Market drivers and catalysts
Equities: US mixed; Europe recovers; UK strong GDP; Asia down on GDP and earnings
Volatility: VIX below 18; market calm; cautious anticipation
Digital assets: BTC stable; ETH ETF optimism; Coinbase cyberattack impact
Fixed Income: US treasury yields reversed sharply lower yesterday after a prior surge.
Currencies: The JPY rose further overnight, while the USD weakened in the Asian session.
Commodities: Gold rebounds as bond yields drop on weak US economic data
Macro events: US April Housing Starts & Preliminary May Univ. of Michigan Consumer Sentiment
Macro data and headlines
Fed Chair Powell warned of high long-term rates and inflation volatility from supply shocks, stressing anchored expectations for growth and reaffirming the Fed's 2% inflation target to prevent job losses.
Prices paid to US producers unexpectedly dropped in April, the largest in five years, mainly due to shrinking margins, suggesting companies are absorbing tariff impacts. The producer price index fell 0.5% after no change in March, contrary to a predicted 0.2% rise. Excluding food and energy, the core PPI declined 0.4%, the steepest since 2015.
US retail sales growth slowed sharply in April, with consumers cutting spending on cars, sporting goods, and other imports amid tariff-related price concerns. Retail purchases, unadjusted for inflation, rose by 0.1% (vs 0% est), following a revised 1.7% gain in March, the largest in two years.
US factory production dropped 0.4% in April, the first decline in six months, due to higher import duties and other challenges. Motor vehicles, computers, and apparel led the decrease, while business equipment output rose slightly. Capacity utilisation fell to 76.8%, and factory activity remained weak, staying in contraction territory.
Japan's economy shrank by 0.7% annually in the first quarter, its first decline in a year, due to lower exports, higher imports, and stagnant consumer spending. This raises concerns about resilience and may lead to discussions on tax cuts or cash handouts before the summer election.
Container shipping rates jumped 7.6% this week with the Drewry Composite reaching a four-week high, led by significant 15.6% and 19.3% increases on the Shanghai to Los Angeles and New York routes, on a renewed frontloading surge, as exporters and importers alike in China and the US take advantage of the 90-day truce period.
Macro calendar highlights (times in GMT)
1230 – US April Housing Starts
1400 – US Preliminary May University of Michigan Consumer Sentiment
Earnings events
Today: Richemont
Next week:
Monday: Ryanair
Tuesday: Home Depot, Palo Alto Networks
Wednesday: TJX Companies, Lowes, Medtronic, Snowflake, Target
Thursday: Intuit, Analog Devices, Workday, Autodesk, Copart
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
US: US equities closed mixed Thursday. The S&P 500 rose 0.41%, boosted by utilities and consumer staples, while tech struggled with the Nasdaq flat amid Amazon and Meta losses. The Dow added 0.65%, driven by GE's 2.8% gain as Qatar selected its engines for Boeing aircraft. UnitedHealth plunged 11% amid federal investigations, weighing heavily on healthcare. Retail sales data disappointed, wholesale inflation dropped unexpectedly, and Powell’s cautious comments kept sentiment wary despite trade optimism.
Europe: European stocks recovered Thursday with the STOXX 50 (+0.16%) and STOXX 600 (+0.5%) rebounding as healthcare stocks, notably Bayer (+3%) and Sanofi (+1%), recovered from recent declines due to US drug pricing signals. Utilities also gained, while Siemens and Allianz slid after disappointing earnings. France's CAC 40 rose 0.2%, helped by Engie's upbeat outlook (+3.6%), though luxury names suffered due to weak sector earnings.
UK: The FTSE 100 climbed 0.57%, snapping a two-day losing streak, driven by robust GDP growth (+0.7%) and solid corporate earnings. National Grid (+3%) and AstraZeneca led gains, while 3i Group (-4.4%) and BP (-3.4%) lagged amid oil sector pressures and weaker corporate guidance.
Asia: Asian equities were largely down Friday. Japan's Nikkei (-0.5%) suffered due to weak GDP (-0.7% YoY). Hong Kong’s Hang Seng (-0.8%) faced significant declines led by Alibaba (-4.9%), missing quarterly revenue expectations, and broader concerns over US-China tech tensions. Mainland China markets slid as well, with subdued sentiment despite recent tariff reductions.
Volatility
The VIX dropped sharply to 17.83 (-4.2%), marking its first close below 18 since early March, reflecting easing market fears. Short-term volatility indicators (VIX1D, VIX9D) also declined significantly. Markets appear comfortable despite macro uncertainties, anticipating key events like upcoming FOMC minutes and Nvidia earnings.
Digital Assets
Bitcoin edged up 0.18% to $103,961, maintaining stability above key psychological levels, supported by institutional inflows into spot BTC ETFs (+$114.9 million). Ethereum climbed slightly to $2,596 (+1.86%), bolstered by positive sentiment around options trading on BlackRock’s ETH ETF. However, crypto-related stocks suffered; notably, Coinbase fell sharply by 7.2% on news of a significant cyberattack.
Fixed Income
US treasury yields dropped on Thursday. The 10-year benchmark, after having closed at a three-month high on Wednesday, fell some 10 basis points yesterday and is trading lower still in the Asian session at 4.42% after a drop in Japanese government bond yields on a weak GDP number from Japan overnight. The US 2-year benchmark yield punched lower as well, from above 4.05% yesterday to 3.94% today.
Commodities
Gold’s biggest correction since 2023 from last month’s record high at USD 3,500 to USD 3,121 has been partly reversed after weak US economic data triggered a drop in the US dollar and Treasury yields, thereby triggering fresh demand for bullion, which had suffered during a week-long US-China truce-related risk-on rally.
The Bloomberg Commodity Index trades down 1% on the week (+4.6% YTD), primarily hurt by weakness in two of the major components: natural gas (-9%) and gold (-3.5%). Overall, a positive week for pro-cyclicals led by diesel, gasoline, aluminium, and zinc, while the agriculture sector trades flat despite bouncing wheat prices.
Currencies
The Japanese yen continued to strengthen yesterday and overnight, despite a weak GDP reading for Japan overnight. USDJPY touched 145.00 briefly overnight before bouncing, while EURJPY dropped well back into its trading range below 165.00 after an attempt to break above mid-week, trading below 163.00 this morning after a 162.46 low overnight.
The US dollar weakened overnight, with EURUSD rebounding back above 1.1200 after a 1.1170 low yesterday, with the key range high established at 1.1266 (also a former range low on its recent sell-off.) AUDUSD rose above 0.6430 after testing the 0.6400 level yesterday and overnight, while USDCAD has now rejected an attempt to rise above 1.4000 three times this week, trading 1.2940 this morning.
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