U.S. markets were underwhelmed by the outcome of the U.S.-China talks, with stock futures slipping back into the red early Wednesday.
Chinese stocks, by contrast, took a more positive view of the London talks and advanced almost 1% to a three-week high. The CSI Rare Earth Index jumped nearly 4%, as Chinese rare earths magnet producer JL MAG Rare-Earth said it had obtained export licences to regions including the U.S., Europe and Southeast Asia for products including magnets, motor rotors and components.
There are currently few details available about the discussions between Washington and Beijing.
U.S. Commerce Secretary Howard Lutnick said the framework puts "meat on the bones" of a stalled agreement in Geneva last month, with them aim of removing restrictions on Chinese exports of rare earths and magnets and some of the recent U.S. export restrictions "in a balanced way".
But there was no additional information about the sky-high bilateral tariffs imposed - and paused - in recent months. Whatever agreements the two parties came to will now go back to their respective presidents for approval.
In the background, JPMorgan lifted its end-of-year forecast for China's onshore yuan, citing moderating risks around the trade war and a global theme of so-called de-dollarization.
The U.S. investment bank revised its dollar/yuan target to 7.15 from 7.30, seeing a "gentle downtrend" to 7.10 by mid-2026.
There was better news on trade front back in the Americas. The United States and Mexico are negotiating a deal to reduce or eliminate Trump's 50% steel tariffs on imports up to a certain volume, industry sources said late Tuesday. That appeared to underscore the rise in Mexico's peso this week to its best level since August last year.
Meanwhile, MCSI's all-country stock index managed to eke out another small gain to hit a new record high, which is impressive given the latest world economic forecasts.
The World Bank slashed its global growth forecast for 2025 by 0.4 percentage point to 2.3%, saying that higher tariffs and heightened uncertainty posed a "significant headwind".
In its twice-yearly Global Economic Prospects report, the bank lowered its forecasts for nearly 70% of all economies, including the United States, China and Europe, as well as six emerging market regions.
While the World Bank stopped short of forecasting a recession, it said growth this year would be the weakest outside of a recession since 2008. It forecast that GDP growth would average just 2.5% by 2027, the slowest pace in any decade since the 1960s.
Speaking in Beijing, European Central Bank President Christine Lagarde said coercive trade policies will fail to resolve financial imbalances and that the risk of mutual damage is so great that all sides must weigh policy adjustments to resolve the tensions.
Nevertheless, over in the UK, the blue chip FTSE100 rose to within a whisker of record highs set in March as investors awaited UK finance minister Rachael Reeves' latest government spending review on Wednesday.
Reeves will allocate more than 2 trillion pounds ($2.7 trillion) of public spending to different departments, outlining the government's priorities for the coming year.
The FTSE was helped by sterling's swoon this week after softer data on wages and jobs raised expectations for at least two more Bank of England interest rate cuts this year. The pound remained on the backfoot on Wednesday, near its weakest level against the euro in a month.
Elsewhere, Tesla shares climbed more than 2% ahead of the bell after its billionaire owner Elon Musk said he regretted some of the posts he made last week about President Trump.
But domestic U.S. tensions simmered as several U.S. cities braced for protests against Trump's sweeping immigration raids.
On the economic front, U.S. consumer prices are likely to have increased moderately in May given the relatively low price of gasoline, but tariffs probably started filtering through to other goods, potentially spurring underlying inflation pressures.
Core CPI inflation is expected have hit 0.3% last month, which would push up the annual core rate to 2.9% from 2.8% in April.
Now for today's column, which looks at the remarkable drop in Italy's bond market risk premium versus Germany's.
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