Global Market Quick Take: Asia – May 29, 2025

Key points:

• Macro: US trade court blocks Trump from imposing broad tariffs
• Equities: Nvidia gains 5% in extended hours with 69% yoy revenue growth
• FX: Dollar strengthened; court blocks Trump's unlawful reciprocal tariffs
• Commodities: Gold continued its decline for the fourth consecutive day
• Fixed income: Treasuries fell across the curve lifting 10-year to 4.5%

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Disclaimer: Past performance does not indicate future performance.

Macro:

• A U.S. trade court blocked President Trump from imposing broad tariffs under emergency powers. The Court of International Trade ruled after lawsuits claimed Trump exceeded his authority using the 1977 IEEPA, arguing trade deficits as a national emergency, which plaintiffs said did not meet the law's "unusual and extraordinary threat" requirement.
• President Trump ordered US chip designers to halt sales to China, according to FT. The administration instructed US companies providing semiconductor design software to cease services to Chinese groups, aiming to hinder China's advanced chip development.
• Fed officials observed larger-than-expected tariff increases and significant uncertainty about trade policy impacts, as per May FOMC minutes. They noted increased risks to employment, economic activity, and inflation. Policymakers agreed that, with solid growth and a moderately restrictive policy, the Fed could remain patient, awaiting clearer inflation and economic trends.
• Eurozone median inflation expectations rose to 3.1%, the highest since February 2024, up from 2.9% in March. Twelve-month uncertainty increased to June 2024 levels. Three-year expectations stayed at 2.5%, and five-year expectations remained at 2.1% for the fifth month.
• US mortgage applications dropped 1.2% for the week ending May 23rd, hitting a three-month low, per the Mortgage Bankers Association. The decline matched rising benchmark rates, with the 30-year fixed rate nearing 7% due to fiscal risks increasing long-dated yields.

Equities: 

• US - The S&P 500 and Nasdaq both fell by 0.5%, while the Dow decreased by 224 points during last night's trading as trade concerns arose. The Trump administration pushed US companies to halt certain semiconductor software sales to China, impacting Cadence and Synopsys. Okta plunged over 13% due to weak guidance, while Abercrombie & Fitch rose 16% and Dick's gained 2% after strong earnings reports. In the after-hours, US stock futures climbed following Nvidia's stronger-than-expected quarterly results with the Dow, S&P 500, and Nasdaq 100 each rising by more than 1%. Nvidia shares soared over 5% in extended trading as the chipmaker exceeded Q1 earnings and revenue estimates, driven by a 73% yoy rise in its data centre business.
• EU - European stocks saw declines on Wednesday afternoon, wiping out weekly gains across major sectors. The Eurozone's STOXX 50 dropped 0.7% to 5,380, the DAX fell 0.78%, and the STOXX 600 slipped 0.6% to 549. Tech giants like SAP, ASML, and Infineon fell approximately 1%. Banks experienced sharp losses due to a bond pullback, with BBVA down 2.3% and ING and BNP dropping over 1%. In contrast, German automakers rose, with BMW, Volkswagen, and Mercedes Benz gaining over 2%.
• HK – HSI dropped 0.5% to 23,258 on Wednesday due to losses in financials, consumer, and tech sectors. Risk appetite decreased due to a growing price war in China's auto industry, triggered by BYD's announcement of discounts on over a dozen models. Automakers saw declines: BYD fell 2.7%, Li Auto 2.4%, and Geely Auto 2.0%. Pop Mart Intl. experienced a significant 6.7% drop, its largest since early April.

Earnings this week:

• Thursday: Costco, Zscaler, SentinelOne, Best Buy
• Friday: No notable earnings.

FX:

• Dollar index (DXY) rose above 100.30 after a federal court ruled that President Trump exceeded his authority with reciprocal tariffs, declaring them "unlawful" and ordering their removal and permanent blockage.
• EUR remained weak, falling below 1.1350 due to dollar strength, with focus on trade talks involving EU Trade Commissioner Sefcovic and US officials.
• GBP stayed below 1.3540 amid a lack of significant UK catalysts.
• JPY weakened further against the dollar as US yields rose, USDJPY rose to 145.80.
• NZD rose to 0.5960 after RBNZ's hawkish 25bps OCR cut to 3.25%, surprising markets with a 5-1 vote, including one dissenting for a hold.
• Economic data – Japan Consumer Confidence, Canada Current Account, US GDP Growth Rate, US GDP Price Index, US Initial Jobless Claims, Fed Barkin Speech

Commodities:

• Oil surged after a US trade court blocked Trump's global tariffs, declaring them illegal. WTI rose above $62 per barrel, and Brent closed near $65. The tariffs and retaliatory actions have unsettled markets, with the ruling open to appeal.
• Gold continued to decline for the fourth day, dropping up to 1% on top of 2% decline last three sessions as markets reacted to the US court's decision to block Trump's tariffs.

Fixed income:

• The Bank of Japan will purchase national debt after a weak 40-year bond auction triggered a selloff. New Zealand plans to auction bonds. The BOJ's last scheduled bond purchases this month include 3 to 25-year maturities and inflation-linked notes. Treasuries dipped following European bonds, but losses eased after a strong 5-year note auction with record indirect bidder participation, indicating foreign central bank interest. The US tariff ruling dampens safe-haven bids, causing the Treasury 10-year yield to rise by 3 basis points to 4.5%.

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