- Asian shares track Wall Street gains, bonds steady
Asian shares gained at the open, tracking the biggest rally on Wall Street in more than two weeks, as sentiment
was boosted by a rebound in US consumer confidence and a global surge in bonds. A regional stock gauge rose
0.4% led by shares in Japan, which jumped more than 1%. Yields on the 30-year Treasury were steady after
posting their biggest one-day slide since late March, on signs that Japan may adjust debt sales following
a market rout. The dollar edged down, while the yen strengthened. Investors are awaiting Nvidia Corp. earnings
and a key 40-year government bond auction in Japan Wednesday to see if the momentum can be sustained.
Tuesday’s rebound broke a ‘Sell America’ trend in the markets that was most visible in the dollar after President
Donald Trump unleashed his tariff war and pushed for tax cuts, which raised concerns about US fiscal deficit. - Dow jumps 700 points to snap four-day losing run as EU tariff delay lifts market
Stocks rallied on Tuesday after President Donald Trump said over the holiday weekend that he agreed to delay
tariffs of 50% on the European Union. The Dow Jones Industrial Average gained 740.58 points, or 1.78%, to
finish at 42,343.65, while the S&P 500 rose 2.05% to 5,921.54. Both snapped four-day losing streaks. The
Nasdaq Composite popped 2.47% to 19,199.16 as technology names like Tesla saw outsized gains. Trump on
Sunday said that he would push back the 50% levy deadline on the EU to July 9 following a request from Ursula
von der Leyen, the president of the European Commission. That comes after Trump last week proposed an
import tax of 50% on the EU beginning June 1. - Oil falls as higher OPEC+ output expectations weigh on sentiment
Oil prices fell on Tuesday on increasing expectations members of the Organization of Petroleum Exporting
Countries and their allies, known as OPEC+, will decide to increase their output at a meeting later this week.
Brent crude futures lost 65 cents, or 1%, to close at $64.09 a barrel, while U.S. West Texas Intermediate (WTI)
crude fell 64 cents, or 1.04%, to settle at $60.89 a barrel. The WTI contract did not settle on Monday because
of the U.S. Memorial Day holiday. “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. OPEC+ will likely finalise July
output at their meeting, which sources have previously told Reuters will entail a production increase of 411,000
barrels per day. Russian Deputy Prime Minister Alexander Novak said on Monday that OPEC+ had yet to discuss
hiking output. The group is likely to finalise output quotas in an online ministerial meeting on May 28. 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. OPEC+ members
had already agreed to accelerate oil output increases for a second month in June. However, U.S. President
Donald Trump’s decision to extend trade talks with the European Union until July 9 alleviated immediate fears
of tariffs that could suppress fuel demand. Iran set the official selling price for its light crude oil grade for Asian
buyers at $1.80 a barrel above the Oman/Dubai average for June, the state-owned National Iranian Oil
Company (NIOC) said. The price it set for May was a premium of $1.65. - Trump’s tariff reprieve pushes gold down for second straight session
Gold prices declined for a second consecutive session on Tuesday, as risk sentiment improved following U.S.
President Donald Trump’s decision to postpone tariffs on the European Union. Spot gold fell 1.2% to $3,302.10
an ounce after rising nearly 5% last week. U.S. gold futures settled 1.9% lower at $3,300.40. “There is a lot of
volatility in gold prices as we keep having things change on the tariff front. Currently, the market may be under
the impression that there is a deal to be had and that is pressuring gold,” Bart Melek, head of commodity
strategies at TD Securities, said. A weekend telephone call between Trump and EU chief Ursula von der Leyen
gave “new impetus” to trade talks, the EU said, after Trump dropped his threat to impose 50% tariffs on imports
from the European Union next month. The U.S. dollar strengthened and stock index futures surged. A stronger
dollar and rising risk sentiment weighed on gold, a dollar-denominated asset typically favoured during periods
of economic and geopolitical uncertainty. Federal Reserve Bank of Minneapolis President Neel Kashkari called
for keeping interest rates steady until there is more clarity on how higher tariffs affect inflation. The minutes
from the Fed’s latest policy meeting are set to be released on Wednesday. Key U.S. economic data scheduled
for release this week include the first-quarter GDP estimate, weekly unemployment claims, and the core PCE
price index. “Our longer term bullish view on gold has not changed. As soon as the market believes that the
Fed is going to cut (rates), gold will start doing well,” Melek added. Zero-yield bullion tends to do well in a low
interest rate environment. Elsewhere, spot silver slipped 0.4% to $33.21 per ounce, platinum fell 0.1% to
$1,084.02 and palladium dropped 1.2% to $975.49. - Elon Musk must face lawsuit over his role in DOGE under Trump, judge says
A federal judge said on Tuesday that a lawsuit brought by 14 U.S. states challenging the legality of Elon Musk’s
role in the Department of Government Efficiency (DOGE) under President Donald Trump may proceed. The suit
alleges that Tesla (NASDAQ:TSLA) CEO Musk, classified as a “special Government employee,” functioned as a
de facto principal officer of DOGE, an agency created by executive order without congressional authorization,
and wielded sweeping authority over federal spending, personnel, and regulations. The plaintiffs claimed Musk
and DOGE unilaterally dismantled agencies, terminated federal contracts, and accessed sensitive systems in
violation of the Constitution’s Appointments Clause, the judge stated in a court filing. In a 42-page opinion,
Judge Tanya S. Chutkan denied the defendants’ motion to dismiss the case against Musk and DOGE, allowing
the states’ ultra vires claims to move forward. The court found the DOGE entity lacked a statutory or
constitutional basis and that Musk’s alleged conduct exceeded lawful bounds. However, the court dismissed
claims against Trump in his official capacity, citing established precedent barring courts from enjoining the
president’s discretionary duties.
6. Japan’s bond market raises alarm over risks of outflows from U.S., carry trade unwind and market
turmoil
Japan’s bond market is igniting fears of capital flight from the U.S. and a carry trade unwind as long-dated yields
hover near record highs. Yields resumed their move higher Wednesday as demand for 40-year government
bonds reportedly dropped to its weakest level since November, according to Reuters’ calculations, hovering
near record highs hit last week. Japan’s 40-year government bonds yields hit an all-time high of 3.689%
Thursday and were last trading at 3.318% — almost 70 basis points higher so far this year. Yields on 30-yea
government debt are up more than 60 basis points this year at 2.914%, also not too far from all-time highs,
while for 20-year debt they are up over 50 basis points. - India’s iPhone exports to the U.S. soared an estimated 76%. But Trump, Beijing won’t make further growth
easy
Shipments of iPhones from India to the U.S. rose 76% in April year on year, estimates from a technology market
analyst firm shows. The surge comes as Apple accelerates its “made in India” plans, which analysts say will
meet pushback from President Donald Trump and Beijing. The data from Canalys, now part of Omdia, showed
that U.S. iPhones shipped from India in April reached roughly 3,000,000. That’s a stark contrast to shipments
from China over the same period, which fell about 76% from last year to just 900,000. Omdia says its
smartphone estimates incorporate customs records and channel data from iPhone distributors. According to
Le Xuan Chiew, a research manager at Omdia, the April numbers show the aggressive measures Apple has
taken to adapt to Washington’s tariffs against China, where Apple manufactures most of its iPhones. “This
latest trade war with China, is the type of disturbance that Apple has long been trying to prepare itself for,” he
said, adding that the country had first started investing heavily into supply chains in India during the Covid-19
pandemic. India also surpassed China in iPhone shipments to the United States in March, according to Omdia’s
estimates. The uptick came ahead of Trump’s first iteration of “reciprocal tariffs” on April 2. The amount of
shipments that month was unusually high and appeared to be the result of the company’s stockpiling,
according to Chiew. - SpaceX’s Starship explodes for third time in a row, Musk promises more frequent launches
SpaceX’s Super Heavy booster and Starship rocket exploded during a test flight on Tuesday, the third
consecutive setback for Elon Musk’s company. Tuesday’s un-crewed mission was the ninth test flight. The
system suffered prior explosions in January and March. Together, the Starship rocket and Super Heavy booster
are around 400 feet tall when stacked for a launch. SpaceX has been developing the Starship system to
transport people and equipment around Earth, and to the Moon. Musk also wants SpaceX to use Starship to
colonize Mars. A livestream of Tuesday’s test flight, which ran on the SpaceX website and on social media,
showed the first-stage booster exploding and the second-stage Starship spacecraft undergoing a major fuel
leak, then spinning out of control and blowing up during reentry. The Federal Aviation Administration said in
an emailed statement on Tuesday that the agency, “is aware an anomaly occurred during the SpaceX Starship
Flight 9 mission that launched on Tuesday, May 27, from Starbase, Texas, and is actively working with SpaceX
on the event. The agency said there were “no reports of public injury or damage to public property at this
time.” - Xiaomi reports record first-quarter revenue as it launches new electric SUV
China’s Xiaomi (OTC:XIACF) on Tuesday reported record first-quarter revenue and profit, as the company said
its ongoing shift towards higher-end products from smartphones to home appliances was already paying off.
Revenue for the quarter ended March 31 was 111.3 billion yuan ($15.48 billion), up 47% year-on-year and
beating the 107.6 billion yuan average of 17 analyst estimates compiled by LSEG. Adjusted net profit rose above
10 billion yuan for the first time, jumping 65% year-on-year to 10.7 billion yuan, ahead of the average estimate
of 8.96 billion yuan, according to LSEG data. Xiaomi President Lu Weibing told a conference call with reporters
that Xiaomi’s strategy to focus on high-end products had yielded positive results. The world’s third-largest
smartphone maker, whose product lines also extend to cars, announced its latest electric SUV, the YU7, last
week, which it will start selling in July. Lu said feedback on the YU7 indicated it could have a broader target
market than its previous model, the SU7.
The company did not disclose the price of the YU7 but suggested
its better configurations should make the car 60,000-70,000 yuan more expensive than Tesla (NASDAQ:TSLA)’s
best-selling Model Y, which is expected to be its strongest competitor and is priced from 263,500 yuan
($36,574). Xiaomi’s EV business generated 18.1 billion yuan in revenue during the first quarter, delivering
75,869 SU7 sedans. It posted an adjusted net loss related to its EV and other new initiatives of 0.5 billion
yuan. Its new EV orders have fallen since a fatal highway crash at the end of March involving an SU7 in
driving-assistance mode, analysts have said. - Salesforce to buy Informatica for $8 billion to bolster AI data tools
Salesforce (NYSE:CRM) said on Tuesday it would buy Informatica for about $8 billion, betting on the data
management platform to sharpen its competitive edge in the booming artificial intelligence market. The cloud
software giant is returning to big-ticket M&A after years on the sidelines, driven by scrutiny from activist
investors pressing for better profitability. It had last year shelved deal talks with Informatica after the
companies failed to agree on deal terms. Buying Informatica, in its biggest deal since its nearly $28 billion
acquisition of Slack Technologies (NYSE:WORK) in 2021, would help Salesforce expand its data management
tools as it doubles down on AI-powered products. The deal would also allow Salesforce to tighten control over
how business data is managed and used, an essential step as it races to embed generative AI deeper into its
products. “Salesforce and Informatica will create the most complete, agent-ready data platform in the
industry,” said Salesforce CEO Marc Benioff, adding the deal will strengthen its position in the $150 billion-plus
data enterprise market. The company has been offering AI agents – programs that can handle routine work
without human supervision – to businesses for recruiting and customer service. It has closed more than 1,000
paid deals for “Agentforce”, its platform for creating AI-powered virtual representatives. Salesforce is paying
$25 for each share of Informatica, a premium of about 30% to Informatica’s closing price on May 22, the day
before news of renewed talks emerged. - Advanced Micro Devices Inc. shares rose 3.9% after HSBC upgraded the chipmaker to hold from reduce
Analyst Frank Lee cites “the recent re-rating on the back of the Saudi AI deal, as well as tariff de-escalation”.
“AMD is in a good position to fend off competition from Intel as it continues to gain market share” and it should
“benefit from a new AI GPU product launch this year and in 2026”. PT to $100 from $75. - Shares of PDD Holdings Inc. fell 13.6% in US trading after its quarterly sales and profit missed estimates,
highlighting the impact of trade tensions between Beijing and Washington on its business
PDD’s revenue for the March quarter was 95.7 billion yuan, falling short of the average analyst estimate of
101.6 billion yuan, with net income totaling 14.7 billion yuan, below the expected 25.7 billion yuan. Sales
growth rate slowed to 10% in the current quarter, down from 24% the quarter before and 131% the quarter
before that. PDD offered faint hope for improvement in the near term. It’s facing intensifying competition in
the domestic China market and shifting trade policies that have hurt Temu, the discount e-commerce platform
that had propelled revenue growth abroad in quarters past. PDD Chairman Chen Lei warned the company will
have to make pricey investments to adjust its business model. Chen said the company has to invest and charge
lower fees for its merchants to help the e-commerce ecosystem. It’s also trying to fill more Temu orders by
sourcing merchandise locally to insulate operations against trade policies. - HSBC Holdings Plc dismissed more than two dozen analysts as Europe’s largest lender embarks on one of
the biggest restructurings of a Wall Street research department in recent years
Most of the cuts were in Europe, though they include Steven Major, HSBC’s Dubai-based global head of fixed
income research, according to people familiar with the matter. As part of the changes, the bank is combining
macro strategy across asset classes including foreign exchange and fixed income. Murat Ulgen will now act as
interim head of macro strategy in addition to his existing role as global head of emerging markets research.
Meanwhile, Eliot Camplisson and Raj Sinha will expand their roles to become co-heads of equity research
globally, and Janet Henry will continue to lead the global economics team. The latest revamp comes as Chief
Executive Officer Georges Elhedery continues to streamline the lender to increase efficiency. Since taking the
helm in September, he has combined HSBC’s commercial and investment banking units, while making
operations in the UK and Hong Kong standalone businesses. Elhedery’s restructuring of the bank is expected
to lead to $1.8 billion in charges over the next two years. Billions more will be spent redeploying resources
from lower-returning units to areas where the bank believes it has a better chance of earning higher revenues.
