Global Market Quick Take: Asia – June 6, 2025

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Key points:

• Macro: Public feud between Musk and Trump sours risk sentiment
• Equities: Tesla fell 14.3% after Trump threatens to end contracts/subsidies
• FX: EUR surged near 1.15 post-ECB rate cut, then retreated slightly
• Commodities: Silver reached a 13-year high, above $36
• Fixed income: Treasuries dropped, reversing gains ahead of NFP

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Risk sentiment was pressured by a public feud between US President Trump and Elon Musk, involving threats to terminate Musk's government contracts and Musk's claim that Trump "is in the Epstein files."  
• Trump announced a positive phone call with Chinese President Xi, focused mainly on trade. Their teams will meet soon at a location to be decided. The call lasted about 1.5 hours and ended positively.
• ECB cut key interest rates by 25 bps, citing updated forecasts. Inflation is close to the 2% target, projected at 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027.
• US initial jobless claims rose by 8,000 to 247,000 in the week ending May 31, exceeding expectations of 235,000 and marking the highest level since October 2024, hinting at labour market softening.

Equities:

• US - The S&P 500 fell 0.5%, the Dow dropped 107 points, and the Nasdaq 100 slid 0.8%, heavily influenced by Tesla's sharp decline. Tesla shares dived 14.3% after Trump criticised Musk for opposing a major tax-and-spending bill, suggesting possible revocation of government contracts and subsidies for Musk's companies. Earlier optimism from Trump's call with China's President Xi Jinping waned as no concrete progress emerged, despite plans for further trade talks. Lululemon fell 20% in post market trading after reporting earnings that beat expectations but cut Q2 guidance significantly. Docusign tanked 16.8% in aftermarket trading after lowering their billings forecast in their earnings report.
• EU - The ECB reduced borrowing costs by 25 basis points and adjusted its inflation forecasts downwards for 2025 and 2026. While the rate cut was anticipated, the significant downward revision for the 2026 inflation outlook surprised some investors. ECB President Lagarde noted heightened uncertainty around the inflation outlook. Additionally, German factory orders unexpectedly increased in April, countering predictions for a decline. On the corporate front, shares of British fintech firm Wise surged 7.1% after releasing full-year earnings and announcing plans to shift its stock listing from London to New York.
• HK – HSI rose 1.1% to 23,907 on Thursday, marking its third consecutive gain and reaching a two-week high. The rally was driven by broad sector advances, with improved sentiment from a rebound in China's services activity for May, following April's seven-month low. The tech index led the gains, increasing by nearly 2.0% due to strong performances by Chinese ADRs in New York. BOC Aviation Ltd. rose 1.5% after announcing plans to purchase nine Airbus aircraft for lease to Avianca, while Prada Spa gained 0.7% after acquiring a 10% stake in an Italian leather firm. Top movers included Kuaishou Tech (4.7%), SMIC (3.8%), and Meituan (2.6%).

Earnings this week:

• Friday: G-III Apparel Group, ABM, FuelCell Energy

FX:

• USD ended mostly unchanged. Initially, it rose after reports of a call between US President Trump and Chinese President Xi, but was later pressured by US data, including an unexpected rise in Initial Jobless Claims, and the ECB press conference. DXY fell to 98.70.
• EUR made slight gains but retreated from its post-ECB peak, initially surging close to 1.15 after ECB President Lagarde indicated a strong position and noted one dissenter to the 25bps cut. However, most gains were lost, and the meeting between German Chancellor Merz and US President Trump yielded little new information, though Merz described it as a very good discussion.
• GBP lost most of its early gains after briefly reaching the 1.36 level amid limited UK-specific news. 
• JPY weakened, but further USDJPY advances were limited by resistance near 144 and fluctuating risk appetite.
• AUD, NZD, and CAD gained similarly with minimal news. AUDUSD traded around 0.6510, NZDUSD at 0.6050. BoC Deputy Governor Kozicki suggested potential rate cuts if inflation is controlled, but the economy remains soft. USDCAD traded near 1.3660.
• Economic data – Germany Balance of Trade, UK Halifax House Price Index, EU Retail Sales, CA Unemployment Rate, US Non Farm Payrolls, US Unemployment Rate

Commodities:

• Oil prices steadied after Thursday's rise amid easing US-China trade tensions. WTI neared $63 a barrel, set for its first weekly gain since mid-May, while Brent topped $65. Trump and Xi agreed to continue trade talks.
• Silver reached a 13-year high, exceeding $36.06 an ounce, driven by technical momentum, better fundamentals, and investor interest. Momentum investors and ETF inflows boosted the rally. Silver is valued for financial and industrial uses, with the market in deficit for the fifth year.
• Copper hit a two-month high as LME inventories dropped to 54,700 tons. It rose 1.2% to $9,739.50 a ton, with potential to reach $3,000 by next year due to tight supply and increased US demand.

Fixed income:

• Treasuries fell, reversing gains as short- and medium-term maturities declined. ECB President Lagarde cast doubt on future rate cuts, affecting euro-zone bonds. US yields rebounded despite high jobless claims. Buyers snapped up Treasury's four-week bill auction amid limited investment options, with $65 billion sold at 4.17% and $55 billion of eight-week bills at 4.225%.

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