InvestMacro

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.56%. The S&P 500 Index (US500) fell by 0.58%. The Nasdaq technology Index (US100) closed down 0.51%. Stocks fell amid President Trump’s expansion of restrictions on chip software supplies to China.

According to the Fed, the announced tariff increase was much more significant and extensive than expected, and they noted considerable uncertainty regarding the direction of trade policy, as well as the magnitude, scale, timing, and duration of its economic consequences, according to the minutes of the May FOMC meeting. Policymakers viewed this uncertainty as unusually high and believed that the risks of a decline in employment and economic activity, as well as the risks of higher inflation, had increased. In May 2025, the Federal Reserve kept its benchmark interest rate at 4.25-4.50% for the third consecutive meeting, in line with expectations.

The US Court of International Trade ruled that the tariffs were illegal and ordered them to be repealed and permanently blocked, dealing a significant blow to the president’s economic agenda. The White House is expected to appeal the decision.

Nvidia reported better-than-expected first-quarter results on Wednesday, but the chipmaker warned of an $8 billion negative impact on its second-quarter expectations due to the US ban on chip sales to China. Nvidia (NVDA) shares rose more than 2% after the close of trading on the back of the report.

The Mexican peso (MXN) fell to 19.4 per US dollar from an eight-month high of 19.2 reached on May 23, under pressure from some strengthening of the dollar and the Bank of Mexico’s dovish expectations. At the same time, expectations that the Bank of Mexico will extend its cycle of rate cuts this year prevailed after the latest core inflation figures matched expectations. The Bank of Mexico has made three consecutive 50 bps rate cuts in the current cycle, lowering its benchmark rate to 8.5%.

European stock markets were mostly lower on Wednesday. Germany’s DAX (DE40) fell by 0.78%, France’s CAC 40 (FR40) closed down 0.49%, and Spain’s IBEX35 (ES35) lost 0. 98%, and the British FTSE 100 (UK100) closed down 0.59%. Median inflation expectations in the Eurozone rose for the second month in a row to 3.1% in April 2025, the highest since February 2024, compared to 2.9% in March. Uncertainty about inflation expectations for the next 12 months also increased, reaching the same level as in June 2024. At the same time, inflation expectations for the next three years remained unchanged at 2.5%.

WTI crude oil futures rose to around $62.6 per barrel, marking the second consecutive session of growth, helped by lower tariff risks and prospects for reduced supply. On Wednesday, the US Court of International Trade ruled that President Trump had exceeded his authority in imposing global tariffs, declaring them illegal and ordering them to be rescinded. Although the administration is expected to appeal, the ruling helped reduce trade uncertainty and improved the outlook for global oil demand.

The US natural gas prices rose to $3.40/MMBtu, the highest level in a week, thanks to lower production, rising demand, and expectations for hotter weather. Looking ahead, LNG supplies are expected to remain below April’s peak.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) fell by 0.01%, China’s FTSE China A50 (CHA50) dropped 0.03%, Hong Kong’s Hang Seng (HK50) lost 0. 53%, and Australia’s ASX 200 (AU200) showed a negative result of 0.13%. Hong Kong stocks rose to 23,360 at the start of trading on Thursday, recovering from the previous session’s decline. The growth was almost universal, led by technology, consumer, and financial companies. Sentiment improved after a strong rally in US futures after a federal court blocked President Donald Trump’s tariffs imposed on “Liberation Day”.

New Zealand’s ANZ Business Outlook Index fell sharply to 36.6 in May 2025 from 49.3 the previous month, reaching its lowest level since July 2024. The decline is the third consecutive month amid growing concerns about the impact of rising US tariffs.

At the end of Tuesday, the Dow Jones Index (US30) rose by 1.78%. The S&P 500 Index (US500) was up 2.05%. The Nasdaq Technology Index (US100) closed higher by 2.39%. The US stocks rose sharply on the first trading day of the week, following gains in Treasury securities as markets eased concerns that a new trade war could hamper the corporate outlook.

Tesla shares rose by 6.5% after CEO Elon Musk said he was going to refocus on his companies and reduce political involvement. Nvidia also added 3%, setting the pace for chipmakers ahead of its earnings release this week.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.83%, France’s CAC 40 (FR40) closed down 0.02%, Spain’s IBEX35 (ES35) gained 0.13%, and the UK’s FTSE 100 (UK100) closed higher by 0.69%. European stocks closed solidly higher on Tuesday, extending the previous session’s sharp gains amid easing fears of a trade war with the United States and renewed support from the defense sector. On the economic front, GfK surveys and Eurozone sentiment indicators improved in May.

WTI crude oil prices dipped to $61 a barrel after earlier gains as traders await the OPEC+ meeting, which is expected to decide on an increase in oil production. Sources say OPEC+ is likely to approve a 411,000 bpd production increase in July, continuing a trend of accelerating supply growth after a similar increase scheduled for June.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was up 0.51%, China’s FTSE China A50 (CHA50) decreased by 0.53%, Hong Kong’s Hang Seng (HK50) added 0.43% and Australia’s ASX 200 (AU200) was positive 0.56%.

The New Zealand dollar stabilized around $0.594 on Wednesday, after briefly falling to $0.592 following the Reserve Bank of New Zealand’s interest rate decision. As expected, the RBNZ cut the official money rate by 25 bps to 3.25% for the sixth consecutive time as inflation remains within the target range. The Central Bank also signaled that it has room for further rate cuts to support the economic recovery overshadowed by the US tariffs. The RBNZ now expects a monetary rate cut to 2.92% in the fourth quarter of 2025 and to 2.85% in the first quarter of 2026.

The Australian dollar fell to $0.643 on Wednesday, extending its recent decline despite stronger-than-expected inflation data. Monthly CPI for April came in at 2.4%, unchanged from the previous two months but slightly above market expectations of 2.3%. The data provided limited support for the currency as markets remain focused on the Reserve Bank of Australia’s dovish outlook. The Central Bank cut its policy rate by 25 basis points last week and is expected to continue easing in the coming months.

The US indices did not trade yesterday due to the bank holiday. The US stock futures jumped on Tuesday after President Donald Trump announced over the holiday weekend that he would delay the imposition of 50% tariffs on European Union goods, extending the deadline to July 9. The decision followed a volatile week for financial markets, driven by growing concerns over the US fiscal outlook and lingering trade uncertainty.

Equity markets in Europe were mostly rising on Monday. Germany’s DAX (DE40) rose by 1.69%, France’s CAC 40 (FR40) closed 1.21% higher, Spain’s IBEX35 (ES35) Index gained 0.83%, and the UK’s FTSE 100 (UK100) was not trading on Monday. Frankfurt’s DAX Index added 1.7% to 23,997 points on Monday, outperforming its regional peers, helped by US President Donald Trump’s decision to delay the imposition of 50% tariffs on EU goods until July 9, up from last Friday’s June 1 deadline. Germany, Europe’s largest economy and a major exporter, increasingly relies on the US as a key market for pharmaceuticals, machinery, cars, and automotive components such as engines and machine parts.

WTI crude prices fell to around $61.3 a barrel on Tuesday on fears of further OPEC+ supply increases. The group will meet later this week and is likely to finalize production targets for July, with reports suggesting a possible increase of 411,000 bpd. Earlier this month, OPEC+ agreed to accelerate oil production increases in June for the second consecutive month. Meanwhile, Iran on Monday refused to suspend uranium enrichment as part of a nuclear deal with the US, just days after Trump hinted that an agreement may be imminent. Iran’s president has said Iran will be fine even if the sides fail to reach an agreement. A failure of nuclear talks would mean continued sanctions against Iran, which would limit Iranian oil supplies and support oil prices.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) rose by 1.00%, China’s FTSE China A50 (CHA50) lost 1.91%, Hong Kong’s Hang Seng (HK50) decreased by 1.35%, and Australia’s ASX 200 (AU200) was positive 0.01%.

The Bank of Japan (BoJ) should carefully assess the impact of rising food prices on core inflation, which is currently nearing the 2% target, Bank of Japan Governor Kazuo Ueda said. Ueda reiterated the Central Bank’s willingness to raise interest rates if data bolsters confidence in the economic recovery. Despite recent rate hikes and the end of a decade-long economic stimulus program, global uncertainties such as tariff hikes in the US have forced the BOJ to revise its growth expectations downward. Ueda warned that both upside and downside risks remain, especially in fiscal years 2025 and 2026.

In Australia, traders await key Australian inflation data this week, which could play a crucial role in determining the Reserve Bank of Australia’s (RBA) policy trajectory. Last week, the RBA cut the rate to 3.85% as expected and signaled the possibility of further easing in response to increasing economic headwinds and slowing inflation. Markets currently estimate a 65% probability of another rate cut in July, with expectations pointing to a total of 75 basis points of easing by the first quarter of 2026.

There is a high probability that the Reserve Bank of New Zealand (RBNZ) will continue to cut interest rates as early as tomorrow. A 0.25% cut from 3.5% to 3.25% is expected. In the absence of shock results, the New Zealand Dollar is likely to be driven by the bank’s updated expectations. With market pricing in the possibility of a move to below 3% later this year below the 3.1% level that the RBNZ expected three months ago, risks to the New Zealand dollar could be shifted to the upside if the bank fails to meet dovish expectations. The NZD/USD pair briefly touched highs for the year on Monday, rising to levels last seen just after the US presidential election.

The Dow Jones Index (US30) decreased by 0.61% (for the week -2.21%) on Friday. The S&P 500 Index (US500) was down 0.67% (for the week -1.70%). The Nasdaq Technology Index (US100) closed lower by 0.93% (for the week -1.05%). The US stocks declined on Friday after Donald Trump escalated trade tensions by threatening tariffs against Apple and the European Union. Apple shares fell 3%, bringing its value below $3 trillion, after Trump demanded that iPhones sold in the US be made domestically or face a 25% tariff. He also proposed a 50% tariff on all imports from the EU starting June 1 due to stalled trade talks, renewing fears of protectionist policies.

The US stock futures jumped on Monday after President Trump announced on Sunday that he would delay the imposition of 50% tariffs against the EU, extending the deadline to July 9. The move came after a turbulent week for markets, with growing concerns over the US fiscal outlook and trade tensions weighing heavily on investor sentiment.

The Canadian dollar (USD/CAD) strengthened to 1.375 per US dollar, the highest since October 2024, as bets that the Bank of Canada (BoC) will be less accommodative added to the impact of a weaker dollar. Canadian retail sales rose by 0.5% in April, following up on a 0.8% increase in March, signaling strength in Canadian consumers.

The Mexican peso (USD/MXN) rose to 19.3 per US dollar in May 2025, the strongest since last October, as budget concerns and tariff uncertainty in the US weakened the dollar. The dollar declined against major currencies after the US House of Representatives approved a bill that could increase the federal budget deficit by more than $3 trillion and days after Moody’s downgraded their debt rating due to unsustainable debt. On the domestic front, the latest data showed that Mexico’s GDP grew 0.2% in the first quarter. While this avoided a technical recession, it signaled underlying weakness in the Mexican economy and a more urgent need for Banxico to cut interest rates.

Equity markets in Europe were mostly falling on Friday. Germany’s DAX (DE40) fell by 1.54% (week ended -0.32%), France’s CAC 40 (FR40) closed down 1.65% (week ended -1.52%), Spain’s IBEX35 (ES35) fell by 1.18% (week ended +0.22%), and the UK’s FTSE 100 (UK100) closed negative 0.24% (week ended +0.38%). European stocks fell sharply on Friday after US President Trump said he recommends imposing tariffs of 50% on goods from the European Union, which could deprive demand from a key source of European exports. Shares of Mercedes Benz, BMW, Stellantis, Hermes and Inditex fell between 2% and 4.5%. Meanwhile, the likelihood of retaliatory measures from the European Commission put pressure on banks, with Intesa Sanpaolo, UniCredit, and BBVA down 3% each. On the data side, German Q1 GDP growth was revised upward to 0.4% from 0.2%, helped by strong manufacturing numbers and a surge in exports in March, suggesting the economy is resilient amid trade tensions.

WTI crude prices rose by 0.5% to settle at $61.50 a barrel on Friday, but still recorded their first weekly loss in three weeks, pressured by expectations of another OPEC+ production increase. The group is expected to increase output by 411,000 barrels a day in July, with discussions next week likely to confirm the move. Market sentiment deteriorated further on reports that OPEC+ may roll back the remainder of its voluntary 2.2 million bpd production cut by October.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) fell by 1.10%, China’s FTSE China A50 (CHA50) gained 0.43%, Hong Kong’s Hang Seng (HK50) rose by 0.92%, and Australia’s ASX 200 (AU200) posted a positive 0.21%.

Japan’s Index of leading economic indicators, which gauges the economic outlook for the coming months based on data such as job offers and consumer sentiment, was revised upward to 108.1 for March 2025 from a preliminary estimate of 107.7. However, the latest reading remains slightly below February’s 108.2 and is the lowest since last December due to deteriorating consumer sentiment.

The New Zealand dollar rose to around USD 0.602 on Monday, extending Friday’s 1.5% gain and nearing its highest level in seven months. The rally was largely driven by a broad-based decline in the US dollar, which weakened amid renewed trade tensions and growing concerns about the US fiscal outlook. However, tensions eased slightly when Trump announced on Sunday that he would extend the deadline for tariff talks with the EU until July 9. Domestically, traders are now awaiting Wednesday’s Reserve Bank of New Zealand (RBNZ) meeting, where the Central Bank is expected to cut the cash rate by 25 bps as inflation remains low. Markets currently expect rates to fall to around 3% or 2.75% by the end of the year.

At the end of Thursday, the Dow Jones index (US30) was virtually unchanged. The S&P500 Index (US500) was down 0.04%. The Nasdaq Technology Index (US100) closed higher by 0.15%. Wall Street remained cautious as a bill to cut taxes and increase defense spending now heads to the Senate and could add trillions to the $36 trillion national debt. The US Congressional Budget Office estimates spending at nearly $4 trillion, raising concerns about budget instability. Bond markets reflected this concern, with 30-year Treasury yields briefly hitting 5.14%, the highest level since 2023.

The US initial jobless claims fell 2,000 from the previous week to 227,000 for the period ended May 17, the lowest in four weeks and below market expectations for a rise to 230,000. The result extended a period of relative strength in the US labor market.

Bitcoin surpassed the $110,800 mark for the first time in history as the US government’s deregulation of cryptocurrencies reinforced the positive momentum since mid-April. Democrats in Congress dropped their opposition to a bill aimed at regulating stable cryptocurrencies, paving the way for legislation by the end of the week. The move reinforced expectations that government regulation of cryptocurrencies tied to the US dollar could spur the adoption of the asset class.

European stocks closed significantly lower on Thursday, following declines in global equities amid concerns over rising US debt and risks to European growth. Germany’s DAX (DE40) fell by 0.51%, France’s CAC 40 (FR40) closed down 0.58%, Spain’s IBEX35 (ES35) lost 0.25%, and the UK’s FTSE 100 (UK100) closed 0.54% yesterday. In Germany, the Ifo Business Climate Index rose to 87.5 in May, the highest reading since June 2024 and slightly above market expectations of 87.4, indicating some easing of recent uncertainty among companies. However, PMI data pointed to a renewed and sharper-than-expected contraction in the Eurozone’s private sector — the strongest in six months — driven by a moderate decline in service sector activity. Output declined in Germany and France, while the rest of the Eurozone continued to show positive growth.

WTI crude prices fell by 0.6% to settle at $61.2 a barrel on Thursday, pressured by reports that OPEC+ is considering increasing production in July, raising concerns about a potential supply glut. A production increase of 411,000 barrels per day is reportedly being discussed, although a final decision has yet to be made. Prices were further impacted by an unexpected 1.3 million barrel increase in US crude inventories last week, driven by higher imports and lower demand for the fuel.

The US natural gas prices (XNG/USD) fell more than 3% to $3.25/MMBtu after the EIA reported a larger-than-expected increase in storage inventories. Inventories rose by 120 billion cubic feet last week, exceeding forecasts of 115 Bcf and well above last year’s 78 Bcf and the five-year average of 87 Bcf. The growth was driven by mild weather that limited heating and cooling demand.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) fell by 0.84%, China’s FTSE China A50 (CHA50) added 0.09%, Hong Kong’s Hang Seng (HK50) lost 1.19%, and Australia’s ASX 200 (AU200) was negative 0.45%.

On May 23, the People’s Bank of China (PBOC) injected CNY500 billion into financial institutions under a one-year medium-term credit line (MTL) to maintain sufficient liquidity in the country’s banking system. This month’s net injection of MLF was down from CNY600 billion in the previous month.

New Zealand retail sales in the three months to March 2025 rose 0.8% quarter-on-quarter, following an upwardly revised 1% increase, and beat market expectations for a 0.1% increase. On a year-on-year basis, retail sales rose 0.7%, the second increase since Q3 2022, following an upwardly revised 0.3% increase in the previous quarter.

Singapore’s annual inflation rate in April 2025 was 0.9%, unchanged from the previous two months but slightly above market expectations of 0.8%. The rate remained at its lowest level since February 2021. Singapore’s core consumer prices rose 0.7% year-on-year in April 2025, accelerating from a four-year low of 0.5% in the previous month and exceeding market forecasts of 0.5%. This was the highest core inflation rate since January, mainly driven by higher inflation in services and food.

At the end of Wednesday, the Dow Jones Index (US30) decreased by 1.91%. The S&P 500 Index (US500) was down 1.61%. The Nasdaq Technology Index (US100) closed lower by 1.34%. The US stocks fell on Wednesday as a sharp rise in Treasury yields and renewed fiscal concerns weighed heavily on investor sentiment. Long-term bond yields rose after a weak $16 billion auction of 20-year Treasuries, and 30-year yields jumped to 5.08%, the highest level since 2023, amid heightened concerns that Washington’s proposed tax-and-spending bill could further widen the federal budget deficit.

Bitcoin surpassed the $109,500 mark for the first time ever, extending a rally since mid-April, as the advancement of legislation to regulate stablecoins in the US supported the outlook for digital assets. Democrats in Congress dropped their opposition to a bill aimed at regulating stablecoins, paving the way for its passage by the end of the week. The move reinforced expectations that government regulation of digital assets tied to the US dollar could spur adoption of the asset class.

Equity markets in Europe traded flat on Wednesday. Germany’s DAX (DE40) was up 0.36%. France’s CAC 40 (FR40) closed down 0.40%, Spain’s IBEX35 (ES35) fell by 0.11%, and the UK’s FTSE 100 (UK100) closed positive 0.06%. European equities closed unchanged, holding near two-month highs hit in the previous session, as a lack of new catalysts kept hopes alive that rising government spending in Europe would lead to increased investment among corporate giants.

Silver (XAG/USD) prices climbed above $33.1 an ounce on Wednesday, testing the highest level in three weeks, amid a weaker dollar and evidence of heavy buying by the industry. The dollar came under pressure despite a fresh rise in long-dated Treasury yields, reflecting lingering doubts about the exclusivity of US assets and consistent with the recent rush into precious metals in search of safety.

WTI crude oil prices reversed previous gains and are trading below $62 a barrel after an unexpected increase in US crude inventories. The EIA reported a 1.328 million barrel increase in crude inventories, contradicting expectations of a 1.85 million barrel decline.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) fell by 0.61%, China’s FTSE China A50 (CHA50) gained 0.69%, Hong Kong’s Hang Seng (HK50) rose by 0.62%, and Australia’s ASX 200 (AU200) gained 0.52%. Japanese stocks hit a two-week low and followed a sharp sell-off on Wall Street overnight. Japan’s Core Machinery Orders, a key leading indicator of capital investment, unexpectedly rose 13% in March, well above expectations of a 1.6% decline. Despite the upbeat data, sentiment was dampened by weak economic signals elsewhere: manufacturing activity remained in contractionary territory in May, while growth in the services sector also slowed.

Malaysia’s annual inflation rate for April 2025 was 1.4%, unchanged from March and in line with market expectations. It remained the lowest since February 2021, with food prices rising the least in six months (2.3% vs. 2.5% in March). Core consumer prices, excluding volatile fresh food and administrative expenses, rose to 2.0% y/y in April after increasing 1.9% in the previous two months, the sharpest pace since November 2023.

Singapore could slip into a technical recession this year, a government official warned after final GDP data confirmed the economy shrank in the first quarter of 2025, even before US tariffs take effect. The country’s trade-dependent economy grew 3.9% y/y but contracted 0.6% q/q.

At the end of Tuesday, the Dow Jones Index (US30) was down 0.27%. The S&P 500 Index (US500) decreased by 0.39%. The Nasdaq Technology Index (US100) closed lower by 0.38%. Sentiment turned cautious amid renewed uncertainty surrounding trade negotiations and political resistance to the tax plan. An extensive tech sell-off pressured markets, with Alphabet (-1.5%) falling after the Google I/O event, while Nvidia (-0.9%), Meta (-0.5%) and Apple (-0.9%) shares also declined. Additional pressure came from new warnings from JPMorgan and Fed officials, including St. Louis Fed President Alberto Musalem, who said tariffs could hamper economic growth and dampen inflation expectations.

The Canadian dollar strengthened at 1.39 per dollar, rebounding from a one-month low of 1.398 hit on May 14, as markets weighed inflation data for April and a weaker US currency. Canada’s Core Consumer Price Index slowed to a 1.7% annualized rate, the slowest pace in seven months, thanks to a 12.7% drop in energy costs following the repeal of a carbon tax and OPEC supply increases. However, the Bank of Canada’s preferred benchmark rate unexpectedly rose to 3.1%, the highest level in thirteen months, indicating continued underlying price pressures and speaking against imminent policy easing. Simultaneously, talks between US Vice President Vance and Prime Minister Carney bolstered hopes for a comprehensive trade agreement, reducing bilateral uncertainty.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) was up 0.42%. France’s CAC 40 (FR40) closed 0.75% higher, Spain’s IBEX35 (ES35) gained 1.16%, and the UK’s FTSE 100 (UK100) closed positive 0.94%. Frankfurt’s DAX Index rose for the first time to surpass the 24,000 mark and set a new record high. The rally was fueled by strong performances from BMW, Infineon and Merck, which rose over 1.5%, while Bayer, RWE, and Fresenius Medical Care were up 2-4%. On the macroeconomic front, investor sentiment was supported by better-than-expected Eurozone consumer confidence data for May. In addition, producer prices in Germany fell for the second month in a row, and at a faster pace than expected.

WTI crude oil prices jumped above $63 a barrel on Wednesday following reports that Israel plans to strike Iranian nuclear facilities. While it is still unclear whether Israel has made a final decision, the news has already raised fears of possible supply disruptions in the key oil-producing region of the Middle East. There are growing fears that Iran may retaliate by closing the strategically important Strait of Hormuz, a key route for oil and fuel exports from major Gulf countries including Saudi Arabia, Kuwait, Iraq, and the UAE.

The US natural gas (XNG/USD) prices jumped more than 6% on Tuesday, topping $3.325/MMBtu, thanks to lower daily production and higher demand expectations for next week.

Asian markets were predominantly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.08%, China’s FTSE China A50 (CHA50) gained 0.56%, Hong Kong’s Hang Seng (HK50) added 1.49%, and Australia’s ASX 200 (AU200) posted a positive 0.58%. Hong Kong’s seasonally adjusted unemployment rate rose to 3.4% for the three months ending April 2025 from 3.2% in the previous period, remaining at the highest level in more than two years. The number of unemployed rose by about 6.6 thousand from the previous month to 124,900, the highest since November 2022.

The New Zealand dollar rose to around US$0.593 on Wednesday, helped by a weaker US dollar amid growing concerns about the US economy. Sentiment was boosted by encouraging domestic data. New Zealand posted a trade surplus of $1.43 billion in April, reversing a deficit of $0.01 billion in the same month last year. This was helped by double-digit export growth (25%), which outpaced import growth (1.8%). On the monetary policy front, the Reserve Bank of New Zealand is expected to cut the official money rate by 25 bps next week, but some investors suspect the central bank’s easing cycle is nearing an end, with rates hitting 2.83% by the end of the year.