InvestMacro

At the end of Thursday, the Dow Jones Index (US30) rose by 0.28%. The S&P 500 (US500) added 0.40%. The Nasdaq (US100) closed higher at 0.21%. Market growth was held back by ongoing legal battles over President Donald Trump’s tariffs. A federal court initially blocked most of the tariffs, ruling that they were imposed illegally, but on Thursday afternoon, a US appeals court reinstated them, creating uncertainty about trade policy. Weak data reinforced expectations of multiple Fed rate cuts this year. In the first quarter of 2025, the US economy contracted by 0.2% on an annualized basis, which was slightly better than the initial estimate of a 0.3% decline, but still marked the first quarterly contraction in GDP in three years.

European stock markets were mostly lower on Thursday. The German DAX (DE40) fell by 0.44%, the French CAC 40 (FR40) closed down 0.11%, the Spanish IBEX35 (ES35) rose by 0.11%, and the British FTSE 100 (UK100) closed lower at 0.11%. Initial optimism following the US Court of International Trade’s ruling that President Donald Trump had exceeded his authority in imposing retaliatory tariffs and ordering the administration to stop collecting them faded as investors weighed the possibility that the administration would use alternative legal avenues to maintain its trade policy.

WTI crude oil prices fell to $60.7 per barrel on Thursday under pressure from weak US economic data and concerns about rising global supply. A report from the US showed that the economy contracted in early 2025, raising concerns about slowing fuel demand. At the same time, Kazakhstan said that OPEC+ is likely to increase production at its meeting on Saturday, although the size of the increase has not yet been determined. The head of the International Energy Agency said that oil consumption in China remains weak, exacerbating concerns about demand. On the supply side, US crude oil inventories unexpectedly fell by 2.8 million barrels last week.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 1. 88%, China’s FTSE China A50 (CHA50) added 0.06%, Hong Kong’s Hang Seng (HK50) increased by 1.35%, and Australia’s ASX 200 (AU200) showed a positive result of 0.15%. The Hang Seng Index is showing steady monthly growth of around 5%, recovering from sharp losses in the previous period. The recovery was aided by strong GDP data for the first quarter, a 90-day tariff pause between the US and China, high IPO activity, and a resurgence in tourism.

In Australia, retail sales unexpectedly fell by 0.1% month-on-month in April, reversing the 0.3% growth in March, which was also in line with the consensus expectations. In addition, building permit data was also unexpectedly low, heightening concerns about a weakening economic outlook. The data reinforced expectations that the Reserve Bank of Australia will maintain its easing bias after cutting rates by 25 basis points last week.

According to Reserve Bank Deputy Governor Karen Silk, interest rates in New Zealand are now in a neutral range of 2.5-3.5%, and further changes will depend on economic developments, as past rate cuts have not yet fully taken effect. She also noted that uncertainty in global trade remains high, but expects the economy to recover, supported by previously adopted easing measures that may offset some risks. The Reserve Bank of New Zealand (RBNZ) cut rates by 25 basis points to 3.25% at its May meeting, signaling that the easing cycle may be coming to an end after cutting rates by 225 basis points since August.

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.