Global Market Quick Take: Asia – May 02, 2025

Key points:  

• Macro: US manufacturing contracts again in April and jobless claims rises 
• Equities: Futures pulled back slightly after mixed earnings 
• FX: USD gains after better earnings 
• Commodities: Oil, gold and copper trades lower 
• Fixed income: Yields rise towards 4.2% due to tariffs and economic concerns 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• Bessent said resolving tariffs with China will be a multi-step process requiring de-escalation and rebalancing between the U.S. and China. He noted China's economy is slowing and expects a revisit of Trump's Phase 1 trade deal to reduce trade barriers and enforce commitments.  
• ISM Manufacturing PMI for the U.S. dropped to 48.7 in April 2025 from 49.0 in March, slightly above expectations. The sector remains in contraction, with sharper output declines and rising prices. New orders fell more slowly, but export orders dropped due to tariffs. Manufacturers face rising costs and trade uncertainties, affecting supply chains and causing delays. Customer demand is volatile, with some delaying orders or shifting tariff costs to manufacturers. 
• U.S. initial jobless claims rose by 18,000 to 241,000 in the week ending April 26, exceeding expectations of 224,000. Non-seasonally adjusted claims increased by 12,901 to 223,614, mainly in New York and Massachusetts. Outstanding claims grew by 83,000 to 1,916,000 in the week ended April 19, above expectations of 1,860,000. 
• BoJ maintained its interest rate at 0.5% in May, the highest since 2008, amid concerns over U.S. tariffs affecting global growth. Tokyo's trade talks with Washington may influence future policy. The BoJ signalled possible rate hikes if forecasts are met and lowered its FY 2025 GDP growth forecast to 0.5% from 1.0%, citing trade risks and policy uncertainty. 

Equities:  

• US - Stocks started May strongly, with the Dow up 70 points, the S&P 500 rising 0.6%, and the Nasdaq up 1%, driven by Big Tech earnings. Microsoft jumped 7.4% after beating estimates and raising its Azure guidance, while Meta gained 4.3% on strong Q1 revenue. Nvidia rose 2.4% on renewed interest in its data-center plans. Eli Lilly fell 11.7% after quarterly results, and McDonald’s slipped 1.9% due to declining Q1 sales. Amazon fell 3.2% after better-than-expected results but a softer guidance. Apple fell 3.7% even after beating expectations, due to softer guidance surrounding tariff concern.
• Germany - DAX rose 0.3% to 22,497 on Wednesday, its highest since early April, marking seven days of gains. Optimism over tariff negotiations outweighed mixed economic data. The US economy contracted in Q1, but Eurozone GDP growth exceeded expectations. Germany grew 0.2% in Q1 after a Q4 contraction. Deutsche Borse gained 3.7%, followed by Rheinmetall (+3.1%) and Vonovia (+2.8%).

Earnings this week: 
Friday: Exxon, Chevron 

FX: 

• USD gained from increased optimism following strong earnings from Microsoft and Meta, despite mixed economic data, with markets now focused on Friday's NFP report.
• EUR was pressured by the stronger dollar, with Europe largely inactive due to the Labor Day holiday, although EU's Sefcovic mentioned a potential EUR 50 billion offer to President Trump.
• GBP fell below 1.3300 against the dollar amid its strength, lacking significant UK-specific catalysts.
• JPY weakened after the BoJ maintained its interest rate at 0.5% and postponed its price goal timeline.

Commodities: 

• WTI crude futures hovered near $58 per barrel after a three-week low, supported by a US equity rally and potential tariff easing. Oil fell over 2% due to demand concerns and expected OPEC+ supply increases. Geopolitical risks and weak economic data, including US GDP contraction and China's factory slump, affected demand.
• Gold dropped below $3,230 per ounce on Thursday, its lowest in two weeks, as easing U.S. trade tensions reduced its safe-haven appeal. President Trump mentioned potential trade deals with India, South Korea, and Japan.
• Copper futures steadied at $4.57 per pound on Thursday after a sharp drop, buoyed by progress in trade negotiations easing global slowdown fears. President Trump hinted at trade deals with India, Japan, South Korea, and China.

Fixed income:  

• US 10Y Yields rose toward 4.2%, rebounding from a three-week low, as concerns grew over tariffs and policy uncertainty impacting the US economy. The ISM report indicated factory activity shrank in April at the fastest pace in five months, with output dropping significantly amid weak demand.

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