Global Market Quick Take: Asia – May 05, 2025

Key points:

• Macro: Trump’s 25% tariffs on key autos began on Saturday
• Equities: Berkshire's earnings drop; Buffett retiring; tariffs may impact profits
• FX: Asian currencies rise sharply; central banks intervene to stabilise
• Commodities: Oil prices dropped as OPEC+ agreed to raise production
• Fixed income: Treasuries sells off as front end causes flattening curve

------------------------------------------------------------------

Disclaimer: Past performance does not indicate future performance.

Macro:

• Trump's 25% tariffs on key auto parts began on Saturday. He is open to reducing tariffs on China, as high levies have disrupted business between the two economies. However, he intends to retain some tariffs to encourage production in the US.
• U.S. economy added 177,000 jobs in April 2025, exceeding market expectations of 130,000, despite slowing from March's revised 185,000. This aligns with the 12-month average of 152,000 amid uncertainty over President Trump's tariff policies.
• New orders for US manufactured goods rose by 4.3% to $618.8 billion in March 2025, up from a revised 0.5% increase, aligning with expectations of a 4.5% rise. This was the largest increase since last July, as clients rushed orders ahead of April's tariffs.
• Average hourly earnings for US private nonfarm payrolls increased by 0.2% to $36.06 in April 2025, below the 0.3% forecast. Production and nonsupervisory employees' earnings rose by 0.3% to $31.06. Over 12 months, earnings grew by 3.8%, slightly below the 3.9% estimate.
• Euro Area inflation remained at 2.2% in April 2025, above the 2.1% forecast and ECB's 2.0% target. Energy prices fell, but services and food inflation increased. Core inflation rose to 2.7%, above the 2.5% forecast. Monthly consumer prices rose by 0.6%, matching March.
• Hong Kong's economy grew by 3.1% in Q1 2025, up from 2.5% in the previous quarter, due to a tourism recovery and export surge. Visitor numbers boosted retail and catering, with exports rising 8.7% and imports 7.4%.

Equities: 

• US - On Friday, US stocks surged due to a robust jobs report and easing US-China trade tensions, boosting investor confidence. The S&P 500 rose nearly 1.5% for its ninth straight gain, marking its longest winning streak in 20 years, while the Dow Jones surged 563 points, and the Nasdaq climbed 1.5%. April's nonfarm payrolls exceeded expectations, rising by 177,000, adding optimism regarding the labour market amid tariff concerns. Signs of Beijing's readiness for renewed trade talks, contingent on US tariff cuts, further supported sentiment. Despite mixed earnings, Exxon Mobil and Chevron posted gains, but Apple and Amazon shares faced declines. Berkshire Hathaway's first-quarter operating earnings fell 14% to $9.64 billion, down from $11.22 billion last year. Earnings per class B share decreased to $4.47 from $5.20, missing estimates. The company warned that tariffs could further affect profits.
• EU - European stocks advanced on Friday, driven by stronger-than-expected US payroll data for April and potential US-China trade talks. The Stoxx 50 surged 1.9%, while the Stoxx 600 rose 1.7%, led by a 3% increase in tech shares. London's FTSE 100 grew over 1%, achieving its longest recorded streak of daily gains. Shell's shares increased 1.9% after surpassing Q1 profit forecasts and initiating a $3.5 billion share buyback. Standard Chartered exceeded expectations with wealth management and global banking gains, while NatWest reported a better-than-anticipated £1.8 billion profit. Moët Hennessy plans to cut over 10% of its workforce amid LVMH's wine and spirits division restructure. Euro Area inflation stayed steady in April at 0.6% monthly and 2.2% yearly, matching March figures.
• HK - On Wednesday, the Hang Seng gained 0.5% to close at 22,119, recovering from early losses and marking its second consecutive day of gains, driven by hopes that Beijing may increase efforts to mitigate the U.S.-China trade impact. Tech stocks led the rise, with the sector index up over 1% after President Xi Jinping urged AI breakthroughs during his Shanghai visit. Consumer and property shares also climbed, anticipating policy support to boost local consumption. Despite optimism, the benchmark fell 4.3% for April due to weak Manufacturing PMI data in China, showing the steepest drop in nearly 18 months. Markets will be shut from Thursday to Monday for Labour Day. Leading gainers included AIA Group, Chow Tai Fook Jewellery, Kingsoft, and Xiaomi Corp.

Earnings this week:

Monday: TG Therapeutics, Palantir Ford, Realty Income.
Tuesday: Celsius, Supermicro, AMD, Rivian, Marriott International, Ferrari
Wednesday: Uber, Disney, Novo Nordisk, Teva, Unity, AppLovin, Arm, DoorDash
Thursday: Peloton, Shopify, ConocoPhillips, D-Wave, Hut 8, Coinbase, Cloudflare
Friday: Terawulf, 1stDibs, Enbridge, ANI Pharmaceuticals, Telos

FX:

• USD rose due to mixed trade signals on Friday. Optimism from potential Chinese tariff exemptions was offset by Trump's insistence on high tariffs. Despite positive US data revisions, the dollar's decline was gradual. Key US data is forthcoming.
• JPY was near 145 against USD after a 1.6% drop, as easing safe-haven demand followed US-China trade progress and China's consideration of trade talks. Tokyo CPI was higher than expected, prompting markets to price in tightening for the Bank of Japan. Focus now shifts to the BoJ's outlook report next week.
• Swiss National Bank Chairman Schlegel noted potential economic slowdown but gave little policy guidance. ING foresees limited SNB intervention, with EURCHF possibly hitting 0.92 amid volatility.
• China plans proactive fiscal policies and rate cuts, aligning with PBoC's moderately loose monetary stance. USDCNH is tightly ranged between its 50-day (7.2755) and 100-day (7.2890) moving averages.
• Asian currencies are rising sharply due to USD weakness, prompting central bank interventions. Hong Kong sold a record amount of local dollars to maintain its currency peg, while Taiwan's central bank acted as its currency surged.
• Economic data: US ISM Services PMI, US S&P Global Composite PMI

Commodities:

• Oil prices dropped due to oversupply fears after OPEC+ increased production amid weak demand from the trade war. Brent fell 4.6% to $58 a barrel, and WTI was near $56. OPEC's decision to penalise overproducing members like Kazakhstan further pressured prices.
• US copper imports hit a record in April, surpassing 170,000 tons, as traders like Mercuria and Trafigura rushed shipments before possible tariffs. This tightened the market, causing sharp declines in stockpiles on the Shanghai and London exchanges.

Fixed income:

• Treasuries fell to session lows after April's job data exceeded expectations, leading to block sales in futures and a hawkish shift in Fed rate-cut forecasts. Short-term maturities saw increased selling pressure as Goldman Sachs and Barclays delayed Fed cut projections to July. Additionally, a Wall Street Journal report suggested Beijing may offer a Fentanyl-related proposal to the US, potentially easing tensions and allowing trade talks, which added risk-on sentiment and kept yields near the day's highs.

For a global look at markets – go to Inspiration.