Morning Note: A round-up of the latest market news.
Market News
US equities bounced last night – S&P 500 (+3.3%); Nasdaq (+4.4%) – on optimism the US-China trade truce marks the end to an all-out tariff war. The S&P 500 is now down only 5% from its record February close and less than 1% year to date. Pharma was a relative underperformer but reversed early weakness related to Trump’s executive order.
In Asia this morning, Japanese shares led gains in the region (Nikkei 225, +1.7%), with the Topix rising for a 13th day, while benchmark indexes also advanced in Australia and Taiwan. However, gains were trimmed, and US stock futures are drifting in a sign investors are concerned higher tariffs will still exact some economic damage even after the US and China ‘truce’. Furthermore, Scott Bessent downplayed the possibility of a quick trade agreement with the EU, saying the bloc suffers from a “collective action problem.”
Treasuries edged higher in Asia – the 10-year yields 4.46% – while the dollar fell. After yesterday’s heavy slide, gold has regained some poise and currently trades at $3,260 an ounce. Swaps tied to Fed meetings now favour a quarter-point reduction in September. Last week, they indicated three cuts this year, with a change likely as soon as July. Brent Crude drifted below $65 a barrel.
The FTSE 100 is currently little changed at 8,615, while Sterling trades at $1.3310 and €1.1880. British retail sales rose 6.8% year on year in April on a like-for-like basis, according to the BRC. UK employment rose by 112k in Q1, a touch above expectations, while the unemployment rate remained at 4.5%. Wage growth, excluding bonuses, slowed to 5.6%. UK pension fund managers agreed to invest at least 5% of their assets into British private markets by the end of the decade, Rachel Reeves said.
Volodymyr Zelenskiy said he’d like President Trump to join a possible meeting with Vladimir Putin in Turkey on Thursday. European leaders are said to be willing to wait for that gathering before urging the US to announce new sanctions on Moscow.
Source: Bloomberg
