- Stocks, US Futures Advance on Auto Tariff Reprieve: Markets Wrap
Asian stocks rose to the highest level in a month on expectations President Donald Trump will ease the impact
of his auto tariffs, boosting hopes for further dialing down of trade tensions. A regional index advanced 0.4%
while futures for the S&P 500 gained after a White House official said imported automobiles would be given a
reprieve from separate tariffs on aluminum and steel. Hyundai Motor Co. led gains among South Korean
automakers. A gauge of the dollar strengthened 0.2% while gold dropped as much as 1.1%. There’s no trading
of cash Treasuries in Asia as Tokyo is closed for a public holiday, and they will open at the start of the European
session. A five-day rally in US stocks, the longest advance since November, faces a significant test this week
amid US data from jobs to inflation and economic growth, as well as earnings from some of the biggest
technology companies. Some calmness has returned to financial markets in the past week after the Trump
administration’s trade policies had sparked volatile trading in stocks and bonds and prompted traders to sell
American assets, including the dollar. - S&P 500 ekes out fifth winning day as Big Tech earnings loom
The S&P 500 inched higher Monday as Wall Street braced for a packed week of earnings and economic data.
Investors are also awaiting any progress on trade deal negotiations. The broad market index gained 0.06% to
close at 5,528.75, posting its fifth straight winning day. The Nasdaq Composite ticked 0.1% lower and ended at
17,366.13. The Dow Jones Industrial Average rose 114.09 points, or 0.28%, to settle at 40,227.59. - Oil falls as economic jitters dampen demand outlook
Crude oil prices fell in early Asian trading on Tuesday as investors lowered their demand growth expectations
due to the ongoing trade war between the United States and China, the world’s two biggest economies.
Brent crude futures fell by 25 cents, or 0.4%, to $65.61 per barrel by 0024 GMT. U.S. West Texas
Intermediate crude futures fell 18 cents, or 0.3%, to $61.87 a barrel. Both benchmarks fell more than $1 on
Monday. U.S. President Donald Trump’s push to reshape world trade by imposing tariffs on all U.S. imports has
created a high risk that the global economy will slip into a recession this year, according to a majority of
economists in a Reuters poll. China, hit with the steepest of those tariffs, has responded with its own levies
against U.S. imports, stoking a trade war between the top two oil consuming nations. That has prompted
analysts to sharply lower their oil demand and price forecasts. Barclays on Monday cut its 2025 Brent crude
price forecast by $4 to $70 a barrel, citing elevated trade tensions and a pivot in production strategy by the
OPEC+ group as drivers of a 1 million barrel per day oil supply surplus this year. Several members of OPEC+,
which comprises the Organization of the Petroleum Exporting Countries and its allies, will suggest an
acceleration of output hikes for a second consecutive month in June, sources told Reuters last week. “A
substantial (oil) price decrease appears probable if exporting countries boost production,” oil analyst Philip
Verleger said in a note. - Gold declines as trade war concerns ease, US data in focus
Gold fell on Tuesday as softening trade tensions between the U.S. and its trading partners dulled the metal’s
safe-haven appeal, while investors awaited U.S. economic data to assess the Federal Reserve’s policy path.
Spot gold fell 0.4% to $3,329.12 an ounce as of 0211 GMT. U.S. gold futures lost 0.2% to $3,342.40. “The risk
environment has clearly improved recently, with market participants buoyed by optimism that the worst of the
trade tensions may be behind us amid encouraging rhetoric around trade deals,” said IG market strategist Yeap
Jun Rong. U.S. Treasury Secretary Scott Bessent said on Monday several top trading partners had made “very
good” proposals to avoid U.S. tariffs, with India likely to be among the first to finalize a deal. China’s recent
moves to exempt certain U.S. goods from its retaliatory tariffs showed a willingness to de-escalate trade
tensions, Bessent added. U.S. President Donald Trump’s administration will also move to reduce the impact of
his automotive tariffs on Tuesday by alleviating some duties imposed on foreign parts in domestically
manufactured cars. But risks are high that the global economy will slip into recession this year, according to a
majority of economists in a Reuters poll, with many saying Trump’s tariffs have damaged business sentiment.
Bullion, traditionally seen as a hedge against political and financial instability, rose to an all-time high of
$3,500.05/oz last week due to elevated uncertainties. Investors will monitor economic data this week,
including the U.S. job openings report later in the day, Personal Consumption Expenditures on Wednesday,
and the non-farm payrolls report on Friday. “Longer-term structural tailwinds for gold prices are likely to keep
the broader upward trend intact, supported by room for ongoing reserve diversification among emerging
market central banks,” Rong said. Spot silver rose 0.1% to $33.21 an ounce, platinum was steady at $986.00
and palladium lost 0.1% to $948.06. - Chinese factories are stopping production and looking for new markets as U.S. tariffs bite
Chinese manufacturers are pausing production and turning to new markets as the impact of U.S. tariffs sets in,
according to companies and analysts. The lost orders are also hitting jobs. “I know several factories that have
told half of their employees to go home for a few weeks and stopped most of their production,” said Cameron
Johnson, Shanghai-based senior partner at consulting firm Tidalwave Solutions. He said factories making toys,
sporting goods and low-cost Dollar Store-type goods are the most affected right now. “While not large-scale
yet, it is happening in the key [export] hubs of Yiwu and Dongguan and there is concern that it will grow,”
Johnson said. “There is a hope that tariffs will be lowered so orders can resume, but in the meantime
companies are furloughing employees and idling some production.” Around 10 million to 20 million workers in
China are involved with U.S.-bound export businesses, according to Goldman Sachs estimates. The
official number of workers in China’s cities last year was 473.45 million. - German fiscal boost won’t outweigh tariff drag for euro zone, IMF’s Europe head says
The IMF last week cut its growth outlook for the euro area, also making downgrades for the U.S., U.K. and
many Asian countries due to President Donald Trump’s volatile tariff policy. The negative impact of tariffs will
be slightly offset by Germany’s recent infrastructure spending bill, which will boost growth in the euro area
over those two years, Alfred Kammer, director of the European department at the IMF said. He added that
the ECB should only cut interest rates once more this year despite growth risks. - Trump to reduce impact of auto tariffs, officials say
President Donald Trump’s administration will move to reduce the impact of his automotive tariffs on Tuesday
by alleviating some duties placed on foreign parts in domestically manufactured cars and keeping tariffs on
cars made abroad from stacking on top of other ones, officials said. “President Trump is building an important
partnership with both the domestic automakers and our great American workers,” Commerce
Secretary Howard Lutnick said in a statement. “This deal is a major victory for the President’s trade policy by
rewarding companies who manufacture domestically, while providing runway to manufacturers who have
expressed their commitment to invest in America and expand their domestic manufacturing.” The Wall Street
Journal first reported the development. - China rolls out employment support and hints at more stimulus as U.S. tensions escalate
Senior Chinese officials on Monday outlined plans to support jobs and help exporters, while hinting at the
possibility of more stimulus in light of rising trade tensions with the U.S. In just a few weeks, tit-for-tat tariffs
between the U.S. and China have more than doubled to over 100%, forcing Chinese factories to pause
production and tell some workers to stay home. Exports have been a rare bright spot in China’s economy,
which has faced pressure from lackluster consumption and a real estate slump. “Labor market stability remains
a critical concern for Chinese policymakers, given its direct linkage to social stability and consumption
recovery,” Goldman Sachs analysts said in a report Sunday. They estimate around 16 million jobs in China are
involved in the production of goods exported to the U.S. Authorities on Monday acknowledged the impact of
trade tensions on jobs at exporting companies. China has repeatedly emphasized that consumption is its
priority for the year. But Monday’s press conference focused more on efforts to stabilize employment. The
briefing came after the human resources ministry on Friday announced subsidies for companies that hire
recent graduates, but did not specify an amount. Officials speaking Monday spoke broadly about plans to
promote entrepreneurship, increase vocational skills training and better distribute wages to workers in fields
with “urgent” needs. - NXP Semiconductors NV announced a new chief executive officer as part of its quarterly earnings report
and warned that the chipmaker was navigating “a very uncertain environment” due to tariffs
CEO Kurt Sievers will retire from the company late this year, the Dutch chipmaker said in a statement on
Monday. Rafael Sotomayor, a current NXP executive, will take the president role immediately — on the way to
becoming the new CEO on Oct. 28. The shares tumbled more than 7% in late US trading. They had been down
5.6% this year through the close. As part of the report, NXP forecast that revenue will decline to $2.8 billion to
$3 billion in the second quarter. That compares with an average analyst estimate of $2.86 billion, according to
data compiled by Bloomberg. NXP and peers such as STMicroelectronics NV and Infineon Technologies
AG have struggled with weak demand for mature chips used in electric cars or smartphones. Customers are
still working through stockpiles of semiconductors they accumulated after the Coronavirus pandemic. Tariffs
announced by US President Donald Trump threaten to add further upheaval to the industry, even as it shows
signs of recovering. The company said it has a “cautious optimism” that it can continue to navigate a challenging
market. “We are operating in a very uncertain environment influenced by tariffs with volatile direct and indirect
effects,” NXP said. - Deutsche Bank posts 39% jump in first-quarter profit, above expectations
Germany’s largest lender Deutsche Bank on Tuesday posted higher-than-expected first-quarter profit as
lenders in Europe’s largest economy navigate broader market turbulence instigated by U.S. tariff policies.
Net profit attributable to shareholders reached 1.775 billion euros ($2.019 billion) in the first quarter, up 39%
year-on-year and above analyst expectations of around 1.64 billion euros, according to a Reuters poll. The bank
reported profit of 106 million euros for the December quarter. Revenues reached 8.524 billion euros over the
period, up 10% year-on-year and above a $7.224-billion-euro result in the fourth quarter. In a statement
accompanying the results, Deutsche Bank CEO Christian Sewing said the print “put us on track for delivery on
all our 2025 targets” and marked “our best quarterly profit for fourteen years.” Other fourth-quarter highlights
included: Profit before tax of 2.837 billion euros, up 39% year-on-year; CET 1 capital ratio, a measure of bank
solvency, was 13.8%, unchanged from the fourth quarter; Post-tax return on tangible equity (ROTE) rate
of 11.9%, against a 10% target for 2025. - HSBC announces share buyback of up to $3 billion as first-quarter results top expectations
Europe’s largest lender HSBC’s first-quarter results on Tuesday beat estimates on the back of robust
performance of its wealth business as well as strength in its corporate and institutional banking segment.
The bank also announced share buyback of up to $3 billion which it intends to complete before its 2025 interim
results are announced. Here are HSBC’s first-quarter 2025 results compared with consensus
estimates compiled by the bank. Profit before tax: $9.48 billion vs. $7.83 billion; Revenue: $17.65 billion vs.
$16.67 billion. The bank’s profit before tax declined 25% on a year-on-year basis, while revenue fell 15% from
last year. Pre-tax profit, however, soared nearly 317% from the previous quarter. “Our strong results this
quarter demonstrate momentum in our earnings, discipline in the execution of our strategy and confidence in
our ability to deliver our targets,” HSBC Group CEO Georges Elhedery said. The bank, however, warned of
heightened uncertainty in the macroeconomic climate, highlighting that protectionist trade policies were
adversely affecting consumer and business sentiment. “Despite uncertainties on global trade, HSBC’s
restructuring progress should continue to bring positive impacts on cost-saving,” said Manyi Lu, DBS Bank’s
equity research analyst. There might be some headwinds from tariff and concerns on global recession, but the
effect will be more prominent in the following quarters, Lu told CNBC. The earnings do not reflect the full
impact of U.S. President Donald Trump’s tariffs, with “reciprocal” levies announced in April having been
suspended. However, tariffs on steel, aluminum and autos have been in place since March. Investors should
watch whether the bank will lower its guidance going forward due to the tariff uncertainties, Lu added. “How
large will the impact be depends on how the tariff on ASEAN countries will go after the 90-day grace period,”
she said. The additional $3 billion buyback was larger than the $2 billion figure that Morningstar was expecting,
said Morningstar’s senior equity analyst Michael Makdad. The bank’s results were also better than he
expected.
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