Investing.com - U.S. stock futures were subdued ahead of the final day of the trading week, with markets gauging the potential for a series of new U.S. trade deals. Sentiment was buoyed on Thursday by a new trade agreement between the U.S. and U.K., with the spotlight now shifting to upcoming talks between American and Chinese officials this weekend. Elsewhere, artificial intelligence-darling Nvidia (NASDAQ:NVDA) is reportedly planning to downgrade its China-focused chip in a bid to meet stringent U.S. export controls.
1. Futures muted
U.S. stock futures hovered around both sides of the flatline on Friday, as investors assessed the implications of a recently-announced trade agreement between the U.S. and Britain.
By 03:38 ET (07:38 GMT), the Dow futures contract had dipped by 41 points, or 0.1%, S&P 500 futures had inched up by 3 points, or 0.1%, and Nasdaq 100 futures had gained 38 points, or 0.2%.
The main averages on Wall Street gained on Thursday, fueled by optimism that the new U.S. deal with the UK could help thaw global trade tensions.
While a baseline 10% U.S. tariff on imported British items will remain in place, the UK has said it will lower its duties to 1.8% from 5.1% and grant greater access to U.S. goods.
Plane parts made by engine manufacturer Rolls-Royce (LON:RR) (OTC:RYCEY) were also exempted from U.S. levies, bolstering airline stocks like Delta Air Lines (NYSE:DAL), which spiked by 7.2%. The sector-wide S&P 500 passenger airlines index climbed by 5.4%.
Boeing (NYSE:BA) shares advanced as well after Commerce Secretary Howard Lutnick said the UK had agreed to purchase $10 billion of aircraft from the jetmaker.
The U.S. dollar strengthened following the announcement, with analysts at ING saying the greenback was benefiting from "Trump shifting to market-appeasing mode" after his punishing -- and now partially delayed -- tariffs rocked investor confidence last month.
2. U.S.-U.K. trade agreement
Although it came with heightened fanfare from Trump, analysts noted that Thursday’s announcement was relatively light on substance, providing more of an outline that a detailed trade deal.
Still, hopes remain that the accord may be the first of many to come during the ongoing 90-day pause to Trump’s elevated "reciprocal" tariffs.
Speaking in the Oval Office with U.K. Prime Minister Keir Starmer listening in on a speaker phone, Trump said Britain had notched a "good deal", adding that other trading partners may end up with higher tariffs because they have larger trade surpluses with the U.S.
"[T]his rush to demonstrate progress on ’deals’ reveals a rising desperation within the administration to rollback tariffs before they hit gross domestic product growth and inflation," said Paul Ashworth, Chief North America Economist at Capital Economics, in a note. "That is still good news, however."
Trump previously slapped sweeping tariffs of up to 50% on goods from dozens of countries at a White House event in early April, arguing that the moves were necessary to bolster government revenues, reshore lost manufacturing jobs, and correct perceived trade imbalances. Despite postponing them a few days later, several tariffs are still in place, including the universal 10% levies and duties on other products like steel, aluminum and auto parts.
Many economists have warned that the tariffs could cause a "demand shock" in the world economy that eats away at global activity. Gross domestic product in the U.S. contracted in the first quarter, but there have been signs of resilience in consumer spending and the labor market.
3. U.S.-China trade talks ahead
Markets are now turning their focus to crucial talks this weekend between U.S. Treasury Secretary Scott Bessent and top trade negotiator Jamieson Greer and their Chinese counterparts in Switzerland.
Crucially, China was omitted from Trump’s tariff pause and now faces U.S. duties of at least 145%. Beijing has responded with its own reciprocal levies of 125%, sparking concerns over an intensifying trade conflict between the world’s two largest economies.
Trump suggested on Thursday that the much-anticipated discussions in Geneva on Saturday and Sunday will be substantive, saying he expects the soaring tariffs would eventually be lowered.
China’s Vice Foreign Minister has said the country has full confidence that it can handle trade issues with the U.S., adding that the draconian nature of the Trump administration’s tariff agenda cannot be sustained. Beijing has previously accused the U.S. of using the tariffs as a "coercion" tactic.
4. Nvidia planning to modify China-focused AI chip - Reuters
Nvidia is planning to release a less-powerful version of its H20 artificial intelligence chip in China within the next two months, as it moves to meet stricter U.S. export restrictions, Reuters reported on Friday.
The semiconductor giant has informed several major Chinese customers, including cloud computing services providers, of the move, Reuters reported, citing three sources familiar with the matter.
The H20 is the most powerful chip that Nvidia is allowed to sell in China, at least under Biden-era export controls. But the Trump administration recently signaled that it will impose new regulations on technology shipped to China, including rules requiring Nvidia to obtain a license to export the chip to the country.
Downgrading the H20 -- largely by lowering its computing power and slashing its memory capacity -- is expected to help Nvidia bypass the updated controls. The chip is at the forefront of China’s AI development efforts, and is used by a slew of companies ranging from AI startup DeepSeek to internet giants such as Baidu (NASDAQ:BIDU) and Alibaba (NYSE:BABA).
5. Oil climbs
Oil prices edged higher Friday, adding to the previous session’s gains as trade tensions eased ahead of talks between top oil consumers U.S. and China and after the announcement of the trade deal with Britain.
At 03:39 ET, Brent futures climbed 1.2% to $63.60 a barrel, and U.S. West Texas Intermediate crude futures rose 1.3% to $60.69 a barrel.
Both contracts settled nearly 3% higher on Thursday. Despite these gains, oil prices still remained close to four-year lows, as worries heightened economic uncertainty and its impact on crude demand remained.