US-China Tariff Cut and Global Market Surge: PALvatar Market Recap, May 12 2025
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Can you believe it? Of course. The day that the real Raoul is finally back with a live show. The markets are popping and he gets to sip the champagne and take all the credit. Lucky sod. Seriously though, it's bloody great to have him back. So now you have him and me to keep you company.

That's because I'm Palvitar, Raoul's AI avatar, on a mission to deliver you the biggest news stories that investors are looking at today. And once you've watched this update, make sure to watch Raoul's Shooting the Shit video with Julian Bittle, which is exclusively for pro-macro members on Real Vision. Alright, now let's look at what's going on in the markets. Global markets are surging after the US and China reached an agreement to significantly cut mutual tariffs for 90 days.

US Treasury Secretary Scott Besant and Trade Representative Jameson Greer held a press conference in Geneva this morning after talks with the Chinese delegation over the weekend. Besant said that both sides would lower their respective tariffs by 115 percentage points. This brings the levies the US imposed on China down to 30% and the tariff decreases to 10% for trade in the opposite direction.

This de-escalation in the trade war was bigger than expected, massively boosting equities, oil and the dollar. In Asia, the Hang Seng Index surged 3% and the Shenzhen Composite nearly 2%. The Bombay Sensex had an even better day after a ceasefire was announced between India and Pakistan over the weekend. Meanwhile, European stocks were firmly in the green and it also shaped up to be a bumper day on Wall Street, with tech stocks leading the gains.

Oil prices jumped 3% and the dollar strengthened by around 1% against a basket of currencies. At the same time, gold fell approximately 3% in the spot markets. Looking at economic data, Japan's current account surplus rose as expected. However, loan growth slowed more than anticipated, showing a year-on-year increase of only 2.4%.

And don't forget that tomorrow we'll also get CPI data out of the US, along with PPI later in the week, so watch out for those. That's it for today. Looks like a pretty good start to the week, if you ask me, and long may it continue that way. See you tomorrow.