- Stocks Rise on Easing Trade War, Rate-Cut Hopes: Markets Wrap
Global stocks advanced for a fourth consecutive day – on track for the best winning streak in more than two
months – as trade tensions cooled and after Federal Reserve officials indicated they would be open to cutting
rates earlier than anticipated. The MSCI Asia-Pacific Index extended its gains after Bloomberg News reported
China’s government is considering suspending its 125% tariff on some US imports. Shares in South Korea rose
1% as Treasury Secretary Scott Bessent said the US may reach an “agreement of understanding” on trade as
soon as next week. The Nikkei-225 climbed as much as 2% on positive comments from the US-Japan trade
talks. A gauge of the dollar advanced while Treasuries held gains from Thursday. Appetite for risk is returning
as the White House strikes a conciliatory tone, boosting investor optimism the US will clinch crucial trade deals
with top economic partners. In a sign that markets may be stabilizing after the jolt from Donald Trump’s
century-high levies, a gauge of Asian stocks on Friday erased all its losses since April 2 — the day the US
president announced his reciprocal tariffs. - S&P 500, Nasdaq close higher for third straight day, fueled by tech gains
Stocks popped Thursday thanks to strong gains in megacap tech names, as investors continued to look for signs
of progress on the global trade front. The S&P 500 ended up 2.03% at 5,484.77, while the tech-heavy Nasdaq
Composite added 2.74% to finish at 17,166.04. The Dow Jones Industrial Average lagged the other two indexes,
weighed down by a 6.6% drop in IBM, but still added 486.83 points, or 1.23%, at 40,093.40. This marked the
blue-chip index’s first close above the 40,000 threshold since April 15. - Oil prices steady on mixed economic news, possible OPEC+ output increase
Oil prices were little changed on Thursday as investors weighed a potential OPEC+ output increase, mixed
economic news, conflicting tariff signals from the White House and news from the Russia-Ukraine war. Brent
crude futures rose 10 cents, or 0.2%, to $66.22 a barrel. U.S. West Texas Intermediate (WTI) crude rose 16
cents, or 0.3%, to $62.43. In the U.S., the number of people filing for unemployment benefits rose marginally
last week, suggesting a resilient labor market despite economic turbulence caused by tariffs on imported
goods. Businesses are increasing prices and cutting financial guidance due to higher costs stemming from U.S.
President Donald Trump’s trade war, which has also roiled global supply chains. U.S. Federal Reserve Bank of
Cleveland President Beth Hammack called for patience on monetary policy and did not rule out changes by
June if data suggested action was needed. Analysts have said Trump’s unsteady tariff policy has so far stopped
the Fed from raising or lowering interest rates. Central banks hike rates in order to fight inflation in an
overheated economy or lower them to fight a recession and boost growth. U.S. Treasury Secretary Scott
Bessent said high tariffs between the U.S. and China are not sustainable, signaling possible moves to ease the
trade war between the world’s two largest economies that has fed recession fears. In Germany, Europe’s
biggest economy, business morale unexpectedly rose in April though expectations were gloomier as companies
worried about U.S. tariffs. - Gold gains amid bargain hunting, all eyes on trade updates
Gold prices gained on Thursday after falling more than 3% in the previous session, helped by a subdued dollar
and bargain hunting, while market attention remained focused on any updates on U.S.-China trade relations.
Spot gold rose 1.4% to $3,333.90 an ounce. Bullion hit a record high of $3,500.05 on Tuesday due to concerns
about the U.S. economy, but prices retreated on Wednesday after U.S. President Donald Trump backed down
from threats to fire the head of the Federal Reserve and appeared to soften his stance on China. U.S. gold
futures settled 1.7% higher at $3,348.60. “The entire market is one story, tariffs, at the moment. China is
playing the outraged party,” which has the dollar down and gold up,” said Tai Wong, an independent metals
trader. “The gold run to $3,500 was a little gluttonous and it needed a pullback to digest. Gold seems likely to
trade sideways for the next few sessions but we are in a bull market so significant dips will certainly be bought.”
In other markets, stocks drifted and a rebound in the dollar lost traction as investors try to grasp Trump’s U
turns. A weaker dollar and a risk-off sentiment tend to make safe-haven bullion more appealing to investors.
China called for all “unilateral” U.S. tariffs to be cancelled, and clarified it has not held trade talks with
Washington despite repeated comments from the U.S. government suggesting there had been engagement.
Meanwhile, data showed the number of Americans filing new applications for unemployment benefits rose
marginally last week, suggesting the labor market remains resilient despite darkening clouds over the economy
caused by tariffs on imported goods. Among other metals, spot silver was down 0.1% at $33.51 an ounce,
platinum was down 0.1% at $971.60 and palladium rose 0.4% to $947.93. - Trump asserts trade talks with China are underway after Beijing denies any ongoing negotiations
U.S. President Donald Trump on Thursday refuted China’s claims that there were no ongoing trade discussions
between Beijing and Washington. “They had a meeting this morning … It doesn’t matter who ‘they’ is. We may
reveal it later, but they had meetings this morning, and we’ve been meeting with China,” Trump told reporters.
The statement followed China’s denial of any talks with the U.S. and calls for abolishing “unilateral” tariff
measures for resolving trade issues. “At present there are absolutely no negotiations on the economy and
trade between China and the U.S.,” Ministry of Commerce spokesperson He Yadong told reporters in Mandarin,
translated by CNBC. He added that “all sayings” regarding progress on bilateral talks should be dismissed. “If
the U.S. really wants to resolve the problem … it should cancel all the unilateral measures on China,” He said.
Trump and Treasury Secretary Scott Bessent this week indicated that there could be an easing in tensions with
China. The White House earlier this month added 145% tariffs on Chinese goods, to which Beijing responded
with duties of its own and increased restrictions on critical minerals exports to the U.S. The Commerce
Ministry’s comments echoed those of Chinese Foreign Ministry spokesperson Guo Jiakun, who said on
Thursday afternoon that there were no ongoing talks, according to state media. Both spokespersons held to
the official line that China would be willing to talk to the U.S. subject to Beijing being treated as an equal. - Bank of England chief focused on tariff ‘growth shock’ but downplays UK recession risk
The Bank of England is focused on the potential impact of U.S. tariffs on U.K. economic growth if there is a
slowdown in global trade, the central bank’s governor Andrew Bailey said Thursday. “We’re certainly quite
focused on the growth shock,” Bailey told CNBC’s Sara Eisen in an interview at the IMF-World Bank Spring
Meetings. Going into its May 8 monetary policy meeting, the central bank will consider “arguments on both
sides” around the impact of tariffs on growth and domestic supply constraints on inflation, Bailey said. “There
is clearly a growth issue we start with, with weak growth … but a big question mark is how much of that is
caused by the weak demand, how much of it is caused by a weak supply side,” he continued. “Because the
weak supply side, of course, unfortunately, has the sort of the upside effect on inflation. So we’ve got to
balance those two. But I think the trade issue is now the new part of that story.” Inflation could be pulled in
either direction by wider forces, with a redirection of trade exports into other markets being disinflationary,
but a retaliation on U.S. tariffs by the U.K. government — which he stressed did not appear likely — pushing
up inflation. Bailey added that he did not see the U.K. as being close to a recession at present, but that it was
clear economic uncertainty was weighing on business and consumer confidence. - Coinbase ends PayPal stablecoin fee as payment race heats up
Coinbase is removing fees for purchases of PayPal’s stablecoin as part of a broader effort to increase the use
of the coin, and an attempt to boost on-chain payment opportunities for consumers and institutional users. In
a blog post Thursday, Coinbase said it aims “to accelerate the adoption, distribution, and utilization of the
PayPal USD (PYUSD),” the U.S. dollar-pegged stablecoin that has lagged the market since it launched in 2023.
With a market cap of only about $730 million, it PayPal USD controls less than 1% of the market for stablecoins
tied to the dollar. Tether’s USDT and Circle’s USDC, dominate the market with 66.5% and 28.3% shares,
respectively, according to CryptoQuant. PayPal said the companies will also collaborate on “stablecoin based
solutions” for “moving or managing money around the world, particularly in commerce,” as well as potential
use cases for PYUSD in decentralized finance and other on-chain platforms. “We are excited to drive new,
exciting, and innovative use cases together with Coinbase and the entire cryptocurrency community, putting
PYUSD at the center and driving further utility and adoption for digital currencies among developers,
customers, and other users,” said Alex Chriss, PayPal president and CEO. - Apple aims to source all US-sold iPhones from India in pivot away from China
Apple Inc (NASDAQ:AAPL) plans to shift assembly of all iPhones sold in the U.S. to India by as soon as next year
in a pivot away from China due to increased Sino-U.S. trade hostilities, the Financial Times reported on
Friday. The push will likely be further and faster than investors are anticipating, with a goal to source the
entirety of over 60 million iPhones sold in the U.S. annually from India by end-2026, the FT report said, citing
people familiar with the matter. The target will entail doubling India’s iPhone output in just over a year- a
fraction of the time Apple spent developing its production line in China, which took nearly two decades of
heavy investment. Apple is heavily reliant on China as a manufacturing powerhouse, where the company
manufactures several of its products through third parties such as Foxconn (SS:601138). But this reliance leaves
the company exposed to steep trade tariffs imposed by U.S. President Donald Trump against the world’s
second-largest economy. Apple was seen rushing shipments of iPhones from India earlier in April, after
President Trump kickstarted a renewed trade war with China. While Trump did exempt electronics imports
from China, he clarified that this was a temporary move, and that he will tariff electronics imports separately. - BNP Paribas shares dropped 2.2% after the French lender reported a drop in first-quarter net income
despite record result from equities trading. Analysts see results as mixed, with higher costs weighing
JPMorgan (neutral): Analyst Delphine Lee sees earnings as mixed, as clean operating profit is 5% below
JPMorgan’s estimates driven by higher costs in global markets division. Says top line was stronger in CIB, wealth
management, Europe Med and Arval unit, while revenues were weaker in Eurozone retail, personal finance,
asset management. Sees 2025-2026 targets “as a bit challenging” and expects limited EPS consensus upgrades.
Citi (buy): Analyst Andrew Coombs sees results as solid but unspectacular and doesn’t expect much change to
consensus EPS forecasts. Notes slight disappointment is heavier opex, while revenue and provisions trends are
reassuring. Jefferies (buy): Analyst Joseph Dickerson expects investors to focus on negative aspects of a cost
miss, quarterly decline in French NII vs positives including equity and prime revenue, guidances maintained.
Says that for shares to work, management need to deliver on 11.5% ROTE in 2025, provide clarity on AXA IM
deal closing by 2Q. - IBM’s first-quarter sales increased almost 1% to $14.5 billion, and profit, excluding some items, was $1.60
per share, exceeding analysts’ average estimates
However, shares declined 6.6% due to concerns about economic uncertainty and US government cost cuts,
despite the strong profit and sales. IBM maintained its full-year forecast of about $13.5 billion in free cash flow
and at least 5% revenue growth in constant currency, but executives expressed caution about the consulting
unit this year. “In the near term, uncertainty may cause clients to pause,” Chief Executive Officer Arvind
Krishna said. Still, he said IBM has “not seen a material difference in client buying behavior.” CFO Kavanaugh
said about 15 of IBM’s contracts with the federal government have been canceled or paused, amounting to
about $100 million in future payments. Federal sales amount to less than 5% of IBM’s overall revenue,
Kavanaugh added. - Google parent Alphabet Inc. reported first-quarter revenue and profit that exceeded analysts’
expectations, buoyed by continued strength in its search advertising business
First-quarter sales, excluding partner payouts, were $76.5 billion. Analysts had expected $75.4 billion on
average. Net income was $2.81 per share, compared with estimates of $2.01. Shares rose 7.5% in afterhours
trading. The company’s first-quarter earnings included an $8 billion “unrealized gain on our non-marketable
equity securities related to our investment in a private company,” according to a filing. The private company,
which Alphabet didn’t name in its report, is Elon Musk’s Space Exploration Technologies Corp., according to a
person familiar with the matter. Google Cloud brought in operating profit of $2.18 billion, beating analysts’
estimates for $1.94 billion despite slightly missing expectations on sales. The results indicate that Google may
be eking out more profits from Cloud even as sales slow. The cloud unit is so far the clearest indicator of how
the AI boom is contributing to the company’s sales, as startups that require more computing power for their
work become customers. For a second quarter in a row, the company had more customer demand than it had
data center capacity for, according to Chief Financial Officer Anat Ashkenazi. That’s why Alphabet remains
heavily invested in AI, boosting its spending on servers and data centers. Capital expenditures were $17.2
billion in the first quarter, slightly higher than expectations for $17.1 billion. Search advertising generated $50.7
billion in sales. That compared with the average analyst projection for $50.3 billion. The unit remains the core
engine of Google’s wider advertising business, and saw traction with the insurance, retail, health care and
travel industries, executives said. - PepsiCo shares fell 4.9% after it lowered its full-year profit outlook due to tariff headwinds and White
House pressure
The company expects 2025 earnings per share to be about even with 2024 based on constant currencies, versus
an earlier view for growth in the mid single-digit percentage. The company is preparing to contend with rising
supply-chain costs as new US tariffs increase the cost of ingredients, and is working to lessen the impact of
higher costs where possible. PepsiCo reported a 1.8% drop in first-quarter sales to $17.9 billion, with organic
sales rising 1.2% and core earnings coming in at $1.48 a share, versus the $1.49 average estimate of analysts.
Health and Human Services Secretary Robert F. Kennedy Jr. this week announced plans to phase out the use
of all petroleum-based synthetic food dyes, impacting many products produced by PepsiCo. He is also lobbying
state governors to join his campaign to limit access to sugary sweets and drinks. PepsiCo is also contending
with government efforts to prohibit low-income citizens from using federal food vouchers to purchase soda
and candy. “Some of our categories could be exposed,” CEO Laguarda said. According to data from RBC Capital,
nearly 6% of PepsiCo’s US sales come from SNAP, or Supplemental Nutrition Assistance Program, purchases. - Intel CEO Lip-Bu Tan says the company’s bureaucratic culture needs a shake-up, and plans to cut jobs,
remove management layers, and require employees to work in-person four days a week
Intel’s revenue forecast for the current quarter was below analyst projections, and the company warns of a
tariff-fueled recession that could hurt chip demand, sending shares down 5.1% afterhours. SECOND QUARTER
FORECAST: Sees revenue $11.2 billion to $12.4 billion, estimate $12.88 billion. Sees adjusted EPS $0, estimate
7.2c. Sees adjusted gross margin 36.5%, estimate 37%. FIRST QUARTER RESULTS: Revenue $12.67 billion, -0.4%
y/y, estimate $12.31 billion. Adjusted EPS 13c vs. 18c y/y, estimate 0.74c. Adjusted gross margin 39.2% vs.
45.1% y/y, estimate 36.1%. The company plans to reduce operating costs to $17 billion this year and $16 billion
next year, and will cut spending on new plants and equipment by $2 billion to shore up finances. Truist
Securities (hold, PT $21): The results are better than expected on key metrics, but the outlook is below
expectations and Intel is cutting its capex. The company “noted the current macro environment is creating
elevated uncertainty across the industry”. - AAL Reports Narrower-Than-Expected Q1 Loss, Withdraws FY25 View
American Airlines’ AAL first-quarter 2025 loss (excluding 13 cents from non-recurring items) of 59 cents per
share was narrower than the Zacks Consensus Estimate of a loss of 69 cents. In the year-ago quarter, AAL
reported a loss of 34 cents per share. Operating revenues of $12.55 billion edged past the Zacks Consensus
Estimate of $12.52 billion but decreased 0.2% year over year. Passenger revenues, accounting for 90.8% of the
top line, decreased 0.6% year over year to $11.4 billion. The metric was just shy of estimate of $11.5 billion.
Passenger revenues were hurt by the slowdown in domestic leisure demand due to tariff woes. Cargo revenues
increased 1.1% to $189 million. The metric surpassed the estimate of $171.7 million. Other revenues increased
5% to $971 million, which surpassed the expectation of $891.6 million. Total revenue per available seat miles
(a key measure of unit revenues) increased to 17.95 cents from 17.83 cents recorded a year ago. Passenger
revenue per available seat miles increased 0.3% to 16.3 cents. However, the figure was lower than expectation
of 16.5 cents. Consolidated yield increased 1.4% to 20.21 cents, ahead of estimation of 19.69 cents. - Freeport-McMoRan (NYSE:FCX) Q1 Earnings Dip and Completes Share Buyback of US$1,974 Million
Freeport-McMoRan recently reported a 5.61% increase in its share price over the past week, a period marked
by its first-quarter earnings release showing declines in sales and net income. The company also updated its
ongoing share buyback program, having repurchased over 51 million shares. Despite the slight dips in financial
performance, buoyant market conditions, with the Dow Jones and other indices surging, likely reinforced
investor sentiment. The overall market rose by 2.3%, and this upward trend might have provided some tailwind
to Freeport-McMoRan’s stock performance amidst mixed earnings and repurchase activities. The recent 5.61%
increase in Freeport-McMoRan’s share price following its first-quarter earnings suggests that the company’s
ongoing share buyback program may be buoying investor confidence despite the reported declines in sales and
net income. The buyback, coupled with broader positive market conditions, likely mitigated some of the
negative sentiment from the financial performance data. Over the longer term, Freeport-McMoRan has
delivered a very large total return of 303.26% including dividends over the past five years, highlighting its
resilience and potential appeal to shareholders.
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