Trump and Xi agree to one-year trade truce

US President Donald Trump and Chinese President Xi Jinping have reached a comprehensive one-year trade truce during their meeting at the APEC summit in South Korea on Thursday. As part of the agreement, both leaders agreed to postpone export controls on rare earths and chips. China will suspend its recently imposed rare earth export controls, while the US will delay extending technology-related export controls to Chinese subsidiaries for one year. The leaders also reached agreements on fentanyl-related tariffs, with Trump reducing levies on China from 20% to 10% after Xi pledged to curb exports of opioid chemical ingredients, bringing average tariffs on Chinese imports to 45%. Additional agreements covered tit-for-tat levies on shipping industries. Trump indicated discussions on semiconductors are ongoing, with Nvidia expected to negotiate chip exports to China, excluding the most advanced microelectronics. The leaders said they would sign a formal trade deal “pretty soon” and plan reciprocal visits, with Trump traveling to Beijing in April.

The European Central Bank held its benchmark interest rate at 2% for the third consecutive meeting as Eurozone GDP grew 0.2% in Q3, exceeding economists’ expectations of 0.1%. ECB President Christine Lagarde cited resilient growth despite global challenges, including higher US tariffs, with a robust labor market and solid private sector balance sheets.

France was the standout performer, recording its strongest growth in over two years with a 0.5% expansion driven by trade and domestic demand. Spain continued its strong performance from the previous quarter. Growth was also seen in the Netherlands (0.4%), Belgium (0.3%), Portugal (0.8%), and Austria (0.1%). However, Germany and Italy both stagnated, narrowly avoiding recession, while Ireland, Finland, and Lithuania contracted. Lagarde attributed some momentum to increased investment in digital infrastructure and AI integration across European companies. Markets currently see roughly 40% probability of a rate cut by June 2026.

Today’s Economic Data and Events

14:00 Eurozone CPI MoM YoY Oct Forecast 0.2%

Fixed income

US treasuries yields closed up yesterday. The 2yr yield rose 1bps to 3.6082% and the 10yr yield grew 2bps to 4.0979%

FX

The dollar spot index rose 0.31% to 99.526. EURUSD declined 0.31% to 1.1565. GBPUSD fell 0.33% to 1.3151 while USDJPY climbed 0.92% to 154.13.

In emerging markets, USDTRY rose 0.23% to 42.0354. USDINR climbed 0.47% to 88.6163. USDEGP declined 0.16% to 47.2331.

Equities

The S&P 500 closed down 0.99% at 6,822.34, while the Dow Jones Industrial Average declined 0.23% to 47,522.12. The Nasdaq Composite fell 1.57% to 23,581.14.

In Europe, The Eurostoxx 50 declined 0.12%, the DAX fell 0.02%, the CAC 40 closed down 0.53% and the FTSE 100 gained 0.04%.

In local markets, the DFM closed up 0.3% and ADX gained 0.5%. Saudia’s Tadawul closed down 0.8%.

Commodities

Oil prices closed up on Thursday. Brent futures rose 0.1% to reach USD 65.00/b and WTI grew 0.1% to USD 60.57/b.

Gold prices rose 2.4% to close at USD 4,024.54/troy oz, while silver surged 2.9% to USD 48.93/troy oz.