- Dollar Falls on Concern Over Tariffs, US Economy: Markets Wrap
The dollar dropped, extending recent losses, on concern over the impact of higher tariffs on the US economy
and the risk of a widening fiscal deficit. Bloomberg’s gauge of the greenback slipped for a third day, heading
for its lowest close since July 2023, on weak demand for US assets. An index of Asian currencies climbed toward
the highest level since October, with the Taiwan dollar advancing for a sixth day. Equity-index futures for the
S&P 500 and Nasdaq 100 jumped 0.9%, holding their gains from a Monday holiday, as President Donald Trump
extended a deadline on aggressive Euro area tariffs. The yen rose as much as 0.5% after Bank of Japan Governor
Kazuo Ueda indicated his intention to keep raising interest rates if the economy improves. Treasuries edged
higher with the 10-year yield falling three basis points. Japan’s 40-year bonds rose ahead of a bond auction
Wednesday. Asian shares swung between gains and losses. - Oil edges down as potential higher OPEC+ output eyed
Oil prices eased on Tuesday as market participants weighed the possibility of an OPEC+ decision to further
increase its crude oil output at a meeting later this week. Brent crude futures shed 12 cents, or 0.19%, to
$64.62 a barrel by 0022 GMT, while U.S. West Texas Intermediate crude was down 15 cents, or 0.24%, at
$61.38 a barrel. “Crude oil edged lower as the market contemplated the outlook for rising OPEC supply,” Daniel
Hynes, senior commodity strategist at ANZ, said in a note. Eight OPEC+ members that had pledged additional
voluntary cuts are now expected to meet on May 31, one day earlier than previously scheduled, three
sources within the group told Reuters on Monday. The Organization of the Petroleum Exporting Countries and
its allies, collectively known as OPEC+, will likely finalize July output at the meeting, which sources have
previously told Reuters will entail a production increase of 411,000 barrels per day. This month, OPEC+ agreed
to accelerate oil output increases for a second consecutive month in June. However, losses were limited as U.S.
President Donald Trump announced an extension to trade talks with the European Union until July 9, alleviating
immediate fears of tariffs that could suppress fuel demand. - Gold hovers near two-week high on dollar weakness, US fiscal woes
Gold hovered close to a two-week high on Tuesday, supported by a weaker dollar and concerns over the U.S.
fiscal outlook, while investors awaited more U.S. economic data for more clarity on interest rate trajectory.
Spot gold was little changed at $3,339.99 an ounce, as of 0228 GMT. Markets in the U.S. and London were
closed on Monday for a holiday. U.S. gold futures fell 0.8% to $3,339.80. “At this point, we are seeing some
consolidation in gold prices. The market is taking a breather and waiting for the next catalyst,” said Kelvin
Wong, a senior market analyst, Asia Pacific at OANDA. “However, market participants are concerned about the
widening of that U.S. budget deficit that is a supporting factor for gold prices and that is also driving a dollar
weakness as well.” The dollar index eased 0.3% to hover near one-month low against its rivals, making
greenback-priced gold more attractive for other currency holders. The U.S. House of Representatives last week
passed a version of Trump’s tax-cut bill that is calculated to add about $3.8 trillion to the federal government’s
$36.2 trillion in debt over the next decade, according to the Congressional Budget Office. Spot silver gained
0.1% to $33.38 per ounce. - China’s industrial profit growth accelerates in April as Beijing’s policy measures cushion tariff impact
China’s industrial profits rose for a second straight month in April, with their growth improving despite U.S.
tariffs and persistent deflationary pressures, thanks to Beijing’s measures aimed at supporting businesses.
Cumulative profits at major industrial firms climbed 3% last month compared to a year earlier, official data
showed Tuesday, accelerating from a 2.6% growth in March. In the first four months this year, industrial profits
rose 1.4%, year on year, according to the National Bureau of Statistics, bolstered by stronger earnings in the
equipment and high-tech manufacturing sectors. U.S. President Donald Trump slapped eye-watering tariffs of
145% on imports from China last month, drawing Beijing to retaliate, effectively amounting to a mutual trade
embargo between the world’s two largest economies. That, however, did not significantly impact
Chinese exports that found other markets. Earlier this month, Washington and Beijing agreed to lower most of
those levies, following a trade truce struck during a meeting between the Trump administration and Chinese
leadership in Geneva, Switzerland. U.S. tariffs on goods imported from China are now down to 51.1% while
China’s levies on U.S. imports stand at 32.6%, according to think tank Peterson Institute for International
Economics. - Sweden’s Volvo Cars to cut 3,000 jobs as part of major cost-cutting drive
Sweden-based automaker Volvo Cars on Monday said it would cut around 3,000 jobs as part of a major cost
cutting drive. The move comes after the company, which is owned by China’s Geely Holding, announced an 18
billion Swedish kronor ($1.89 billion) cost and cash action plan late last month. Volvo Cars said the 3,000 job
cuts would primarily impact office-based positions in Sweden and represent around 15% of the firm’s total
office-based workforce. “The actions announced today have been difficult decisions, but they are important
steps as we build a stronger and even more resilient Volvo Cars,” Håkan Samuelsson, Volvo Cars president and
CEO, said in a statement. “The automotive industry is in the middle of a challenging period. To address this, we
must improve our cash flow generation and structurally lower our costs. At the same time, we will continue to
ensure the development of the talent we need for our ambitious future,” Samuelsson said. As part of the
redundancies, the company said it would reduce around 1,000 positions currently held by consultants, mostly
in Sweden, roughly 1,200 employees in Sweden and the remaining in other global markets. When the action
plan was launched on April 29, Volvo Cars said the program would include reductions in investments and
redundancies at its operations across the globe. The company also withdrew its financial guidance for both
2025 and 2026, citing tariff pressure on the automotive sector. - Xiaomi takes aim at Tesla’s bestselling car in China with its longer-range YU7
China’s Xiaomi, known for its smartphones, only recently entered the electric-vehicle space. It is now taking
aim at Tesla’s bestselling car in China. Less than a year after launching its first electric car, Xiaomi late on
Thursday revealed its YU7 SUV and claimed it would have a driving range of at least 760 kilometers (472 miles)
on a single charge. That’s well above the 719 km advertised for Tesla’s extended-range Model Y. Driving range
has been a selling point for consumers worried about frequent battery charging. “We expect Yu7 would
significantly erode Tesla Model-Y’s China market share,” Citi analyst Jeff Chung said in a report Sunday. Citi
expects the YU7 to be priced around 250,000 yuan to 320,000 yuan ($34,700 to $44,420), and forecasts
monthly sales of about 30,000 units. Once sales pick up, Citi predicts annual sales of 300,000 to 360,000 units.
That price range pits the YU7 against Tesla’s Model Y, which starts at 263,500 yuan in China. Xiaomi plans to
announce the YU7′s price at the car’s official launch in July. - Shares of Chinese automakers continue to slide after fears of price war and scrutiny from regulators
Shares of Chinese automakers marked a second day of decline as fears of a price war and increased scrutiny
from regulators weighed on investors. Hong Kong-listed shares of BYD fell as much as 4% Tuesday, continuing
losses recorded in the prior session. The plunge of more than 9% on Monday was a reversal of its record high
last week, as investors assessed the Chinese electric vehicle giant’s price cuts announced on May 23. Stocks of
other Chinese automakers also fell Tuesday as investors turned cautious about stiffer competition in the sector.
Geely Automobile shares declined 3.16%, while Great Wall Motor Co and Li Auto had lost 1.1% and 2.37%
respectively. Meanwhile, shares in Xpeng were down 1.73%. Reuters reported Tuesday that China’s commerce
ministry was meeting industry bodies and automakers over a practice of marking cars as sold to meet sales
targets. These zero-mileage cars were then sold by thousands of vendors on the secondhand market.
Separately, BYD announced on the Chinese social media platform Weibo that it was reducing the prices on 22
electric and plug-in hybrid models until the end of June. Victor Sun, senior equity analyst at Morningstar says
the recent price cut is “quite significant.” “We expect BYD’s vehicle margin would be under pressure in the
short term as I think this move by them is driven by the need to hit their sales targets,” he said, adding that
BYD shares are now overvalued. Looking ahead, Sun expects the company to “offset the impact via larger sales
scale and battery cost staying low,” regardless of whether its sales campaign is extended beyond its current
deadline of June. - India and Pakistan’s drone battles mark new arms race in Asia
A little after 8:00 pm on May 8, red flares streaked through the night sky over the northern Indian city of Jammu
as its air-defence systems opened fire on drones from neighbouring Pakistan. The Indian and Pakistani
militaries have deployed high-end fighter jets, conventional missiles and artillery during decades of clashes,
but the four days of fighting in May marked the first time New Delhi and Islamabad utilized unmanned aerial
vehicles at scale against each other. The fighting halted after the U.S. announced it brokered a ceasefire but
the South Asian powers, which spent more than $96 billion on defence last year, are now locked in a drones
arms race, according to Reuters’ interviews with 15 people, including security officials, industry executives and
analysts in the two countries. Two of them said they expect increased use of UAVs by the nuclear-armed
neighbours because small-scale drone attacks can strike targets without risking personnel or provoking
uncontrollable escalation. India plans to invest heavily in local industry and could spend as much as $470 million
on UAVs over the next 12 to 24 months, roughly three times pre-conflict levels, said Smit Shah of Drone
Federation India, which represents over 550 companies and regularly interacts with the government. The
previously unreported forecast, which came as India this month approved roughly $4.6 billion in emergency
military procurement funds, was corroborated by two other industry executives. The Indian military plans to
use some of that additional funding on combat and surveillance drones, according to two Indian officials
familiar with the matter. - Bitcoin price today: rangebound at $109k post record high; 2025 crypto summit eyed
Bitcoin edged lower on Tuesday, trading in a narrow range after last week’s record high, as investors turned
their focus to the start of the major 2025 Bitcoin conference in Las Vegas later in the day. The world’s largest
cryptocurrency fell 0.6% to $108,962.20 as of 01:58 ET (05:58 GMT). The token surged to a record high of nearly
$112,000 on Thursday last week, but gave some of the gains amid profit-booking and whale trades at peak
levels. Still, prices were supported near record highs amid regulatory cheer and optimism over increased
institutional adoption. - Sony to make case for finance arm spin-off in latest corporate transformation
Sony (NYSE:SONY) will on Thursday lay out the growth strategy for its financial arm set for a spin-off that has
been welcomed by investors as marking the latest chapter in the company’s transformation. The Japanese
conglomerate, once best known for household electronics, has received plaudits for shifting its focus to
entertainment, which totals more than 60% of sales.The financial spin-off reflects the tangled path Sony has
taken, coming just four years after it took full control of the business in a $3.7 billion deal. Sony executives will
address the spin-off and the financial unit’s growth strategy at an investor day on Thursday. The company plans
to distribute just over 80% of its shares in Sony Financial Group, which includes banking and insurance, to
shareholders through dividends in kind. It is the first partial spin-off in Japan taking advantage of a 2023 tax
change and the first direct listing – set for September 29 – in more than two decades. In a direct listing a
company lists on the stock market without a traditional initial public offering. The spin-off will separate the
balance sheets of the non-financial businesses, which seek capital and asset efficiency, and the financial
business, which expands by accumulating capital, helping investors understand their aims, Sony said in
response to questions from Reuters. Compared with an IPO, the spin-off will allow a large-scale separation in
a relatively short time with low risk, Sony said. - JD.com shares drop after Meituan CEO’s competitive pledge
Hong Kong-listed shares of JD.com (HK:9618) dropped on Tuesday after Meituan (HK:3690) CEO Wang Xing
higlighted intensifying competition in China’s instant retail market. The stock declined as much as 6.6% in early
trading, reflecting investor concerns over escalating rivalry between the two tech giants. As of 02:01 GMT,
JD.com shares were trading 3.6% lower at HK$125. Meituan’s shares also experienced volatility, dropping up
to 5% intraday before recovering slightly. Meituan on Monday reported a bigger-than-expected 18.1% rise in
quarterly revenue. Wang said in the earnings call that the company is fully committed to doing whatever is
necessary to come out ahead, while cautioning that the fierce competition could lead to short-term financial
fluctuations. The heightened competition comes as JD.com aggressively expands its food delivery service, JD
Takeaway, challenging Meituan’s market dominance. JD.com has invested heavily in subsidies and recruitment,
aiming to capture market share in the rapidly growing sector. The broader Hang Seng index remained relatively
stable, rising 0.2%.
Menu
