Global Market Quick Take: Asia – May 28, 2025

Key points:

• Macro: Hassett highlights that more trade deals would occur this week
• Equities: S&P 500 rose 2% after Trump postponed 50% EU tariffs. Tesla up 6.5%
• FX: JPY fell to 144 against dollar as Japan cuts super-long bond issuance
• Commodities: Oil trades sideways while gold holds above $3,300
• Fixed income: Treasuries rose, with the long end of the curve leading the gains

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Disclaimer: Past performance does not indicate future performance.

Macro:

• US consumer confidence rebounded sharply from a nearly five-year low, with improved economic and labour market perceptions as tariff threats eased. The Conference Board's index rose 12.3 points to 98, the largest gain in four years, exceeding all Bloomberg survey estimates.
• Adviser Hassett expects deals soon, with tariffs possibly reduced to 10% or less for countries with good offers, including India. He noted EU-US talks are challenging due to differing EU priorities, suggesting more time is needed before resuming discussions.
• In April 2025, US manufactured goods orders decreased by 6.3% to $296.3 billion, the largest drop since January 2024, but less than the expected 7.8% decline. This followed a 7.6% surge the previous month, influenced by new 10% tariffs and reduced demand. Transportation equipment orders fell 17.1% to $98.8 billion, with non-defense aircraft and parts dropping 51.5% to $18.1 billion as airlines paused Boeing orders due to tariff concerns, resulting in only eight orders.
• The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 4.1% year-on-year, down from February's 4.5% and below expectations, marking the smallest increase since September 2023. This slowdown occurred despite lower mortgage rates and limited housing supply, suggesting reduced purchasing power for homebuyers.
• The Dallas Fed's Texas manufacturing index rose to -15.3 from April's -35.8, marking a fourth month of contraction but less severe. The company outlook improved to -11.3 from -28.3, and uncertainty slowed, with the index at 12.7. The production index neared zero, indicating flat output, while new orders increased to -8.7 from -20.0.

Equities: 

• US - US stocks surged at the start of the week, buoyed by rising Treasury securities as trade war fears eased. The S&P 500 rose 2%, the Dow increased 1.8%, and the Nasdaq 100 climbed 2.4%. President Trump postponed the 50% EU tariffs to July 9th and expressed optimism about a trade deal. Long-term Treasuries gained as Japan hinted at reducing long-curve issuance, benefiting US credit-sensitive stocks. Tesla jumped 6.5% after Elon Musk announced he would focus more on his companies and reduce political involvement. Nvidia gained 3% ahead of its earnings, leading chipmakers. US Steel rose 2% to $53 on potential acquisition news by Nippon Steel for $55, including a golden share for the US government.
• EU - Frankfurt's DAX climbed 0.8% to 24,226.5 on Tuesday, reaching new highs due to relief over the US-EU tariff delay and strong data. Germany's GfK consumer confidence rose for the third consecutive month through June. Finance Minister Lars Klingbeil announced €110 billion in public investments this year, along with structural reforms and fiscal consolidation to aid economic recovery.Defence stocks, led by Rheinmetall, Hensoldt, and Renk, performed well following President Trump's consideration of new sanctions against Moscow amid renewed Russian strikes on Ukraine.
• HK – HSI rose 0.4% to 23,382 on Tuesday, recovering partially from the previous session's drop with broad sector gains. Improved sentiment was driven by data showing an increase in China's industrial profits for April, indicating resilience despite US trade tensions and deflation risks. PDD fell 13.6% after reporting earnings that missed revenue and earnings estimates, highlighting challenges faced by Temu due to the trade war. Meanwhile, Xiaomi reported Q1 results that exceeded expectations, with revenue at 111.3 billion yuan (estimated 107.6 billion yuan) and adjusted net profit at 10.7 billion yuan (estimated 8.96 billion yuan), marking a 47.4% year-on-year revenue growth and a 64.5% increase in net profit.

Earnings this week:

• Wednesday: Nvidia, Dick’s Sporting Goods, Foot Locker, Salesforce, HP Inc., Dell, Macy’s, Kohl’s
• Thursday: Costco, Zscaler, SentinelOne, Best Buy
• Friday: No notable earnings.

FX:

• USD gained against G10 currencies despite limited news, with Durable Goods orders falling less than expected and Consumer Confidence exceeding forecasts. Fed comments, including Kashkari's views on tariff-induced inflation, had little impact, supporting unchanged interest rates. DXY traded above 99.40.
• EUR dipped below 1.14 level due to the stronger dollar, as market participants processed various data releases and comments from the ECB.
• GBP fell to test the 1.35 level, where it found support, amidst a quiet UK news day.
• JPY weakened following a decline in super-long Japanese government bond yields, amid reports that Japan might reduce such issuances. USDJPY rose above 144.
• SNB Chair Schlegel warned of possible negative inflation in Switzerland, stressing mid-term price stability amid trade uncertainties, particularly US tariffs. USDCHF traded near 0.8260.
• Economic data: Australia April CPI, RBNZ Rate Decision, Fed’s Neel Kashkari speaks in Tokyo, US FOMC Minutes, US MBA 30-year Mortgage Rate

Commodities:

• Gold edged up after a two-day decline, trading near $3,309 an ounce. Despite improved US consumer confidence and trade progress, the dollar's rise made gold more expensive for most buyers.
• Oil steadied as the market considered more OPEC+ supply and potential US sanctions on Russia. WTI was above $61, and Brent near $64. OPEC+ meets Wednesday and Saturday to discuss July output policy.

Fixed income:

• Treasuries rose with gains led by the long end of the curve due to a favourable June month-end extension. The front end also advanced after a strong 2-year note sale. Overnight, Treasuries were bolstered by a rally in Japanese bonds following reports of Japan’s finance ministry consulting on debt issuance levels. A strong US consumer confidence report had little effect on the rally. Most gains occurred from the re-open, supported by Japanese Government Bonds, with 30-year yields dropping 10 basis points as month-end flows became significant. New Zealand bonds edged up in anticipation of a rate cut by the Reserve Bank, while Japan’s 40-year bond auction is in focus following hopes for reduced super-long debt issuance.

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