Global Market Quick Take: Asia – June 5, 2025

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Key points:

• Macro: ADP employment misses at 37k vs 115k forecast
• Equities: Airbus jumped up to 4% on news that China may order 300 aircrafts
• FX: USD fell on weak data; DXY dropped to 98.80 level; USDCAD below 1.37
• Commodities: Copper hit a two-month high on major mine supply issues
• Fixed income: Weak data led to a drop in Treasury yields, boosting rate cut expectations

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• US private businesses added 37K workers, the lowest since March 2023, below April's 60K and the 115K forecast. The services sector gained 36K jobs, led by leisure/hospitality (38K), but professional/business services (-17K) and education/health (-13K) declined. The goods-producing sector lost 2K jobs, with falls in natural resources/mining (-5K) and manufacturing (-3K) offsetting a 6K rise in construction. 
• ISM Services PMI dropped to 49.9 from 51.6 in April, below the expected 52, signalling a modest contraction in the US services sector amid tariff uncertainty. Production stalled, and new orders, inventories, and backlogs contracted.
• Japan's nominal wages rose 2.3% year-on-year, matching March but below the expected 2.6%. Real wages fell 1.8%, marking the fourth consecutive month of decline.

Equities:

• US - The S&P 500 ended mostly flat on Wednesday, while the Nasdaq rose 0.3% and the Dow dropped nearly 92 points, ending a four-day streak of gains. The market lacked momentum amid a significant slowdown in private-sector hiring; the ADP report revealed only 37,000 new jobs in May, far below expectations and the lowest in over two years. Additionally, the services sector experienced a contraction in May, raising concerns about the broader economic outlook. Hopes for resolving the US-China trade dispute waned as Trump described Xi Jinping as "extremely hard to deal with," highlighting the fragility of ongoing negotiations. ChargePoint fell 14% after missing both revenue and earnings estimates.
• EU - European stocks rose on Wednesday, boosted by new fiscal stimulus measures and progress in EU-US trade talks. Germany's DAX reached a record high after the government approved a €46 billion tax relief package for 2025–2029 to support businesses and boost growth. EU Trade Commissioner Maroš Šefcovic described talks with US Trade Representative Jamieson Greer in Paris as "productive and constructive," hinting that the EU might gain an exemption from President Trump's move to double steel and aluminium tariffs to 50%. Meanwhile, Airbus shares jumped over 4% on news that Chinese airlines may order up to 300 aircrafts, with a deal possibly occurring during a planned visit by European leaders to Beijing next month.
• HK- Hang Seng rose 0.6%, to 23,654 on Wednesday, achieving a second consecutive day of gains amid hopes that an imminent call between U.S. President Trump and China's Xi Jinping might ease trade tensions. Hong Kong's healthcare index surged 3%, led by optimism over earnings growth from innovative drug makers like Innovent Biologics, which climbed 13.8%, CSPC Pharma (2.8%), Hansoh Pharma (2.6%), and Wuxi Biologics (1.6%). Xiaomi also rose after its CEO predicted profitability for its EV unit in H2 2025. However, gains were moderated by concerns over Trump's 50% steel tariff effective today and anticipation of Chinese services data for May, following April's slow growth. Other notable movers included Smoore Intl. (12.1%), Pop Mart Intl. (4.6%), and Meituan (2.9%).

Earnings this week:

• 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 weakened due to disappointing US data and a subsequent decline in yields, with the ADP employment report falling short of expectations ahead of the crucial NFP report on Friday. Analysts remain doubtful about the correlation between these two data sets. Additionally, the ISM Services PMI report was weak. DXY weakened to 98.80.
• EUR gained from dollar selling and better-than-expected EU PMI data, with attention shifting to Thursday's ECB meeting. EURUSD rose to 1.1420.
• GBP rose due to the weaker dollar and UK Services PMI exceeding forecasts, although further gains are limited by minimal UK-specific news. Chancellor Reeves reportedly ruled out raising income tax, NI, and VAT for 'working people' in the autumn Budget. GBPUSD rose to 1.3550.
• JPY strengthened, with USDJPY dropping below 143 as US-Japanese yield differentials narrowed following the soft US data.
• The BoC kept its policy rate at 2.75% as anticipated, citing high uncertainty regarding US tariffs. BoC Governor Macklem noted a consensus to maintain the current policy while gathering more information, with potential rate reductions if the economy weakens amid ongoing US tariffs and uncertainty. CAD rose to 1.3680 against dollar.
• Economic data – AU Balance Trade, China Caixin Services PMI, UK S&P Global Construction PMI, ECB Interest Rate Decision, CA Balance of Trade, US Balance of Trade, US Initial Jobless Claims, ECB Press Conference, CA Ivey PMI

Commodities:

• Oil prices dropped as Saudi Arabia sought a major production increase at the next OPEC+ meeting. WTI fell below $63, and Brent closed under $65. The kingdom aims to boost output by 411,000 barrels per day in August and possibly September.
• Copper reached a two-month high due to supply issues at major mines and a 75% drop in LME inventories. Production setbacks at Teck Resources and Ivanhoe Mines contributed, and efforts to ship copper to US ports ahead of potential tariffs pushed prices up 0.4% to $9,675 per ton.
• Gold maintained gains as weak US data raised expectations of two Fed rate cuts this year. Trading near $3,375 an ounce after a 0.6% rise, gold benefited from reports of contracting US services and slower hiring, alongside falling Treasury yields and anticipated rate cuts in October and December.

Fixed income:

• Treasury yields dropped sharply due to weaker-than-expected ADP employment and ISM services reports. Treasuries outperformed swaps, continuing a trend from Tuesday when Wells Fargo & Co. was freed from an asset cap by the Fed, likely prompting more Treasury purchases. The 10-year yield was around 4.36%, reaching its lowest level since 9 May.

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