09.05.2025 Market Outlook: UK Trade Deal, Wall Street Eyes China Talks and Inflation Data

Stock market bulls are doing their best to push prices above last week’s close, but it’s unclear if a new trade agreement with the UK — one of America’s longest-standing partners — will be enough to sustain that momentum. The deal introduces some tariff reductions on British imports and removes specific obstacles to U.S. exports, especially in agriculture. Notably, this marks the first trade pact since the introduction of “reciprocal” tariffs back in early April, although the UK was never actually hit with those elevated rates.

The White House has stated that negotiations are ongoing. Still, President Trump emphasized that the UK, like all other countries, will face a 10% base import tariff — a point that has traders wary. The agreement allows up to 100,000 UK-made vehicles to be imported at the 10% rate, after which the tariff jumps to 25%. However, the U.S. doesn’t import a large volume of cars from the UK, so investors are holding out for more impactful agreements — particularly with major economies like Japan. Since the UK was never subject to the full reciprocal tariffs, this deal doesn’t shed much light on how far the U.S. is willing to lower rates for other countries.

In terms of total trade volume, the UK is America’s ninth-largest partner. But the real concern remains China, due to both the massive scale of trade and the steep tariffs now in place. Market optimism hinges on the upcoming U.S.–China meetings this weekend, where officials hope to reach a temporary compromise or at least de-escalate tensions. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are set to meet with China’s top economic negotiator in what are being called “ice breaker” discussions.

While a meaningful trade deal with China may still be several weeks — if not months — away, in today’s unpredictable climate, surprises can’t be ruled out.

Performance Update:
Despite the macro uncertainty, our automated trading system continued to perform with precision this week. On May 5th alone, it executed two standout trades:

• Bought at 5670, sold at 5684 for a +14 point gain, generating $700

• Bought again at 5670, sold at 5686 for a +16 point gain, generating $800

These results highlight the strength of our system in navigating volatile intraday price action and identifying high-probability entries and exits.

Looking Ahead:
Investors are now eyeing Tuesday’s release of the April Consumer Price Index (CPI). Many analysts believe it’s too early for the data to fully reflect recent tariffs, as they were only in place for part of the month. A clearer inflation picture may emerge in May or later, depending on how much inventory retailers stocked in advance.

Other important economic indicators due next week include the Producer Price Index, Retail Sales, Business Inventories, Industrial Production, and the Empire State Manufacturing Survey on Thursday. Friday brings reports on Consumer Sentiment, Import/Export Prices, and Housing Starts & Building Permits.

In terms of earnings, key companies reporting next week include NRG Energy and Simon Property on Monday; On Holding and Sony on Tuesday; Cisco on Wednesday; and Deere & Co. along with Walmart on Thursday.

Wishing you a great week!