Global Market Quick Take: Asia – June 12, 2025

Key points:

• Macro: US CPI cools to 2.4% against 2.5% forecasted
• Equities: S&P 500 lost earlier gains to end lower by 0.3% after weaker CPI
• FX: Dollar Index nears low; EUR rises on diverging policy outlooks
• Commodities: Middle East tensions cause oil prices to spike
• Fixed income: Treasuries rallies due to strong 10-year note demand

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Trump said he will set unilateral tariffs rates within two weeks. Earlier deal with China left tariffs at 55%, 30% from reciprocal tariffs, and 25% from fentanyl.
• US CPI rose to 2.4% YoY in May 2025, below the expected 2.5%. Price increases were notable in food (2.9%), transportation services (2.8%), used cars and trucks (1.8%), and new vehicles (0.4%). Core CPI increased 2.8%, slightly below the 2.9% estimate.
• US and China reached a preliminary deal on rare earths supply and eased student visa restrictions, but unclear tariffs and export controls dampened investor optimism. President Trump said the deal was “done,” pending approval from him and President Xi, with a decision expected soon.
• China's vehicle sales increased 11.2% year-on-year to 2.686 million units in May 2025. New energy vehicles jumped 36.9% to 1.307 million units, making up 48.7% of total sales.
• US recorded a $316 billion budget deficit in May, down 9% year-on-year, driven by record customs receipts of $23 billion from new tariffs. Gross customs receipts rose from $6 billion in May 2024 due to increased tariffs.

Equities: 

• US - The S&P 500 dropped 0.3%, ending a 3-day winning streak, the Nasdaq declined 0.5%, and the Dow remained flat. May's Consumer Price Index increased by 0.1% month-over-month, below expectations, easing pressure on the Federal Reserve to raise interest rates. US and Chinese negotiators reached a preliminary deal involving China providing rare earths and the US loosening restrictions on Chinese student visas, but details on tariffs and export controls were unclear, tempering investor optimism. President Trump announced the deal as "done," subject to approval from him and President Xi, while Commerce Secretary Howard Lutnick suggested a decision could be imminent. GameStop shares dropped 11% to $25.32 postmarket after announcing plans to issue $1.75 billion in convertible notes due 2032.
• EU - On Wednesday, the Stoxx 50 declined by 1% and the Stoxx 600 dropped 0.3% as markets processed mixed signals on global trade. US President Trump announced a trade framework with China focusing on rare earth supplies and access for Chinese students to US universities. Meanwhile, European officials expressed scepticism about their own trade talks with the US, suggesting that a preliminary deal might be reached by the July 9 deadline. Retail stocks suffered a sharp decline, with Inditex shares plunging over 4% due to disappointing quarterly sales and economic pressures affecting the summer season. In contrast, the autos and basic resources sectors saw gains, benefiting from the US-China trade update.
• HK - On Wednesday, the Hang Seng rose by 0.8%, reaching a near three-month high of 24,349, rebounding from the previous session's slight dip. Optimism around US-China trade talks drove the gains, though details on the framework remain awaited. Mainland stocks also showed notable gains, which balanced a slight decline in US futures ahead of key inflation data. Chinese automakers announced plans to shorten supplier payment terms amid a price war. JL Mag Rare-Earth Co. rose 2.8% after obtaining export licenses for the US, Europe, and Southeast Asia. Pop Mart surged 3.6% after setting sales records with its "blind box" toys. Huitongda Network increased nearly 3% with plans to buy back up to CNY 500 million in H shares.

Earnings this week:

• Thursday: Adobe

FX:

• USD faced pressure as the DXY fell to 98.5 due to softer-than-expected US CPI data, increasing expectations for Fed rate cuts.
• EUR benefited from the dollar's weakness and rose above 1.15, despite numerous ECB comments that had little effect.
• GBP regained the 1.3550 level, though further gains were constrained, with the spending review aligning with expectations and lacking surprises.
• JPY experienced volatile trading, with USDJPY fell to near 144 level before retreating due to the weaker dollar and deteriorating risk sentiment.
• Economic data – UK GDP, UK Goods Trade Balance, UK Industrial Production, UK Manufacturing Production, US PPI, US Initial Jobless Claims

Commodities:

• Oil prices climbed further after a 5% jump yesterday due to Middle East tensions. WTI gapped up 1.7% to over $69, and Brent neared $70. The US pulled some Iraq embassy staff, and the UK Navy warned of shipping risks.
• Gold increased for the second day due to Middle East tensions and Trump's tariff announcement. It rose 0.6% to about $3,373 an ounce, extending a previous 1% gain. Interest grew after the US pulled embassy staff from Baghdad amid Iran's threats.
• Copper declined by 1.1% as Chinese smelters began exporting cargoes, revealing a gap between tight global supply conditions and weakening demand in China, the leading consumer of metals.

Fixed income:

• Treasuries ended near session highs, buoyed by strong demand for the 10-year note auction and softer-than-expected May CPI data. Early gains in front-end Treasuries reflected increased Fed easing in swaps, now at 48 basis points by year-end versus 42 basis points on Tuesday. Japan plans to auction super-long bonds amid investor demand concerns, with New Zealand and the US also selling debt.

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