Global Market Quick Take: Asia – June 3, 2025

Key points:

• Macro: The US extends tariff exclusions until 31 August, seeking a Trump-Xi call
• Equities: S&P 500 edged up 0.4%; Steel stocks outperformed after 50% tariff increase
• FX: Dollar index fell below 98.7 due to trade uncertainty; AUD hit 0.65, EUR above 1.1440
• Commodities: Gold edged up following its biggest daily increase in four weeks
• Fixed income: Several investment-grade issuances added upward pressure on yields

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Investors are focused on trade war updates after Monday's headlines. The US extended Section 301 tariff exclusions on some Chinese goods until 31 August and seeks countries' "best offer" by Wednesday. A call between Trump and Xi Jinping is being pushed after accusations of violating last month's trade deal but will still likely happen this week.
• Russia and Ukraine's second talks in Istanbul failed to end the war but planned a prisoner exchange. Russia wants Ukraine to cede four regions, while Ukraine seeks an unconditional ceasefire and another meeting. Zelenskiy warned of sanctions if Russia disrupts the agenda.
• US factory activity contracted in May for the third month, with the ISM manufacturing index dropping to 48.5. Imports hit a 16-year low, and exports fell to a five-year low, possibly due to retaliatory tariffs. The report highlighted uncertainty from uneven and changing tariffs, complicating supply sourcing.
• Senate Republicans plan to make temporary tax cuts permanent, potentially increasing the deficit and alienating fiscal hawks. Proposed changes include business tax cuts, state and local tax revisions, and adjustments to green energy, Medicaid, and food stamps. The bill faces uncertainty due to regulatory disputes and a deadline before the Treasury's borrowing authority ends in August or September.

Equities: 

• US - The S&P 500 rose 0.4%, the Nasdaq climbed 0.7%, and the Dow was up 35 points. US-China tensions flared after Beijing rejected US claims of breaking a tariff truce, instead blaming Washington. A potential call between President Trump and China's President Xi this week could provide clarity on trade issues. Trump's plan to double steel and aluminium tariffs to 50% unsettled the EU, which warned it undermines trade talks. Steel stocks surged, with Nucor up 10.1%, Steel Dynamics 10.3%, and Cleveland-Cliffs 23.2%, while Ford and GM fell 3.8% each. Tesla dropped 1.1% due to a decline in May sales in key European markets. Meanwhile, US manufacturing data continued to show contraction.
• EU - On Monday, the Stoxx 50 declined by 0.3% and the Stoxx 600 by 0.1%, as European markets began June with caution due to renewed trade tensions. President Trump's plan to double tariffs on imported steel and aluminium to 50% fuelled fears of a global trade conflict, prompting EU warnings of potential retaliation. Auto stocks were hit hardest, with Stellantis dropping 5%, and Mercedes, BMW, and Volkswagen falling up to 2.7%. Luxury and media stocks also fell. Conversely, oil stocks rose 1.4% as crude prices increased following a smaller-than-expected OPEC+ output hike. Babcock and QinetiQ surged on news of the UK's plans to expand its nuclear submarine fleet. Investors are now looking ahead to the ECB’s expected rate cut decision on Thursday.
• HK - HSI fell 0.6%, to 23,158, marking its second consecutive decline amid sector losses. Sino-U.S. trade tensions rose after China rejected Trump's trade deal accusations. Markets trimmed losses after Treasury Secretary Bessent reassured investors about the U.S. debt ceiling. Automakers continued to decline due to ongoing price war fears, with Li Auto down 2.2%, BYD 2.0%, and Nio 2.5%. Major laggards included Akeso Inc. (-10.4%), Longfor Group (-5.4%), and CSPC Pharma (-4.7%).

Earnings this week:

• Tuesday: Dollar General, NIO, Signet Jewelers, Ollie's, Ferguson, Donaldson, NESR, CrowdStrike, Hewlett Packard Enterprise, Guidewire, Asana, Couchbase, Mama's Creations, Sportsman's Warehouse, HealthEquity
• Wednesday: Dollar Tree, Sprinklr, REV Group, TechTarget, VersaBank, Thor Industries, Webster Bank, Genesco, MongoDB, PVH, Five Below, Planet, ChargePoint, Verint, Bark, Greif, Descartes, Tillys
• Thursday: Ciena, Cracker Barrel, Lands' End, Brown-Forman, Toro, Hello Group, Victoria's Secret, Waterdrop, BitFufu, Broadcom, DocuSign, Lululemon, Rubrik, Samsara, ServiceTitan, Torrid, Petco, Zumiez, Braze
• Friday: G-III Apparel Group, ABM, FuelCell Energy

FX:

• USD experienced significant losses at the start of the week due to ongoing trade uncertainty and Trump's increase of steel and aluminium tariffs to 50%. ISM Manufacturing and Construction Spending data were disappointing, though the Atlanta Fed GDPNow forecast improved to 4.6%. Dollar index fell below 98.70.
• EUR rose above 1.1440, benefiting from the weaker dollar, despite mixed Eurozone PMI figures and anticipation of the ECB meeting on Thursday.
• GBP maintained initial gains but faced choppy price action during US trading, with minimal impact from BoE's Mann's comments on rate cuts and structural market issues. GBP traded above 1.3540.
• JPY was a strong performer, supported by the softer USD and trade tensions between the US and China. JPY rose to 142.70 against USD.
• AUDUSD reached a peak of 0.6500, and NZDUSD topped at 0.6040, benefiting from the rise in base metals following Trump's increase of steel and aluminium tariffs to 50%.
• Economic data – AU RBA Meeting Minutes, CN Caixin Manufacturing PMI, EU Inflation Rate, EU Unemployment Rate, US JOLTs Job Openings, US Factory Orders

Commodities:

• Oil prices rose for the second day due to a weaker dollar and geopolitical tensions. WTI approached $63, and Brent exceeded $64, as the dollar hit its lowest since 2023, with predictions of further declines.
• US aluminum and steel futures rose sharply after President Trump announced doubling tariffs. Aluminum contracts jumped 54% on the Comex exchange, hitting their highest since 2013, with import levies increasing to 50% from Wednesday.
• Gold rose slightly after its largest daily gain in four weeks, driven by a weaker dollar and safe-haven demand amid US-China tensions and the Russia-Ukraine conflict. Bullion neared $3,390 an ounce after a 2.8% rise on Monday.

Fixed income:

• Treasuries fell further, with oil holding its gains and stocks in demand. A significant number of investment-grade issuances added upward pressure on Treasury yields, coupled with rising oil prices, amid persistent concerns about President Donald Trump’s tariff policies. The day's investment-grade issuances involved eight entities, pricing $9.5 billion in new bonds, which introduced some duration risk. Monday's activity featured five deals, each with multiple tranches.

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