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Market Quick Take –1 May 2025

Market drivers and catalysts

Macro data and headlines

• Risk sentiment rebounded overnight after a bout of weakness into the close of trading in the US as China’s Commerce Ministry overnight indicated it is assessing the possibility of trade talks with the US, the first sign that the country is willing to sit down at the negotiating table. Part of the statement read “The US has recently sent messages to China through relevant parties, hoping to start talks with China…China is currently evaluating this.”
• The EU is offering to buy EUR 50 billion more in US imports, including food and LNG, according to EU trade commissioner Maros Sefcovic in an interview with the FT, but said that the EU would not accept the US keeping its 10% tariffs in place (these were before the Liberation Day additional tariffs of 20% which have been put on pause for now). The EU wants to remind the US of its services surplus with the US, which would mean that after the additional buying, the overall trade deficit with the US would be EUR 50 billion.
• Japan indicated that its treasury holdings are among its tools in trade talks with the US, though “whether we actually use that card, however, is a different question.” according to Finance Minister Kato, at odds with his ruling out this idea in earlier comments.
• 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. Continuing claims jumped 83,000 to 1,916,000 in the week ended April 19, suddenly posting the highest level since 2021, and above expectations of 1,860,000.

Macro calendar highlights (times in GMT)

0900 – Eurozone Flash Apr. CPI
1230 – US Apr. Nonfarm Payrolls Change
1230 – US Apr. Unemployment Rate
1230 – US Apr. Average Hourly Earnings
1400 – US Mar. Factory Orders

Earnings events

• Today: Exxon Mobil, Chevron, Eaton
• Saturday: Berkshire Hathaway

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• Asian stocks climbed to a one-month high, while US and European equity futures point to additional gains after China said it’s evaluating trade talks with the US. The S&P 500 trades up for an eighth consecutive day, supported by strong tech earnings and increased optimism that trade tensions have peaked. The near-term economic outlook, however, remains challenged, with Apple and Amazon both sounding the alarm after both stocks fell following their earnings releases. Today, traders will be focusing on the US jobs report for April.
• Apple's quarterly earnings report did little to calm investor fears over rising tariff costs and slowing China sales, pushing shares down as much as 4.2%. The company expects USD 900 million in added tariff costs this quarter and reported a 2.3% drop in China sales to USD 16 billion. Apple plans to launch AI services in China, release a foldable iPhone next year, expand its share buyback by USD 100 billion, and raise its quarterly dividend 4% to 26 cents per share.
• Amazon anticipates a tougher business climate ahead, citing tariffs and economic uncertainty that may hit consumer spending. Its weaker-than-expected profit forecast reflects concerns over tariffs, currency shifts, and recession fears. First-quarter sales rose 9% to USD 155.7 billion, but shares fell 3% in extended trading on tariff concerns.

Fixed Income

• US treasury yields rebounded sharply yesterday amidst mixed US economic data, as jobless claims suggest concern for the first time in many weeks, but the April ISM Manufacturing survey came in stronger than expected. The US yield curve bear flattened slightly as the 2-year benchmark rose from new local lows intraday near 3.55% to close at 3.72% in overnight trading, while the 10-year treasury benchmark is only up 11 bps from its intraday low of 4.11% yesterday, trading 4.23% in late Asian trading.
• Japanese government bonds ignored the sell-off in US Treasuries as yields remained near local lows in the wake of the dovish BoJ meeting of the prior day.
• US High yield credit spreads tightened amidst strong risk appetite in the US equity market yesterday, with the Bloomberg High Yield spread to US treasuries we track tightening 16 basis points to 368 basis points yesterday.

Commodities

• Crude oil trades higher after a week-long slump was met with fresh buying amid a broader bounce in market risk sentiment, US-China trade talk hopes, and fresh US sanctions threat against Iran. Developments offsetting the risk of another OPEC+ production boost, led by Saudi Arabia as they seek to regain market shares.
• Gold is heading for a second weekly loss with strong US tech earnings supporting market risk sentiment, and together with hopes for US-China talks the trade war focus has also faded a bit. Chinese markets closed for the Labour Day holiday through May 5, has also removed a recent strong bid, exposing gold to additional downside pressure
• The Bloomberg Commodities Index is heading for a second weekly loss, trading down 1% on the week with all sectors trading lower except energy, where a strong rebound in natural gas helped offset weakness in crude and fuel products. Apart from natural gas, the gainers include platinum and cattle while the biggest losses are found across the softs sector led by sugar, coffee and cotton.  

Currencies

• The US dollar was sideways to slightly lower versus pro-cyclical currencies, but stronger versus the Euro and especially the Japanese yen yesterday and overnight ahead of the key April jobs report after yesterday’s weekly initial jobless claims suddenly jumped the most since February and the weak ADP payrolls growth earlier in the week.
• The Japanese yen weakened sharply yesterday in the wake of the dovish Bank of Japan meeting that saw lowered CPI forecasts and the sense that the BoJ is likely done hiking for the cycle, USDJPY tested above 145.00 and rose as high as 145.92 overnight before falling back.

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