Market Report.
🕊️ Chinese President Xi Jinping will embark on a 5-day, 3-nation tour of Southeast Asia, visiting Vietnam, Malaysia, and Cambodia. The tour aims to tighten regional trade ties and offset the impact of the huge tariffs imposed by U.S. President Donald Trump. ASEAN (Association of Southeast Asian Nations) was the biggest recipient of Chinese exports in 2024, with Vietnam and Malaysia being the top buyers.
📈 Asian shares edged slightly higher on Tuesday, helped by gains in auto companies after President Trump suggested he might grant exemptions on auto-related tariffs. Trump said he is considering modifying the 25% tariffs on foreign auto and auto parts imports, as car companies “need a little bit of time” to start manufacturing in the U.S.
💵 U.S. Treasury bond yields steadied after last week’s selloff, with the 10-year yield at 4.36%. Federal Reserve officials have suggested the tariffs could lead the Fed to cut rates to head off a recession.
🤝 Kevin Hassett, the director of the U.S. National Economic Council, stated on Monday on Fox Business, that “more than 10” nations had offered the United States “very good, amazing” trade deals. Additionally, he stated that there was absolutely no possibility of a recession in the United States in 2025.
📰 In a post yesterday, Trump denied that a tariff ‘exception’ had been announced on Friday, and said that the products had simply been moved to a different tariff category, accusing the media of communicating ‘fake news’. He announced that his administration is analysing semiconductors and the entire electronics supply chain in future national security investigations into tariffs.
📊 According to a recent CNBC Supply Chain Survey, the U.S. manufacturing sector will not be the primary benefactor if China loses some production due to Trump’s tariffs. Instead of reshoring, 61% of respondents said it would be more cost-effective to relocate supply chains to lower-tariff countries around the world. According to the report, taxes rank lower among the factors that influence the choice of manufacturing site, despite the Trump administration’s promises of tax breaks for businesses that reintroduce manufacturing.
🌍 But this is under the assumption that Trump will not impose tariffs on these new regions, and they will start the process again. The only place where they will certainly not face tariffs is by producing in the US or negotiating a deal with Trump.
⚖️ A legal advocacy group, the Liberty Justice Center, has filed a lawsuit in the U.S. Court of International Trade to block President Trump’s sweeping tariffs on foreign trading partners. The lawsuit argues that Trump overstepped his authority by imposing the tariffs, as the Constitution gives the power to set tax rates, including tariffs, to Congress, not the President. The group said that the International Emergency Economic Powers Act, which Trump invoked to impose the tariffs, does not give the President the authority to do so, as no other President has ever claimed this power.
🤖 Nvidia said on Monday that it intends to use its manufacturing alliances to manufacture up to $500 billion worth of AI infrastructure in the United States over the course of the following four years. According to a blog post by the chipmaker, Taiwan Semiconductor factories in Phoenix have begun producing their Blackwell AI processors. In addition, Nvidia is constructing factories in Texas to create AI supercomputers, marking the company’s first fully domestic production.
Geopolitics:
🇩🇿 The Algerian authorities have given 12 French state officials 48 hours to leave the country, which the French Foreign Minister Jean-Noël Barrot has denounced. The expulsions appear to be a response to the arrest of three Algerian nationals in France who are suspected of being involved in the April 2024 kidnapping of an Algerian influencer, Amir Boukhors, who is a critic of the Algerian government. Relations between France and Algeria have sharply deteriorated since France shifted its position to support Morocco’s autonomy plan for Western Sahara, a disputed territory claimed by the pro-independence Polisario Front supported by Algeria.
🎖️ On 9 May, Russia celebrates Victory Day against Nazi Germany. On this day, fallen defenders are honoured and war veterans are paid tribute. European bureaucrats warned yesterday that no EU member should attend this commemoration, as it is not ‘in line with EU values’. However, countries such as China and Brazil will be attending.
🕊️ President Trump’s special envoy, Steve Witkoff, described his talks with Russian President Vladimir Putin as “compelling”, saying they discussed steps that could end the war in Ukraine and potentially lead to business opportunities. Witkoff sees “a possibility to reshape the Russian-United States relationship through some very compelling commercial opportunities” that could provide stability to the region.
📉 According to Bloomberg, ‘Trump has again blamed Zelensky for the war despite new Russian missile attacks that left new civilian casualties.’ In reality, what Trump said yesterday was: ‘Biden could have stopped it. Zelensky could have stopped it. Putin shouldn’t have started it. Everyone is to blame!’
📜 Based on a publication by Statista, the nationality of the bodies of dead mercenaries found in the Kursk region of Russia is mainly Polish (1,963), Georgian (1,230) and Colombian (917). There were also 208 French, 197 German and 156 British.
Market View:
📊 Uncertainty in the stock markets. Mini S&P 500 futures have not shown significant progress since Friday, stagnating at around 5,430 points. Nasdaq 100 futures are in a similar situation, hovering around 19,000 points. At the moment, they are losing slightly, trading at 18,880 points.
📉 In Europe, the situation is comparable. The Eurostoxx 50 and DAX 40 futures barely registered any advances yesterday. The DAX 40 has not managed to exceed 21,200 points in the last few hours, while the Eurostoxx 50 has not managed to go beyond 4,900 points.
💵 The dollar index remains below 100 points, although not too far away, currently trading at 99.65 points. This has allowed the EUR/USD pair to remain strong in the 1.1350 zone since Friday. Christine Lagarde’s statements today and the ECB’s rate decision this Thursday could add volatility to the pair.
🛢️ Oil also seems static, with Brent crude holding steady at around $65 a barrel.
🏅 Gold futures are holding steady at $3,240.
💰 Bitcoin, meanwhile, seems to be advancing at the moment, trying to rise above $85,500 after last week’s falls, when it even lost $75,000.
