Global Market Quick Take: Asia – May 14, 2025

 Key points:

• Macro: Trump and MBS announced a pledge for $1 trillion investment
• Equities: Nvidia is up 5.6% after major AI chip deal with Saudi
• FX: Aussie and kiwi were the top performers among G10 currencies
• Commodities: Gold holds above support level $3,200
• Fixed income: Treasuries remain under selling pressure

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Disclaimer: Past performance does not indicate llfuture performance.

Macro: 

• Both headline and core US CPI for April came in softer than estimates at 0.2% MoM vs. Exp. 0.3% with clothing and new cars showing that companies are not yet passing tariff costs to consumers.
• Trump and Mohammed bin Salman, Saudi’s crown prince claim to pledge a total of $1 trillion of investments into the US, though only a cumulative total of $300b of investments was signed at the Riyadh conference. In addition, a USD 9 billion Saudi-US minerals memorandum of understanding was signed, intended to counter China's influence in the region.
• The US is considering allowing the UAE to purchase over a million advanced Nvidia chips, while Saudi Arabia collaborates with Nvidia to establish AI factories deploying 6,000 Blackwell GPUs, indicating significant strides in AI development.
• JPMorgan Chase & Co. raised its US growth forecast after a temporary US-China trade deal, abandoning its earlier recession prediction for 2025. Chief US Economist Michael Feroli noted that easing tariffs on China lowers recession risk this year, while still considering the risk elevated but below 50%.

Equities:

• US - Wall Street continued its rally on Tuesday, bolstered by easing US-China trade tensions and softer inflation data. The S&P 500 rose 0.7%, returning to positive territory for 2025, while the Nasdaq 100 climbed 1.6%, led by a rebound in chipmakers. Nvidia surged 5.6% after securing a major AI chip deal with Saudi Arabia, boosting AMD and Broadcom by over 4%. The Dow fell 270 points as UnitedHealth shares dropped 17.8% following the CEO’s departure and suspension of guidance and pharmeceuticals continue to underperform on Trump’s recent order to slash drug prices. April’s consumer price index increased 2.3% year over year, slightly below expectations, raising hopes for rate cuts and fuelled the rally. SMCI is also up 16% after Raymond James initiated coverage with an outperform rating and $41 target.
• EU - European stocks rose on Tuesday, extending gains from the previous session due to improved US-China trade relations. The Eurozone's STOXX 50 increased by 0.4% to 5,411, while the STOXX 600 edged slightly above the flatline at 545. The rally followed the US-China decision to pause their trade war for 90 days to renegotiate terms, benefiting all industries. The auto sector led the gains, with Volkswagen, BMW, and Stellantis rising between 3% and 4.5%. Industrials also performed well, with Siemens, Airbus, and Schneider up by 1.5%. However, Munich Re fell 4.5% after releasing first-quarter results, impacted by damage from the Los Angeles wildfires.
• HK - The Hang Seng fell 441 points (1.9%) to 23,108, ending its eight-session rise. Despite a Sino-U.S. trade truce exceeding expectations, traders worried about post-pause effects. Profit-taking followed a 1.5-month high, while falling U.S. futures hurt sentiment. China's deflation concerns grew with third-month consumer price drops. President Trump plans to speak with China’s Xi Jinping, limiting losses. Sunny Optical fell 7.6% due to a 14.1% yoy decrease in handset camera module shipments. Other decliners: BYD Electronic (-7.0%), Meituan (-5.0%), Xiaomi (-4.2%), SMIC (-4.2%), and Tencent Holdings (-2.1%).

Earnings this week:

Wednesday - ARS Pharma, Cisco, Sony, Dynatrace, CoreWeave,tencent
Thursday - Alibaba Group, Applied Materials, Walmart, Cava, Doximity
Friday - Codere, Flowers Foods, Yatsen Holding, Brady Corporation, RBC Bearings

FX:

• A Bloomberg index showed the dollar declining against all G10 currencies after a weak CPI report. Following a temporary US-China trade truce, investors preferred risk-sensitive currencies during the Asia session, with Sweden's krona and Norway's krone leading in Europe.
• EURUSD rose 0.9% to 1.1186, with significant expiries at 1.1145-50 in €1.39b expected Tuesday. Germany's ZEW investor expectations exceeded forecasts in May.
• GBPUSD climbed nearly 1% to 1.3303 amid cooling UK labour market data.
• USDJPY fell 0.7% to 147.49 after a 2.1% rise Monday.
• USDCHF decreased 0.7% to 0.8401.
• AUDUSD gained 1.7% to 0.6478, aided by exporter dip buying. NZDUSD rose 1.5% to 0.5942. The Aussie and kiwi outperformed among G10 currencies against the dollar.
• USDCAD fell 0.3% to 1.3939, with the loonie being the worst performer in the group.
• Economic data - Australia 1Q Wage price index, Germany April CPI, China April Money Supply, Aggregate Financing, New Yuan Loans (any time through Thursday)

Commodities:

• Gold saw a slight increase as weaker-than-expected US inflation data led traders to anticipate Federal Reserve interest rate cuts. Swaps traders expect at least two rate reductions this year, despite uncertainty surrounding the Fed's easing strategy.
• Oil steadied after a rally driven by trade-war optimism and Trump's stance on Iranian supply. WTI rose above $63, Brent near $67. Trump vowed pressure on Iranian exports without a nuclear deal, following US sanctions on shipments to China.
• Copper and other industrial metals experienced gains as traders assessed the US-China trade truce against ongoing inflation and economic growth concerns.

Fixed income:

• Treasuries fell after failing to hold gains from softer April CPI data. Yields rose from session lows due to corporate issuance and a block sale in Ultra Bond futures. Additionally, seven borrowers raised $6.6 billion in US investment-grade markets, while banks postponed Fed rate cut forecasts, increasing pressure on short-term yields.

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