated PAT rises 41%, but falls short of market expectations.
• REC reports modest PAT growth in January-March due to a high base from last year.
• Suryoday Small Finance Bank posts a net loss as provisions rise.
• Titan outperforms expectations in the January-March quarter, driven by strong gold and jewellery sales.

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