Market Report.

📆 We return to our daily reports after the holidays and yesterday’s May Day in the UK. The UK will decide this week on interest rate cuts. The BoE is expected to cut rates by 25 basis points to 4.25%.

Once again, Trump’s trade war continues to make headlines:
🎭 Actor Jon Voight and his manager submitted a proposal to President Trump that included the idea of imposing tariffs on films produced outside the United States. Shortly after, Trump announced he was authorizing a 100% tariff on any and all movies coming into the country that are produced in foreign lands. This announcement sparked panic and confusion across Hollywood studios and streaming services, briefly dragging down share prices for companies like Disney, Paramount and Netflix. However, both Trump and the White House later walked back the idea, with Trump saying he would ask Hollywood studios if they’re “happy” with the proposal and that he’s not looking to hurt the industry. Voight and his manager said their proposal also included federal tax incentives, changes to tax codes, co-production treaties, and infrastructure subsidies to help boost domestic film production.

💊 President Trump signed an executive order to incentivize prescription drug manufacturing in the U.S., with the goal of streamlining the path for pharmaceutical companies to build new production sites domestically. The order directs the FDA to reduce approval times for new U.S. manufacturing plants by eliminating unnecessary requirements and improving coordination. It also directs the FDA to raise inspection fees for foreign manufacturing plants and improve enforcement of source reporting by overseas producers. The goal is to reduce reliance on imported pharmaceuticals, especially in times of war or crisis, and bring more medical supply chains back to the U.S. The order comes ahead of planned tariffs on imported pharmaceuticals, which have already spurred some domestic manufacturing investments by drugmakers.

⚠️ ECB Governing Council member Fabio Panetta warned that a new wave of protectionism could damage economies around the world. Panetta has repeatedly warned against scapegoating globalization and said tariffs won’t solve the world’s economic challenges. This comes as the U.S. has imposed tariffs on friends and foes globally. He said geopolitical tensions and trade barriers/uncertainty are key variables the ECB must closely assess when formulating monetary policy, as they affect economic growth and the transmission of policy decisions.

🚗 Ford Motor Company beat Wall Street’s first-quarter expectations, but suspended its 2025 financial guidance due to an expected $2.5 billion impact this year from President Trump’s tariffs. Ford has taken actions to mitigate tariff costs, including ceasing U.S. exports to China and adjusting China-made imports, which lowered its Q1 tariff impact by 35%. The tariff impact is notably less than the $4-$5 billion that General Motors expects to incur, as Ford imports fewer vehicles.

⚡ The chairwoman of Spain’s power grid operator, Redeia Corporacion SA, has stated that the company is not responsible for the historic nationwide blackout that affected the country earlier last week. Beatriz Corredor, the chairwoman, said Spain has Europe’s “best electricity network” and that there was nothing wrong in how the grid operator dealt with setting the system back up during the April 28 blackout. When asked if she would resign, Corredor said doing so “would be like admitting that the company didn’t act correctly.” The grid operator has provided limited details on what exactly caused the blackout, but has said it was most likely due to problems in generation. The company is still conducting a review.

Geopolitics:

🇩🇪 Friedrich Merz has vowed to hit the ground running as the new German Chancellor, pledging swift action to address the country’s economic challenges and restore Germany’s global leadership role. Merz will take over as Chancellor on Tuesday after a confirmation vote in parliament, leading a coalition government of his center-right CDU/CSU bloc and the center-left Social Democrats. He faces a stagnating economy, the ongoing war in Ukraine, and rising support for the far-right AfD party, which has overtaken Merz’s bloc in polls. Merz plans to centralize foreign and European policy in the chancellery, with expectations that he will provide stronger German leadership on the global stage. However, Merz has low approval ratings among voters compared to his predecessors, with many skeptical about his ability to effectively govern.

⚖️ Alternative for Germany (AfD) party has filed a lawsuit against the Federal Office for the Protection of the Constitution (BfV), accusing the agency of unlawfully designating it as a “confirmed right-wing extremist” group. The lawsuit was filed on the same day the new center-right-led coalition government was preparing to take office, raising allegations that the timing was politically motivated. The action challenges a rule by Germany’s domestic intelligence agency that classified it as a right-wing extremist movement too. The intelligence agency said the classification was based on an “extremely careful” review. Support for the AfD has strengthened considerably in recent years with many voters drawn to the party due to concerns about irregular migration and frustration with mainstream parties. Based on Bloomberg sources, a ban may soon be warranted, with one claiming anyone who cooperates with or votes for the AfD makes themselves “an accomplice” to an “anti-democratic party.”

🇫🇷 A poll by Ifop shows that in a hypothetical 2027 French presidential election, former centrist Prime Minister Edouard Philippe would be neck and neck with Jordan Bardella, the leader of the far-right National Rally party. In the first round, Bardella would win with around one-third of the vote, while Philippe would come in second in all scenarios tested. Le Pen, the party leader, was recently disqualified as a candidate, sparking criticism, including from Donald Trump, who suggested political motivations ‘like those he suffered’.

🇷🇴 Nationalist candidate George Simion of the Alliance for the Union of Romanians (AUR) came out on top in the first round of the Romanian presidential election, winning 40.87% of the vote. Simion’s victory came after the previous election was annulled and the leading candidate, Călin Georgescu, was barred from running in the redo contest. Simion has branded his victory as “an exceptional result” and vowed to be an ally of the Trump administration if elected, comparing the current struggle against Brussels’ globalism to Romania’s fight against Soviet communist oppression. Simion has stated that he is running as a “MAGA candidate” and that his goal is to bring Georgescu, whom he calls the “real president,” to power through the elections and “all the means that is necessary.”

Market View:

📊 Slight decline in US futures, which closed last week with strong gains, as we had predicted in previous reports. Mini S&P 500 futures are down slightly after reaching 5,725 points last week, currently trading at 5,650 points. Nasdaq 100 futures are also down slightly after last week’s gains, when they exceeded 20,250 points, now standing at 19,945 points.

💵 The dollar index, which regained 100 points last Thursday, has been zigzagging since then and currently stands at 99.80 points. This behaviour is preventing the euro-dollar pair from triggering the downward movement we predicted last week, currently standing at 1.1320.

📊 On the other hand, in Europe, equities continue to break new records despite the bad news coming from European politics. DAX 40 futures have surpassed 23,500 points, marking another all-time high, although they have fallen slightly in recent hours to 23,455 points. Eurostoxx 50 futures are following a similar trajectory and are trading at 5,250 points.

🛢️ Volatility continues in crude oil. Oil futures have risen after the fall caused by OPEC’s announcement of an increase in production. Brent crude is currently trading above $61.30 per barrel.

🪙 Gold has rebounded strongly, reaching prices close to $3,400 an ounce in recent hours, from where it is retreating slightly towards $3,375.

💻 Bitcoin, meanwhile, remains above $92,000, a benchmark level that we had indicated in our previous reports as a positive sign. However, it has failed to break through the $98,000 mark.