InvestMacro

Stocks in the US traded lower on Friday afternoon as investors became more cautious ahead of trade talks between the US and China. At Friday’s close, the Dow Jones Index (US30) decreased by 0.29% (for the week +0.18%). The S&P 500 Index (US500) was down 0.71% (for the week +0.05%). The Nasdaq Technology Index (US100) closed higher by 0.27% (for the week +2.07%). Sentiment briefly improved following the announcement of a trade agreement between the US and UK, but concerns remain that negotiations with China may not succeed.

On the corporate front, Pinterest rose by 5.4% amid strong ad revenue projections, while Expedia fell by 7.7%, missing expectations.

The US futures rose Monday as the US said “substantial progress” in trade talks with China after two days of negotiations in Switzerland over the weekend. The US officials highlighted a deal to reduce the trade deficit, while Chinese leaders characterized the outcome as reaching an “important consensus”. Asian stocks and European futures also rose.

In Canada, the April employment report showed a net gain of 7,400 jobs, beating expectations. The unemployment rate rose to 6.9%, the highest level since November, underscoring the vulnerability of the tariff-prone manufacturing sector. Market odds suggest the odds of a rate cut in June are more than even, after the Bank of Canada noted high levels of household debt and hedge fund activity at bond auctions in its Financial System Review.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) rose by 0.63% (up +1.54% for the week), France’s CAC 40 (FR40) closed 0.64% higher (+0.10% for the week), Spain’s IBEX35 (ES35) gained 0.48% (+0.34% for the week), and the UK’s FTSE 100 (UK100) increased by 0.27% (+0.68% for the week). On Friday, the Frankfurt DAX Index rose by 0.6%, surpassing the 23,500 mark and reaching a new all-time high, continuing Thursday’s gains and following the dynamics of global markets. The rise was driven by the US-UK trade agreement, which reinforced expectations of progress in a broader US-EU agreement.

Norway’s annualized consumer inflation rate eased to 2.5% in April 2025 from 2.6% in the previous month, matching market expectations. This marked the second consecutive month of slowing inflation.

Ukrainian and European leaders, backed by US President Donald Trump, agreed to an unconditional 30-day ceasefire starting May 12. The leaders threatened Russian President Vladimir Putin with new “massive” sanctions if he did not comply.

WTI crude oil prices rose by 1.8% to hit $61 a barrel on Friday, posting a weekly gain of more than 4%, as easing trade tensions between the US and China boosted market sentiment. Optimism was fueled by news that US Treasury Secretary Scott Bessent will meet with China’s vice premier in Switzerland on May 10, signaling possible progress in resolving trade disputes.

Asian markets were predominantly up last week. Japan’s Nikkei 225 (JP225) rose by 3.57%, China’s FTSE China A50 (CHA50) gained 2.09%, Hong Kong’s Hang Seng (HK50) climbed 3.04%, and Australia’s ASX 200 (AU200) posted a positive 0.24%. Asian markets jumped at the open on Monday. The rally followed a significant rise in US futures amid signs of progress in trade talks between the US and China over the weekend. Investor sentiment was further boosted by easing geopolitical tensions, including a fragile ceasefire between India and Pakistan and Ukrainian President Zelensky’s willingness to meet with Putin.

Chinese consumer prices in April 2025 were 0.1% year-on-year, maintaining the same pace for the second month and in line with market expectations. This is the third consecutive month of consumer price deflation, driven by the combined impact of ongoing trade tensions with the US, weak domestic demand, and continued employment uncertainty. China’s producer prices in April 2025 came in at 2.7% y/y, slightly short of the market consensus expecting 2.6% y/y, following 2.5% y/y in March. It was the 31st consecutive month of producer price deflation and the sharpest pace since last October.

The Australian dollar climbed above $0.642 on Monday and rose for the second consecutive session as progress in US-China trade talks over the weekend boosted risk appetite. Markets now expect the Reserve Bank of Australia to cut the money rate to 3.1% by the end of the year, down from previous expectations of 2.85%. The RBA is expected to cut the rate again by 25 basis points at its meeting next week.

At the end of Tuesday, the Dow Jones (US30) was down 0.95%. The S&P 500 Index (US500) decreased by 0.77%. The Nasdaq Technology Index (US100) closed lower by 0.88%. The US stocks closed lower on Tuesday as investor sentiment deteriorated amid mixed trade signals. President Trump’s wavering stance on trade — he said “we don’t have to sign deals” — contradicts recent optimism from Treasury officials and dampens hopes for tariff relief. Diplomatic tensions also rose after a sharp exchange with Canadian Prime Minister Mark Carney, who said “Canada is not for sale,” prompting Trump to respond, “Never say never.”

The US trade deficit widened to $140.5 billion in March 2025, hitting a new record high, compared with expectations of a $137 billion deficit. Imports jumped 4.4% to a record $419 billion in anticipation of new tariff announcements in April.

Technology stocks weakened, with Meta down 1.8% and Tesla down 1.7% on disappointing European sales. Palantir Technologies fell by 12% after results fell short of investor expectations, while Ford rose 2.4%, even after warning that tariffs could cut the company’s 2025 earnings by about $2.5 billion.

The US Federal Reserve will hold a monetary policy meeting today. The US Federal Reserve is expected to leave the federal funds rate unchanged at 4.25–4.50% for the third consecutive meeting in May 2025, as policymakers take into account slowing inflation amid a still-resilient labor market and increased uncertainty over trade policy.

Canada’s trade deficit in March 2025 was CAD 0.51 billion, down from the CAD 1.41 billion deficit recorded in February. The improvement came amid a sharper decline in imports compared to exports, driven by retaliatory tariffs by Ottawa in response to new US duties, as well as a voluntary boycott of US goods by Canadian retailers and households.

Equity markets in Europe traded flat on Tuesday. Germany’s DAX (DE40) decreased by 0.41%, France’s CAC 40 (FR40) closed down 0.40%, Spain’s IBEX35 (ES35) added 0.09%, and the UK’s FTSE 100 (UK100) was up 0.01%. European stocks closed modestly lower on Tuesday, capping off the rally of the past four weeks, as markets digested earnings reports, political setbacks, and continued to assess how economic uncertainty is affecting corporate orders. German conservative leader Friedrich Merz was elected chancellor in the second round of voting in Germany’s Bundestag, but the first vote unexpectedly ended without his election. On the corporate front, technology, retail, and pharmaceutical stocks were among the top losers.

WTI crude oil prices rose to $60 a barrel on Wednesday, extending their gains of more than 3% from the previous session, helped by signs of lower production in the US and rising demand in Europe and China. Adding to the upbeat sentiment were reports that US and Chinese officials will meet this week, boosting hopes of easing tensions between the two biggest oil consumers. In addition, API data showed a larger-than-expected decline in US crude inventories, with a 4.5 million barrel drop last week, exceeding the expected 2.5 million barrel decline.

The US natural gas futures rose to $3.6/MMBtu on Tuesday after declining 2.2% in the previous session, helped by lower production and record LNG exports. Production fell about 4.8 Bcf/d to a seven-week low of 102.6 Bcf/d on Tuesday. In addition, the US remains the world’s top LNG exporter, supported by robust international demand despite the recent slowdown in the domestic market.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) was up 1.04%, China’s FTSE China A50 (CHA50) added 0.51%, and Hong Kong’s Hang Seng (HK50) was up 0.70%, while Australia’s ASX 200 (AU200) was negative 0.08%.

People’s Bank of China (PBOC) Governor Pan Gongsheng announced a 50 basis point cut in the reserve requirement ratio (RRR) on Wednesday, which could lead to an injection of around RMB1 trillion in liquidity. This is the first RRR cut in 2025 as Beijing seeks to support economic growth amid escalating trade tensions with the US. Meanwhile, the Central Bank decided to cut the rate on seven-day reverse repurchase agreements by 10 basis points to 1.40%, effective Thursday, May 8. This is the first key rate cut since September 2024 and could lead to a broader cut in rates on market and liquidity instruments.

On Monday, the Dow Jones Industrial Average (US30) was down 0.24%. The S&P 500 Index (US500) decreased by 0.64%. The Nasdaq Technology Index (US100) closed lower by 0.67%. Markets reacted to President Trump’s threat to impose new tariffs, including a 100% tax on foreign movies, but sentiment improved following stronger-than-expected ISM services sector data. Still, uncertainty remains after Trump said he has no plans to speak with Chinese President Xi Jinping, causing investors to stay cautious. The energy sector led the decline, followed by the consumer discretionary and technology sectors.

The S&P Global Canada Services PMI for April 2025 rose slightly to 41.5 from 41.2 in the previous month, reflecting the fifth consecutive period of contraction in Canadian services activity at a historically high rate. While recovering slightly from March’s decline, business confidence remained historically weak amid continued uncertainty.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 1.12%, France’s CAC 40 (FR40) closed down 0.55%, Spain’s IBEX35 (ES35) added 0.53%, and the UK’s FTSE 100 (UK100) was not trading yesterday. The Fed is expected to leave interest rates unchanged following the release of a good employment report for April. Several major companies, including Continental, Hugo Boss, BMW, Fresenius, Infineon, Puma, Heidelberg Materials, Commerzbank, Zalando, and Siemens Energy are also due to report quarterly results this week. Volkswagen, meanwhile, reaffirmed its full-year outlook, excluding the potential impact of US tariffs, after reporting a 12.4% rise in first-quarter revenue, helped by higher sales of electric vehicles.

Swiss consumer prices were unchanged year-on-year in April 2025 after rising to 0.3% y/y in March and defeating expectations for a 0.2% increase. This is the lowest rate since deflation was recorded in March 2021. Meanwhile, core inflation, which excludes volatile items such as food and energy, fell to 0.6% from 0.9% in March.

WTI crude futures rose more than 1% to $58 a barrel on Tuesday, breaking a two-day decline amid renewed tensions in the Middle East. On Monday, Israel launched airstrikes on Yemen’s Hodeidah port and cement factory in response to an attack by Iranian-backed Houthis with ballistic missiles that hit Israel’s main airport a day earlier.

Silver (XAG/USD) prices rose more than 1% to $32.40 per ounce on Monday, recovering from last week’s losses amid a weaker US dollar, amid lingering concerns over trade relations between the US and China. President Donald Trump has said he has no plans to speak with his Chinese counterpart this week, but has signaled a willingness to cut tariffs on Chinese imports to boost trade. Last week, China said it might consider launching trade talks with the US, but emphasized that Washington must first lift all unilateral tariffs to demonstrate sincerity of intent.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was down 0.21%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) were not trading, while Australia’s ASX 200 (AU200) was negative 0.97%.

The Caixin China Services PMI fell to 50.7 in April 2025, down from March’s three-month high of 51.9 and below market expectations of 51.7, marking the lowest growth in the services sector since September last year. Business sentiment fell to the second-lowest level since data collection began in November 2005 due to concerns about the negative impact of trade policy changes.

Indonesia’s economy contracted by 0.98% QoQ in the first quarter of 2025, the first quarterly GDP contraction in a year and short of the market consensus expecting a 0.89% contraction. The decline followed a 0.53% rise in Q4, helped by a sharp contraction in government spending.

The US stocks rose on Friday thanks to a strong jobs report and signs of easing trade tensions between the US and China, which boosted investor confidence. The Dow Jones (US30) Index was up 1.39% (up +2.85% on the week). The S&P 500 Index (US500) was up 1.47% (for the week +2.85%). The Nasdaq Technology Index (US100) closed higher by 1.60% (for the week +3.45%). Nonfarm Payrolls for April rose by 177,000, exceeding expectations and bolstering optimism about the labor market despite lingering uncertainty over tariffs. Further supporting sentiment was Beijing’s openness to a resumption of trade talks, subject to tariff reductions from the US. However, earnings results remained mixed, with Apple shares falling 3.7% after warning of a $900 million tariff hit, and Amazon down 0.1% after a cautious outlook. Exxon Mobil shares were up 0.4% and Chevron was up 1.7% after the results were released.

Canadian GDP rose slightly in March despite falling prices of key Canadian commodities and pessimism over the country’s trade war with the US, reinforcing expectations that GDP may be somewhat resilient to a weakening US economy. On the political front, the Liberal Party of Canada won its fourth consecutive election by a relatively small margin, putting little pressure on the Lonnie after expectations of a majority victory, but still making former Bank of Canada and Bank of England governor Mark Carney prime minister of a minority government. So far, the incumbent PM has refrained from prioritizing a trade deal with the US, emphasizing Canada’s influence and preferring to make deals with other countries.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) gained 2.62% (for the week +3.94%), France’s CAC 40 (FR40) closed 2.33% higher (for the week +2.71%), Spain’s IBEX35 (ES35) gained 1.20% (for the week +1.22%), and the UK’s FTSE 100 (UK100) closed 1.17% higher (for the week +2.15%). In Europe, encouraging economic data emerged with inflation unchanged at 2.2% in April, although core inflation rose slightly to 2.7% from 2.5%. Meanwhile, final PMI data for April showed tentative signs of a recovery in manufacturing activity. Shell shares rose by 1.9% after beating first-quarter earnings expectations and launching a $3.5 billion share buyback. Standard Chartered also beat projections thanks to profit gains in wealth management and global banking services.

WTI crude futures fell more than 3% to around $56 a barrel on Monday as OPEC+ agreed to increase production, adding to fears of a global supply glut. OPEC+ will boost oil production for the second straight month, increasing output by 411,000 bpd in June. That could put as much as 2.2 million bpd back on the market by November as group leader Saudi Arabia seeks to punish some members of the organization that have exceeded their quotas.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) was up 4.08%, China’s FTSE China A50 (CHA50) decreased by 1.17%, Hong Kong’s Hang Seng (HK50) added 1.92%, and Australia’s ASX 200 (AU200) was positive 3.39% over the past week.

The Australian dollar climbed above $0.645 on Monday, hitting its highest level in nearly five months, after Prime Minister Anthony Albanese won a second three-year term in Saturday’s federal election. Albanese promised the government would act in a “disciplined and orderly” manner, focusing on addressing rising living costs and global trade tensions. He also reiterated commitments to expand renewable energy, cut taxes, ease the housing crisis, and invest in Australia’s strained health system. On monetary policy, the Reserve Bank of Australia is expected to cut its benchmark interest rate by 25 basis points to 3.85% in May.

The New Zealand dollar rose to around US$0.598 on Monday, extending gains from the previous session, helped by continued weakness in the US dollar as investors awaited clearer signals on trade relations between the US and China. On Sunday, President Trump reiterated his confidence that China wants a deal, although he did not provide any details. Meanwhile, Beijing signaled last week that it was open to talks but insisted that the US first remove all unilateral tariffs.

At the end of Wednesday, the Dow Jones Index (US30) rose by 0.35%. The S&P 500 Index (US500) was up 0.15%. The Nasdaq Technology Index (US100) added 0.13%. Investors brushed off recession fears despite data showing the economy contracted for the first quarterly contraction in three years. The US economy shrank by 0.3% in the first quarter, missing expectations as businesses rushed to import goods before Trump’s tariffs took effect. While consumer spending rose a stronger-than-expected 0.7% in March, low hiring and government spending cuts underscored growing economic pressures.

The Canadian dollar strengthened to 1.38 per dollar, its strongest level since October, after the Bank of Canada’s latest meeting minutes showed a marked pullback from its earlier dovish rhetoric. The minutes emphasized the need for caution, expressing concerns that further easing could jeopardize efforts to control inflation, thus lowering expectations of a rate cut soon. The longs were further boosted by preliminary data that Canada’s economy grew 0.2% in the first quarter, avoiding a technical recession and in sharp contrast to the US.

The Mexican peso is holding near 19.60 per US dollar, remaining at its highest level in six months, as investors digest the latest data on economic growth. The Mexican economy avoided a technical recession thanks to preliminary first-quarter GDP growth of 0.2%, beating expectations of stagnation and recovering from a 0.6% contraction in the previous quarter.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.35%, France’s CAC 40 (FR40) closed 0.50% higher, Spain’s IBEX35 (ES35) Index fell by 0.59%, and the UK’s FTSE 100 (UK100) closed positive 0.37%. While the US economy unexpectedly contracted in the first quarter, Eurozone GDP growth came in above analysts’ expectations. The German economy emerged from a brief downturn, posting a 0.2% growth in Q1 after contracting 0.2% in the previous quarter, which matched expectations. Meanwhile, German inflation fell for the second consecutive month to 2.1% in April, the lowest since October 2024, but still slightly above the market prognoses of 2.0%.

WTI crude oil prices fell by 3.7% to $58.20 a barrel on Wednesday, posting their steepest monthly drop since the end of 2021, down 18% amid growing concerns about a global supply glut and weakening demand. Prices were pressured by Saudi Arabia’s signal to increase production and regain market share, while OPEC+ is reportedly considering additional production increases at its May 5 meeting, adding to fears of a renewed price war.

Asian markets were mostly up on Wednesday. Japan’s Nikkei 225 (JP225) rose by 0.57%, China’s FTSE China A50 (CHA50) was down 0.61%, Hong Kong’s Hang Seng (HK50) added 0.51%, and Australia’s ASX 200 (AU200) was positive 0.69%.

In New Zealand, markets are firmly expecting a 25bps rate cut at the Central Bank’s meeting later this month, with rates set to be at 2.75% by October. On the economic front, recent data showed that business confidence in New Zealand deteriorated in April due to concerns over US tariffs. For April, the kiwi dollar rose strongly by 4.6%.

The Australian dollar climbed above US$0.64 on Thursday, building on gains made in the previous session following the release of strong trade balance data. Australia reported a trade surplus of A$6.9 billion in March, up significantly from February’s A$2.85 billion. The currency was further supported by April data, which showed that manufacturing activity continued to grow, and new orders increased at the fastest pace in almost two and a half years, which is a positive sign for domestic demand.

The Dow Jones Index (US30) gained 0.75% on Tuesday. The S&P 500 Index (US500) increased by 0.58%. The Nasdaq Technology Index (US100) was up 0.61%. Stocks headed higher on Tuesday after weaker-than-expected reports on US job openings and consumer confidence crashed 10-year T-note yields to 3-week lows, raising the likelihood that the Federal Reserve will cut interest rates. Markets have moved to estimate a 100 bps Fed rate cut within a year, compared with the Central Bank’s 50 bps announcement last month.

A preliminary estimate saw the US trade deficit widen sharply to $162 billion in March 2025, a record high, exceeding the market consensus expectations of $146 billion, as tariffs threatened by the US government force domestic companies to increase imports.

The Canadian dollar hit 1.38 per dollar, trading near its highest level in six months, as G10 currencies continued to receive support from a flight from dollar assets and markets assessed the outlook for domestic economic policy under the newly elected Liberal Party government. Canada’s Liberal Party won its fourth consecutive election by a relatively small margin, which put little pressure on the CAD after expectations of a majority victory. Still, it made former Bank of England and BoE Governor Mark Carney the Prime Minister of a minority government. So far, the incumbent PM has refrained from prioritizing a trade deal with the US, emphasizing Canada’s influence and preferring to make deals with other countries. At the same time, the Bank of Canada noted that an uncertain US trade policy risks a recession in Canada if the US continues to impose an aggressive tariff package.

Equity markets in Europe traded without a single dynamic yesterday. German DAX (DE40) gained 0.69%, French CAC 40 (FR40) closed down 0.24%, Spanish IBEX35 (ES35) fell by 0.66%, and British FTSE 100 (UK100) closed higher 0.55%. Frankfurt’s DAX Index rose about 0.7% on Tuesday to 22,426, its highest level since early April and marking its sixth consecutive session of gains. The rise came as investors weighed a wave of corporate earnings and former President Trump’s proposal to cut tariffs on auto parts for US-made vehicles. Germany’s largest lender, Deutsche Bank, was also in the spotlight, rising 5% after posting better-than-expected first-quarter earnings.

WTI crude oil prices fell more than 2% to below $61 a barrel, a two-week low, and extended a 1.5% decline in the previous session as global trade tensions and weak US data worsened the demand outlook. Oil is on track for its sharpest monthly decline since 2021, falling 15% in April, as fears grow that President Trump’s escalating tariffs could push the global economy into recession. The US consumer confidence fell, adding to signs of economic strain.

Asian markets were mostly rising on Tuesday. Japan’s Nikkei 225 (JP225) was not trading yesterday, China’s FTSE China A50 (CHA50) was down 0.50%, Hong Kong’s Hang Seng (HK50) was up 0.16%, and Australia’s ASX 200 (AU200) was positive 0.92%. Hong Kong stocks fell 72 points in early trading on Wednesday, reversing the previous session’s modest gains, as investors reacted to China’s April PMI data. Official data showed factory activity contracted by the most in 16 months, amid growing concerns about the impact of rising US tariffs. In contrast, the private survey showed unexpected growth in manufacturing, albeit at the slowest pace since January. Meanwhile, growth in the services sector also weakened, with the reading falling short of expectations.

Headline inflation in Australia rose by 2.4% in the first quarter, in line with the previous quarter’s pace and slightly above market expectations of 2.3%. However, core inflation fell to 2.9% from 3.3%, reinforcing expectations of a rate cut soon. The Reserve Bank of Australia is widely expected to cut its monetary rate by 25 basis points to 3.85% in May, with markets’ pricing in further easing to 2.85% by year-end. The outlook is shaped by rising domestic economic uncertainty and heightened external risks, particularly the potential global impact of new US tariffs.