Global Market Quick Take: Asia – May 15, 2025

 Key points:

• Macro: Trump secures a USD 1.2 trillion commitment from Qatar
• Equities:  Nasdaq 100 gains 0.7%;Super Micro up 16% on deal with Saudi data center
• FX: USD recovered; DXY rose above 101 level; supported by higher US yields
• Commodities: Gold falls to its lowest point in over a month
• Fixed income: Yield on two-year note reaching 4.06%, its highest since March

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Disclaimer: Past performance does not indicate llfuture performance.

Macro: 

• Trump secures a USD 1.2 trillion commitment from Qatar, and Saudi Aramco announced USD 90 billion in agreements with US firms. Treasury Secretary Bessent and USTR Greer are collaborating with China to stop fentanyl. Trade deals with Japan and South Korea are nearly complete, while the India deal is delayed by Pakistan tensions.
• US mortgage applications rose by 1.1% for the week ending May 9th, following an 11% increase previously, according to the Mortgage Bankers Association. Stabilised borrowing costs renewed home-buying interest. New home applications increased by 2.3%, while refinance applications fell by 0.4%.
• Chinese banks issued CNY 280 billion in new loans in April, the lowest since 2005, due to the US trade war affecting credit demand. Total social financing rose by CNY 1.16 trillion, reflecting the government's plan to increase bond sales, including special debt issuance.
• There is speculation that US officials met with Korean counterparts to discuss weakening the dollar, aligning with earlier rallies by the Taiwan and Hong Kong dollars. Reports suggest the US is pushing for a weaker dollar against Asian currencies in trade deals with major Pacific exporters.

Equities:

• US - US stocks closed mixed on Wednesday as investors assessed trade policy changes and the tech sector's recent strength. The S&P 500 rose by 0.1%, erasing its yearly losses, while the Dow fell 89 points and the Nasdaq 100 increased by 0.7%, driven by gains in chipmakers. Nvidia gained 3% on AI chip shipment news to Saudi Arabia, and AMD rose 4% after announcing a $6 billion share buyback. The AI rally boosted Super Micro Computer by 17%, lifting market sentiment, supported by a temporary US-China tariff cut that sparked hopes for broader trade deals. President Trump's Middle East trip resulted in several business agreements, including a Boeing-Qatar Airways deal and Gulf AI initiatives. Although megacap stocks showed strength, sector performance varied, and Fed officials expressed caution due to mixed inflation data.
• EU - European stocks ended slightly lower, pausing the week's strong equity momentum as markets took profits amidst concerns over potential US tariffs impacting European companies. The Eurozone's STOXX 50 dropped 0.3% to 5,400, while the STOXX 600 decreased 0.4% to 542. Consumer discretionary stocks faced volatility, with LVMH, Kering, and L'Oreal seeing declines of 2%, 3%, and 3.3%, respectively. Healthcare stocks continued slipping as US President Trump prepared to implement drug price caps, with Sanofi down 1% and Bayer 2%. Conversely, banks such as Santander, UniCredit, and ING rose over 1%. In the UK, Burberry surged 8.9% after announcing organisational changes.
• HK – HSI rose 2.3% to 23,641 on Wednesday, recovering from the previous session's drop due to softer-than-expected US consumer inflation. Meituan rose 1.2% after expanding into Brazil, JD.com jumped 3.6% on strong earnings, and other notable gainers included Smoore Intl. (9.7%) and Zhejiang Leapmotor (6.0%). Tencent's first-quarter revenue and profit rose, driven by a 24% increase in China games revenue and strong advertising demand on WeChat.

Earnings this week:

Thursday - Alibaba Group, Applied Materials, Walmart, Cava, Doximity
Friday - Codere, Flowers Foods, Yatsen Holding, Brady Corporation, RBC Bearings

FX:

• USD initially fluctuated but recovered its losses, with the DXY surpassing 101 level, aided by higher US yields and a Bloomberg report stating the US isn't seeking to weaken the Dollar in trade deals. President Trump's Middle East visit secured a USD 1.2 trillion commitment from Qatar. Fed officials' comments had little effect, with Jefferson noting Q1 GDP data overstated the slowdown.
• EUR fell below the 1.12 level, as the final CPI data from Germany and Spain aligned with preliminary figures, offering no surprises.
• GBP initially rose but then retreated below the 1.33 level as the USD strengthened, with market participants now anticipating UK GDP data.
• JPY outperformed, briefly pushing USDJPY below the 146 level before the USD regained strength and rebounded from its lows.
• Economic data – AU Unemployment Rate, UK GDP, UK GDP Growth Rate, EU Employment Change, EU Industrial Production, US PPI, US Retail Sales, US Initial Jobless Claims

Commodities:

• Oil prices fell again as Iran considers abandoning nuclear weapons for US sanctions relief. Brent neared $65 a barrel, while WTI was around $62. NBC cited Iran's willingness to sign an agreement with conditions.
• Aluminium climbed for the fifth day, reaching pre-tariff levels as the US and China paused punitive tariffs. The market is tightening, with immediate delivery prices on the London Metal Exchange above three-month contracts.
• Gold steadied after a 2% drop, influenced by fewer expected Fed rate cuts and easing US-China tensions. Trading above $3,182 an ounce, it approached a monthly low. Rising US Treasury yields, amid delayed Fed rate cuts, negatively affect gold.

Fixed income:

• Treasuries saw lower prices as traders reduced expectations for Fed rate cuts, boosting demand for downside options. Short-term rate derivatives anticipated under 50 basis points of Fed easing by year-end. Treasury yields increased by 6 to 7 basis points across maturities, with the 10-year yield at 4.53%, its highest since 11 April, exceeding closing levels since February.

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