📈 Market Report.
📉 The inflation figures published on Tuesday contradicted concerns about rising inflation, revealing that price increases remain moderate. The yearly inflation rate was below predictions, and the core measurement (excluding fluctuating food and energy costs) also fell short of monthly projections.
📊 According to the Bureau of Labor Statistics report, the U.S. consumer price index showed a seasonally adjusted monthly increase of 0.2% in April, resulting in a yearly inflation rate of 2.3% – the lowest figure recorded since February 2021.
🛡️ The risk of stagflation appears to have subsided temporarily, thanks to several factors: the suspension of mutual tariffs, a British-American trade agreement, and China’s temporary reduction of triple-digit duties. These developments are likely to contain price increases.
🇫🇷 The French economy is expected to grow only “slightly” in the second quarter of 2025, according to the Bank of France’s monthly outlook. Business activity will be supported by a moderate pickup in the services and industrial sectors, while the construction and energy sectors are losing momentum. The threat of U.S. tariff increases concerns, although most firms did not consider themselves directly at risk, apart from the wine industry. Manufacturers said they were keeping prices steady, while service firms reported only a slight increase in prices.
🏭 French companies have adopted diverse strategies in response to the US tariffs imposed under the Trump administration, reflecting a cautious yet adaptive approach. LVMH has announced an increase in production in the US to avoid the impact of tariffs, building on its existing workshops. Hermès has opted for price adjustments, raising prices in the US to mitigate tariff impacts. Meanwhile, L’Oréal has considered relocating parts of its production to the US but refrains from major investments. Airbus, already benefiting from its US assembly plant, has avoided further expansion while monitoring the situation.
📉 ECB policymaker Francois Villeroy de Galhau said there is room for another rate cut by the European Central Bank by the summer. Villeroy, who is also the head of the Bank of France, stated that the United States would likely see an uptick in inflation due to President Donald Trump’s tariffs, but Europe should be spared. Villeroy said “The Trump administration’s protectionism will lead to a restart of inflation in the United States, but not in Europe, which will likely allow for another rate cut by the summer.”
📊 However, with yesterday’s US inflation data, we could say that he is wrong for now. On the other hand, the ECB’s constant cuts are making euro deposits unattractive to investors, which could soon reverse the EURUSD’s upward cycle or push the euro into negative real interest rates if inflation picks up.
🇲🇽 Until Trump, Mexico and Canada had been the first or second foreign destination of nearly every U.S. president in the post-World War II era, with few exceptions visiting the UK or attending NATO meetings first. Trump chose Saudi Arabia as his first foreign destination as president.
🤖 US technology firms announced major AI deals in the Middle East as President Trump secured $600 billion in commitments from Saudi Arabia to US companies during his tour of Gulf states. Saudi Arabia aims to position itself as a global hub for AI and a leading center for AI activity outside the US.
💾 Nvidia will sell hundreds of thousands of its latest AI chips to Humain, a new AI startup launched by Saudi Arabia’s sovereign wealth fund. AMD announced a $10 billion collaboration with Humain to deploy 500 megawatts of AI hardware infrastructure over five years. Qualcomm signed a memorandum of understanding with Humain to develop and build a data center central processor. Saudi Arabia’s firm DataVolt will invest $20 billion in AI data centers and energy infrastructure in the US.
🚗 General Motors (GM) is set to introduce lithium manganese-rich (LMR) prismatic battery cells, which are expected to reduce costs and boost profitability of its largest electric SUVs and trucks, like the Chevrolet Silverado and Escalade IQ, starting in 2028. These batteries use more abundant and less expensive minerals like manganese instead of cobalt and nickel, which are currently used in EV batteries.
🔋 GM is developing these batteries in partnership with LG Energy Solution, and expects them to cut hundreds of pounds from GM’s large EVs and have 50% fewer parts, significantly reducing battery pack complexity. The LMR batteries are expected to provide 33% higher energy density compared to lithium iron phosphate cells at a comparable cost. Estimates suggest GM’s LMR battery packs could cost around $80-$90 per kWh, compared to at least $125 per kWh for its current batteries.
📈 Coinbase shares soared 24% on Tuesday, their sharpest rally since the day after President Donald Trump’s election victory, following the crypto exchange’s inclusion in the S&P 500. S&P Global said Coinbase is replacing Discover Financial Services in the S&P 500 index, effective before trading on Monday. Coinbase was a key financial supporter of Trump’s 2024 campaign, with the company and CEO Brian Armstrong donating over $75 million to a pro-crypto PAC. Coinbase has experienced a volatile few months, plummeting in February and March as Trump’s tariff announcements impacted markets, but is now up around 3.5% for the year. Joining the S&P 500 is significant for Coinbase, as it becomes a bigger part of the U.S. financial system with the growth of bitcoin and institutional adoption of crypto. Now funds tracking the index will add it to their portfolios.
🌍 Geopolitics:
🇸🇾 President Donald Trump announced that the U.S. will remove all sanctions on Syria, stating he is “ordering the cessation of sanctions against Syria in order to give them a chance at greatness.” Trump said there is a “new government” in Syria that will “hopefully succeed in stabilizing the country and keeping peace,” referring to the transitional government led by Ahmed al-Sharaa, a former al-Qaeda member who describes himself as reformed.
⚠️ Trump said the decision to lift the sanctions was made at the request of Saudi Crown Prince Mohammed bin Salman, as more Arab countries have been advocating for Syria’s reintegration into the Arab fold in recent years.
🕊️ He also has issued a stark warning regarding the ongoing conflict between Ukraine and Russia. “If there are no immediate direct negotiations between Ukraine and Russia this week, the United States will withdraw from the talks!” declared Trump’s special envoy, Witkoff. Displaying visible impatience, Trump has demanded concrete progress in the peace discussions, signaling that the U.S. is prepared to step aside if no advancements are made.
🤝 During his official visit to China, Brazil’s President Lula da Silva made a compelling call for the unity of Latin American countries as the key to overcoming the poverty that plagued the region throughout the 20th century. “The only way out of the state of poverty that afflicted the region in the 20th century is the union of Latin American countries,” Lula stated, emphasizing the significance of regional cooperation to tackle economic and social challenges.
📊 Market View:
📈 Favorable winds continue for U.S. stock markets. The S&P 500 futures have continued to advance over the past few hours and are currently trading above 5,900 points, standing at 5,905 points. The NASDAQ 100 futures have surpassed the 21,250-point barrier and are now trading at 21,310 points.
💵 The DXY dollar index has pulled back after approaching 102 points during Monday’s session and is currently at 100.90 points. This could signal a pullback for a new bullish push for the dollar, fueled by new agreements from the United States. The euro has found some relief with this decline, and the EUR/USD pair, after falling below 1.11, has climbed back up and is now approaching 1.12.
📊 In Europe, stock markets have advanced less than in the United States but remain strong. DAX 40 futures are holding at 23,700 points, close to the all-time highs reached this week. Eurostoxx 50 futures remain in the 5,400-point zone, awaiting the opening of European markets.
🛢️ The crude oil market continues to rise on the optimism surrounding trade agreements. During yesterday’s session, Brent crude approached $67 per barrel, settling around $66.75 and slightly retreating in the last few hours to its current level of $66.20.
🥇 Gold futures recovered some of their losses yesterday but made little progress, weakening again in the last few hours and currently standing around $3,235 per ounce.
💰 Finally, Bitcoin dropped during yesterday’s session, forming a base around $100,000, rebounding, and returning to its current level of $103,760.
