Global Market Quick Take: Asia – May 26, 2025

 Key points:

• Macro: Trump postpones 50% tariff on EU to July 9th
• Equities: Apple down 3% after Trump imposed 25% on Apple
• FX: USD weakened, DXY trading below 99 level
• Commodities: Gold remains elevated as it gains nearly 5% last week
• Fixed income: Treasury futures dropped after Trump's deadline extension

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Trump postponed the 50% tariff on the EU to July 9 after a call with European Commission President Ursula von der Leyen, who described the conversation as a "good call" and emphasized the need for more time to "reach a good deal."
• Sales of new single-family homes in the US rose by 10.9% to 743,000 units, exceeding expectations of 692,000. This marks the largest increase since August 2022 and the highest sales since February 2022, driven by builder incentives despite rising mortgage rates.
• Canadian retail sales likely increased by 0.5% in April 2025, after a revised 0.8% rise in March to C$69.8 billion, marking the year's highest growth. Six of nine subsectors, led by motor vehicles and parts, showed gains despite US tariffs and Ottawa's retaliation.

Equities:

• US - US stocks fell on Friday as Donald Trump heightened trade tensions, threatening tariffs on Apple and the EU. The S&P 500 dropped 0.6%, Nasdaq 100 fell 0.9%, and Dow decreased by 256 points. Apple shares plunged 3%, lowering its valuation below $3 trillion, after Trump demanded iPhones sold in the US be made domestically or face a 25% tariff. He also suggested a 50% tariff on EU imports starting June 1 due to stalled trade talks, sparking fears of protectionist policies. Tech stocks, including Micron, Qualcomm, and Nvidia, led the decline with losses over 1%. However, in the early Asia session this morning, Trump postponed the 50% tariff on EU to July 9, leading to a rebound in US stock futures.
• EU - European stocks fell sharply on Friday after US President Trump proposed 50% tariffs on the EU, threatening demand for European exports. The Eurozone's STOXX 50 dropped 1.9% to 5,322, and the STOXX 600 fell to 545. Auto, luxury, and textile sectors, heavily reliant on US consumers, led the losses, with Mercedes Benz, BMW, Stellantis, Hermes, and Inditex declining between 4.5% and 2%. Anticipated retaliation by the European Commission pressured banks, with Intesa Sanpaolo, UniCredit, and BBVA each sinking 3%. Meanwhile, Germany's Q1 GDP growth was revised up to 0.4% from 0.2%, driven by strong manufacturing and increased exports in March, showing resilience amid trade tensions.
• HK – HSI climbed 0.24% to 23,601 on Friday, rebounding from sharp losses thanks to gains in financials. Improved sentiment followed the PBoC's CNY 500 billion injection via its one-year lending facility and a lowered deposit rate cap to enhance bank profitability and spending. The index rose 1.1% for the week, marking its sixth consecutive weekly gain—the longest since February—boosted by strong IPO activity. BYD increased 1.6% after surpassing Tesla in European EV sales, while pharma firms Innovent Biologics (3.7%) and CSPC Pharma (2.0%) also gained. Zhaojin Mining rose 1.8% as gold prices stayed firm.

Earnings this week:

• Monday: Memorial Day holiday, US markets closed
• Tuesday: PDD, Bank of Nova Scotia, Bank of Montreal, National Bank of Canada, Royal Bank of Canada, Canadian Imperial Bank of Commerce
• 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 weakened, ending a four-week gain streak, as President Trump proposed 50% tariffs on the EU, initially boosting but later reducing the Dollar's value. Treasury Secretary Bessent hopes tariffs prompt EU action. Light data and Fed members were present; key releases are expected next week, with April PCE at 2.2%. DXY traded below 99 level.
• EUR underperformed due to Trump's aggressive tariff stance, with markets awaiting talks between EU Trade Chief Sefcovic and USTR Greer. German Q1 GDP was revised up to 0.4%, driven by net exports and private consumption. EURUSD traded near 1.1380.
• JPY strengthened amid US pessimism and a firmer Treasury environment. Japan's April CPI met expectations, with CPI excluding fresh food slightly higher. PM Ishiba reiterated Japan's demand for tariff elimination to President Trump. USDJPY trades below 143.
• GBP remained strong following a robust April Retail Sales report, exceeding expectations at 1.2%.
• Economic data – ECB President Lagarde Speech, Singapore April Industrial Production, Hong Kong April Trade

Commodities:

• Oil prices increased for a second session after President Trump extended the EU's reciprocal tariff deadline, fostering optimism for reduced trade tensions. Brent exceeded $65 a barrel, while WTI approached $62.
• Gold declined as its haven appeal was affected by indications that Trump might soften his aggressive trade stance with the EU, following his extension of the tariff deadline. Bullion traded close to $3,350 an ounce, after rising nearly 5% last week.

Fixed income:

• Treasuries ended Friday's shortened session with slightly lower yields after Trump threatened tariffs on the EU and Apple Inc. Yields rose as sellers emerged and equity losses were pared. Swap spreads were volatile midday after Treasury Secretary Bessent mentioned possible summer SLR reform. In early Asian trading, Treasury futures fell as Trump's extension of the EU tariff deadline reduced safe-haven demand. Global cash trading of US government bonds is closed for the holiday.

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