Senior Relationship Manager
Summary: Beware of the Dax
Good morning,
Yesterday witnessed a subdued performance in U.S. equities, with trading volumes remaining below average. The Dow Jones Industrial Average ended lower 0.24%, the S&P 500 lost 0.64%, and the Nasdaq Composite fell 0.74%. Treasury Secretary Scott Bessent expressed optimism about President Trump's tariff, tax-cut, and deregulation agenda, suggesting these measures could collectively stimulate long-term investment in the U.S. He acknowledged potential short-term market volatility but remained confident in the overall positive outlook.
In corporate news, Berkshire Hathaway's shares fell by 5.1% following Warren Buffett's announcement of his decision to step down as CEO Meanwhile, Palantir Technologies exceeded analyst expectations, yet the stock declined by 8% as traders anticipated even stronger results.
A U.S. lawmaker plans to introduce legislation in the coming weeks to verify the location of artificial intelligence chips, such as those produced by Nvidia, after they are sold. This initiative aims to restrict China's access to high-level Nvidia chips.
Trading volume on U.S. exchanges totalled 13.67 billion shares, significantly lower than the average of 18.68 billion. U.S. 10-year Treasury yields climbed to 4.35%, up from last week's low of 4.15%. Precious metals saw gains, with gold and silver prices rising to 3360 and 33, respectively. In the currency markets, the EUR/USD is trading at 1.1320, USD/JPY at 143.80, and GBP/USD at 1.3285. Notably, the Taiwan Dollar appreciated by 10% against the U.S. Dollar following central bank intervention, highlighting the importance of monitoring Asian currencies.
In trade developments, the U.S. rejected Japan's request for a full exemption from 'reciprocal' tariffs but indicated potential negotiations to lower the 14% Japan-specific tariff. U.S. officials conveyed to Japan's negotiator that only a reduction in the tariff, which is suspended until early July, is open for negotiation. The suspension may be extended or the tariff reduced, contingent upon negotiation progress.
Watch the Dax: The index rose by 0.6% on Monday, surpassing the 23,200 mark, its highest level since March 19, marking a nine-session winning streak. Rheinmetall shares increased by 2.5% amid positive sentiment ahead of its earnings report. Major companies such as Continental, Hugo Boss, BMW, Fresenius, Infineon, Puma, Commerzbank, Zalando, and Siemens Energy are set to release quarterly results. Audi maintained its full-year outlook despite potential U.S. tariff impacts, following a 12.4% Q1 revenue increase driven by robust electric vehicle sales.
Friedrich Merz is expected to be elected as chancellor today, barring any unforeseen developments. The focus today will be on political events and corporate earnings. European PMI figures are typically not critical unless they present a significant surprise, while the U.S. International Trade data could prove impactful if it deviates substantially from expectations. Additionally, Donald Trump is scheduled to meet with the new Canadian Prime Minister, and key earnings reports from AMD, Rivian, and Supermicro are anticipated.
Looking ahead, tomorrow will be pivotal with the U.S. Federal Open Market Committee (FOMC) meeting and Chairman Powell's press conference.
Trade safely and expect the unexpected !
May 6 Global PMI
May 6 US Trade
May 7 Switzerland Foreign Exchange Reserves
May 7 Germany Industrial Orders
May 7 France Trade Balance
May 7 Italy Retail Sales
May 7-8 US Federal Reserve FOMC Meeting
May 8 UK Bank of England Interest Rate Decision
May 8 UK Monetary Policy Report
May 9 China Trade Balance
May 9 Switzerland Consumer Confidence Index
May 9 Japan Household Spending
May 9 Canada Labour Force Survey
May 9 US PPI Release
Earnings:
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Head of Commodity Strategy
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Global Head of Macro Strategy
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Chief Investment Strategist
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Head of Commodity Strategy
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Global Head of Macro Strategy
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Head of Fixed Income Strategy