- Dollar gains after two-day drop, US stock futures dip
The dollar gained in early Asian trade after a two-day slide as investors across Asia stayed focused on
exacerbated currency appreciations from Taiwan to Malaysia. A gauge of the dollar rose 0.3% after declining
Monday as speculation around potential trade deals sparked an extraordinary spike in Taiwan’s dollar and
resonated across global foreign exchange markets. The MSCI Emerging Markets Currency Index rose 0.6% to a
record. US stock futures edged lower after the S&P 500 halted its longest rally in about 20 years. There’s no
cash trading in Treasuries during the Asian day as Japan is closed for a holiday. Trump’s aggressive trade talk
has rattled markets since he took office in January, undermining the dollar’s traditional haven role in times of
stress and leading investors to allocate away from US assets. Central bankers from Taiwan to Hong Kong and
financial officials are responding to the sharp appreciation in local currencies by intervening in the market. - S&P 500 snaps nine-day winning run as uncertainty on tariff deals weighs on markets
The S&P 500 fell Monday, ending a nine-day rally as investors monitored the latest developments on global
trade. The broad-market index shed 0.64% to close at 5,650.38, while the Nasdaq Composite dipped 0.74% to
end at 17,844.24. The Dow Jones Industrial Average dropped 98.60 points, or 0.24%, to settle at 41,218.83.
The S&P 500 came into the session riding a nine-day winning streak, its longest since 2004. At its lows, the Dow
fell as much as 253.99 points, while the S&P 500 and Nasdaq lost around 1% each before curtailing their losses.
Data released on Monday from the Institute for Supply Management reflected stronger-than-expected service
sector activity in April, even as company executives reported rising concerns about tariffs. Sentiment also
improved after Bloomberg reported, citing sources, that India has proposed zero tariffs on steel, auto
components and pharmaceuticals on a reciprocal basis and up to a certain amount of imports. That said,
investors remain uncertain about the timeline of tariff agreements between the U.S. and other countries. - Oil steadies after falling to four-year lows in previous session
Oil steadied on Tuesday after hitting four-year lows in the previous session that was driven by an OPEC+
decision to accelerate output increases, stoking fears of oversupply at a time when U.S. tariffs have spurred
concerns about demand. Brent crude futures rose 10 cents to $60.33 a barrel by 0050 GMT, while U.S. West
Texas Intermediate crude added 10 cents to $57.23 a barrel. Both benchmarks had settled at their lowest since
February 2021 on Monday. OPEC+ agreed on Saturday to further speed up oil production hikes for a second
consecutive month, raising output in June by 411,000 barrels per day (bpd). The June increase by eight
participants in the OPEC+ group, which includes allies such as Russia, will take the total combined hikes for
April, May and June to 960,000 bpd. That represents a 44% unwinding of the 2.2 million bpd of various cuts
agreed on since 2022, according to Reuters calculations. The group could fully unwind its voluntary cuts by the
end of October if members do not improve compliance with their production quotas, OPEC+ sources told
Reuters. U.S. shale producer Diamondback Energy lowered its output forecast for 2025 on Monday and said
that a combination of global economic uncertainty and rising OPEC+ supply has brought U.S. oil production to
a tipping point. - Gold hits two-week high on safe-haven demand; Fed decision looms
Gold prices rose to a two-week high on Tuesday as concerns over U.S. President Donald Trump’s tariff plans
boosted interest in safe-haven metal, while investors also kept a close tab on the upcoming Federal Reserve
policy meeting. Spot gold was up 1.4% at $3,380.92 an ounce, as of 0224 GMT, after hitting its highest level
since April 22 earlier in the session. U.S. gold futures climbed 2% to $3,389.90. “Gold prices have a strong run
up to start this week, with investors returning to the safe-haven asset to hedge against portfolio volatility amid
renewed tariff concerns from U.S. President Donald Trump,” said IG market strategist Yeap Jun Rong. Trump
announced on Sunday a 100% tariff on movies produced overseas, but issued few details on just how such a
levy would work. On Monday, he said he intends to announce pharmaceutical tariffs within the next two
weeks. On the radar this week is the Fed’s interest rate decision and Fed Chair Jerome Powell’s comments due
on Wednesday to get clues on the U.S. central bank’s rate trajectory. The Fed has held its policy rate in the
4.25%-4.50% range since last December. “Any dovish signals could provide further support for gold, reinforcing
its broader upward momentum,” Rong said. The Fed will doubtless leave interest rates unchanged, according
to a Reuters report, which also mentioned that the meeting may be the last where the outcome is so cut and
dry with Trump’s tariffs casting a shadow of uncertainty over the economic outlook. “Fed officials will want to
see evidence from labor market and other hard data before cutting. We think this will take a couple of months
and therefore expect three 25bp cuts in July, September, and October,” Goldman Sachs said in a note. Non
yielding bullion, a safeguard against political and financial turmoil, also thrives in a low-interest-rate
environment. Among other metals, spot silver rose 1.5% to $32.99 an ounce, platinum climbed 1.3% to
$971.24 and palladium advanced 0.5% to $945.75. - Trump set to raise millions from crypto and meme coin this month
The “Crypto & AI Innovators Dinner” is $1.5 million per plate and features President Donald Trump and venture
capitalist David Sacks. The May 22 gala at Trump National requires $TRUMP meme coin token ownership to
attend, with access awarded via a public blockchain leaderboard. A watchdog group warned that the contest
enables anonymous donors — including possible foreign nationals — to buy access to Trump while enriching
his affiliates. - Ford suspends 2025 guidance amid $2.5 billion tariff impact
Ford Motor beat Wall Street’s first-quarter expectations, but suspended its 2025 financial guidance amid an
expected $2.5 billion impact this year from President Donald Trump’s tariffs. The Detroit automaker said it
expects to offset $1 billion of those costs through remediation actions as well as volume and pricing
expectations for a total impact of $1.5 billion in 2025. Ford cited “near-term risks, especially the potential for
industrywide supply chain disruption impacting production” and the potential for future or increased tariffs in
the U.S., among other potential impacts such as retaliatory tariffs, as reasons for pulling its guidance. The tariff
impact is notably less than the $4 billion to $5 billion that General Motors said it expected to incur as a result
of Trump’s tariffs, as Ford imports fewer vehicles than its crosstown rival. GM, which last week lowered its
2025 guidance, said it expected to offset at least 30% of those expenses. The automotive industry is
grappling with 25% tariffs on imported vehicles that went into effect in early April, as well as 25% levies on
auto parts that are not compliant with the United States-Mexico-Canada Agreement, which took effect
Saturday. - U.S. commodities regulator seeks to drop appeal of Kalshi election bets offers
The Commodity Futures Trading Commission moved to drop its appeal of a federal district court judge’s ruling
that had allowed commodities exchange KalshiEx to take bets on political elections. The CFTC, in a filing at the
U.S. Court of Appeals for the District of Columbia Circuit, said its proposed dismissal was voluntary and on
terms agreed to with Kalshi. The company’s list of events contracts for political outcomes includes options to
bet on who will be the Republican and Democratic presidential nominees in 2028, which party will win the
Senate race in Georgia, and who will be the Republican nominee for the governor of Ohio. - Berkshire shares fell 5.1% Monday after Warren Buffett announced he will step down from his post as
CEO at year-end, with Vice Chairman Greg Abel set to replace him
UBS (buy): “While the timing was somewhat of a surprise, the ultimate transition to Abel was not,” analysts
including Brian Meredith write. “Operationally, we expect little change at BRK and the culture/strategy to
remain unchanged under Abel”. “Continue to believe BRK represents an attractive holding in the current
uncertain macro-economic environment, with $347bb of cash & ST investments and a defensive business mix”.
CFRA Research (hold): This year is likely to be a transitional year for Berkshire and CFRA Research expects Abel’s
management style to be more hands-on than Buffett’s, writes Vice President Catherine Seifert. Says Abel brings
strong operational skills as the former CEO of MidAmerican Energy and subsequently Berkshire Hathaway
Energy. - Shares of media and entertainment companies were lower on Monday, after President Donald Trump
announced that he is planning a 100% tariff on films produced overseas. Analysts see risks associated with
the news, though they added that there are few details
Citi: “Under a worst-case scenario, we estimate this could reduce Netflix’s EPS ~20%,” although “Netflix has a
wide range of options that will likely limit financial risks,” including shifting production to the US, and “limiting
US consumer access to non-US produced content”. Morgan Stanley: “With only a single social media post to
go on,” it is “virtually impossible to size the impact to the industry or specific companies”. “In the bear case,
this likely reduces the earnings power of all companies in the value chain, from studio production, to streaming
services, to movie exhibitors, with lower earnings power as a result”. Barclays: “There are literally no details
available at this point other than a social media post from President Trump and therefore it is not clear how
this will be implemented”. However, “if this is deployed on a wide scale, it may end up harming the very
industry it is supposed to help, especially given that the US exports 3x the amount of content that it imports”.
Media stocks like Netflix “had been seen as defensive due to lack of exposure to tariff-related threats”. - ON Semiconductor shares fell 8.4% after the chipmaker reported first-quarter results that beat
expectations and gave an outlook that was seen as mixed
KeyBanc Capital Markets: The results are positive but the outlook is mixed, with lower gross margins offsetting
the view on earnings and revenue. The outlook is “likely reflecting a bottoming and recovery in automotive
and industrials”. Truist Securities (hold, PT $52): The company’s “other” business strongly beat expectations,
“suggesting upside in end markets like consumer, comms, and compute”. The outlook is “mixed,” as “revenue
and EPS beat despite margin weakness”. FIRST QUARTER RESULTS: Revenue $1.45 billion, -22% y/y, estimate
$1.4 billion. Adjusted EPS 55c vs. $1.08 y/y, estimate 51c. Adjusted gross margin 40% vs. 45.9% y/y, estimate
40.1%. Adjusted operating margin 18.3% vs. 29% y/y, estimate 17.3%. SECOND QUARTER FORECAST: Sees
adjusted EPS 48c to 58c, estimate 51c. Sees revenue $1.40 billion to $1.50 billion, estimate $1.41 billion. Sees
adjusted gross margin 36.5% to 38.5%, estimate 39%. - Palantir Technologies shares dropped over 8% afterhours after its results failed to meet investors’
expectations, despite the company’s strong growth and increased revenue forecast
The company’s revenue for the quarter jumped 39% to $884 million, exceeding analysts’ estimates, with strong
growth in the US but tepid enthusiasm in the rest of the world. The company described rising demand for
artificial intelligence software as a “ravenous whirlwind,” and bumped its 2025 revenue forecast to about $3.9
billion from about $3.75 billion. That represents growth of 36% from a year ago. “Even with all the good news,
it just wasn’t enough to sustain the valuation going forward,” said Bloomberg Intelligence analyst Mandeep
Singh. “There wasn’t any clarity around new drivers” of business.
