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US stocks edged marginally higher and futures wiped out the majority of initial spoils after weak data and US appealed the tariff ban - Newsquawk Asia-Pac Market Open

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Thursday, May 29, 2025 - 09:59 PM
  • US stocks finished marginally higher and futures wiped out most of the initial gains that were spurred by the US Court of International Trade's ruling that President Trump's tariffs were illegal, with pressure seen after soft US data releases and as White House officials voiced optimism regarding appealing against the court ruling, while it was also later reported that the US Court of Appeals for the Federal Circuit temporarily reinstated US President Trump's tariffs "until further notice" during the appeal.
  • USD weakened after soft data releases including the contraction in GDP, softer Core PCE, weaker pending sales and higher jobless claims, while there was heightened trade uncertainty after the Court of International Trade blocked Trump's "Liberation Day" tariffs, although the Trump admin appealed the ruling and the appeals court later temporarily reinstated the tariffs.
  • Looking ahead, highlights include South Korean Industrial Production & Retail Sales, Japanese Unemployment Rate, Industrial Production, Retail Sales & Tokyo CPI, Australian Building Approvals & Retail Sales, Comments from Fed's Logan, Supply from Australia & Japan.

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LOOKING AHEAD

  • Highlights include South Korean Industrial Production & Retail Sales, Japanese Unemployment Rate, Industrial Production, Retail Sales & Tokyo CPI, Australian Building Approvals & Retail Sales, Comments from Fed's Logan, Supply from Australia & Japan.
  • Click for the Newsquawk Week Ahead.

US TRADE

  • US stocks finished marginally higher and futures wiped out most of the initial gains that were spurred by the US Court of International Trade's ruling that President Trump's tariffs were illegal, with pressure seen after soft US data releases and as White House officials voiced optimism regarding appealing against the court ruling, while it was also later reported that the US Court of Appeals for the Federal Circuit temporarily reinstated US President Trump's tariffs "until further notice" during the appeal.
  • SPX +0.40% at 5,912, NDX +0.21% at 21,364, DJI +0.28% at 21,216, RUT +0.34% at 2,075.
  • Click here for a detailed summary.

TARIFFS/TRADE

  • A second US court blocked Trump tariffs in a case filed by a toy company, pausing the tariff order for 14 days, according to Reuters.
  • US Appeals Court temporarily reinstated US President Trump tariffs during appeal and the Federal Circuit Court said it needs time to consider filings.
  • US said it may ask the Supreme Court on Friday to keep tariffs intact, according to Bloomberg. It was separately reported that the White House called the trade court ruling judicial overreach and said the court should have no role in tariffs.
  • White House said countries intend to continue trade talks despite the ruling and US trade policy will continue, while it added that the President has other authorities for tariffs and they are reviewing other avenues for trade policies.
  • White House US President Trump spoke to the Japanese leader on Thursday, while it noted that Treasury Secretary Bessent and USTR Greer have been in touch with counterparts on tariffs after the court ruling, while it added that they will win the trade battle in court. Furthermore, Japanese PM Ishiba said he exchanged views with US President Trump on tariff issues, while they discussed diplomacy, security and the economy. Furthermore, Ishiba thinks he and Trump deepened their understanding.
  • White House Economic Adviser Hassett said he is confident in the success of the tariff ruling appeal and noted that three trade deals are basically done, according to FBN. Hassett later commented that he expects trade deals in the next week or two and has been briefed on three that are about to happen, while he had productive talks with India.
  • White House Adviser Navarro reiterated President Trump's stance that initial measures (against China) targeted fentanyl imports and said the situation is clearly an economic emergency, while he said nothing has really changed regarding the trade court ruling. Furthermore, Navarro said it can be assumed that even if they lose the tariff cases, they will do it another way.
  • Chinese Commerce Ministry said the US and China have maintained communication through multilateral and bilateral channels since the Geneva talks.
  • Japan and China agreed on procedures for resuming seafood imports, according to Nikkei.
  • Indian Trade Ministry official said India and US trade talks are progressing well and he expects a good outcome soon.
  • Canadian PM Carney said Canada is still being hit by unjustified US tariffs on steel and autos.
  • Germany is reportedly eyeing a 10% digital tax on global tech giants like Meta (META) and Google (GOOGL), according to FT.

NOTABLE HEADLINES

  • Fed Chair Powell met with US President Trump at the White House to discuss economic developments including growth, employment, and inflation, while Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook. Powell also said that he and his colleagues on the FOMC will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis. Furthermore, the White House said US President Trump told Fed Chair Powell that it is a mistake to not lower interest rates.
  • Fed's Kugler (voter) said watching to better understand the link between trade and market vulnerability, while she is monitoring shifts in possible lower demand for US assets and said needs to better understand US assets' safe haven status.
  • Fed's Goolsbee (2025 voter) said if tariffs are avoided by a deal or otherwise, could return to a situation where rates can come down. Goolsbee separately commented that if the court ruling on tariffs leads to further extension of uncertainty that would be more negative, according to WJR radio.
  • Fed's Daly (2027 voter) said the labour market is in solid shape and will not get to 2% inflation this year, while she added they are really making progress on inflation. Daly said workers are worried about inflation and the Fed is resolute to get the job on inflation done, as well as noted that bond yields show markets trying to process uncertainty about policy and the economy. Furthermore, she said Fed policy and the US economy are in a good place and that the Fed is in "wait to see".
  • Former Fed's Kaplan said it is possible the Fed will not cut rates at all this year.
  • White House is to issue new hiring plans for federal workers, according to Axios.
  • US House Speaker Johnson said the House will codify cuts made by DOGE and the tax bill will reduce the deficit if you do the maths right, according to Fox.

DATA RECAP

  • US GDP 2nd Estimate (Q1) -0.2% vs. Exp. -0.3% (Prev. -0.3%)
  • US Core PCE Prices Prelim (Q1) 3.4% vs. Exp. 3.5% (Prev. 3.5%)
  • US Pending Sales Change MM (Apr) -6.3% vs. Exp. -1.0% (Prev. 6.1%, Rev. 5.5%)
  • US Initial Jobless Claims 240.0k vs. Exp. 230.0k (Prev. 227.0k, Rev. 226k)
  • US Continued Jobless Claims 1.919M vs. Exp. 1.894M (Prev. 1.903M, Rev. 1.893M)

FX

  • USD weakened after soft data releases including the contraction in GDP, softer Core PCE, weaker pending sales and higher jobless claims, while there was heightened trade uncertainty after the Court of International Trade blocked Trump's "Liberation Day" tariffs, although the Trump admin appealed the ruling and the appeals court later temporarily reinstated the tariffs.
  • EUR outperformed on the back of the selling in the dollar and reclaimed the 1.1300 handle after breaching through its 21DMA.
  • GBP was underpinned but with the upside capped by resistance around the 1.3500 level, while comments from BoE Governor Bailey did little to shift the dial in which he noted that their jobs are much harder if they face more inflexible and uncertain supply side conditions in their economies, as they appear to do today.
  • JPY strengthened in which USD/JPY retreated to test the 144.00 level to the downside amid softer US yields post-data and as stocks gave back the majority of their initial gains.

FIXED INCOME

  • T-notes pared overnight weakness amid dovish data and as the White House sounded optimistic it can appeal the court tariff decision, while it was also reported that the US Appeals Court temporarily reinstated US President Trump's tariffs during the appeal.

COMMODITIES

  • Oil prices edged lower throughout the duration of the session in line with the deteriorating risk sentiment.
  • US EIA Weekly Crude Stocks w/e -2.795M vs. Exp. 0.118M (Prev. 1.328M)
  • Kazakhstan's Deputy Energy Minister said OPEC+ countries will decide on Saturday whether to raise oil production, though the extent remains unclear.
  • Russia's primary offline oil refining capacity is set to rise by 9.5% in June from May to 3.23mln tonnes, according to Reuters citing calculations.
  • IEA's Birol highlighted considerable weakness in Chinese oil demand and expects oil prices to remain at moderate levels.
  • White House is weighing a plan to deal with a record backlog of requests for refiner exemptions from US biofuel laws, while the plan is to give immediate relief on 2025 biofuel exemption requests and delay decisions on older ones, according to Reuters citing sources.

GEOPOLITICAL

MIDDLE EAST

  • Israeli PM Netanyahu told hostage families that Israel is ready to move forward to a hostage and ceasefire deal in Gaza on the basis of White House envoy Witkoff's new proposal, according to Axios's Ravid. However, a source with direct knowledge said Hamas isn't happy with Witkoff's new proposal and thinks it has shifted in Israel's favour.
  • Israeli Finance Minister Smotrich announced the creation of 22 new settlements in the West Bank which are considered illegal under international law, according to AFP.
  • Hamas official said the Israeli response to US Special Envoy Witkoff's ceasefire offer fails to meet the group's demands, while it added the proposal is still "under discussion".
  • Iran dismissed the US desire to destroy its nuclear sites as a fantasy. It was also reported that Iranian sources dismissed US claims of an imminent nuclear deal and said Iran’s most important concerns and demands regarding the lifting of sanctions have not yet been clearly addressed by the US, according to Iran Nuances.

RUSSIA-UKRAINE

  • Russian Foreign Ministry said the composition of the Russian delegation for the second round of Russia-Ukraine talks in Istanbul will be the same, according to TASS.
  • Russia's Kremlin said there are currently no plans for Russian President Putin to speak to US President Trump and have had no answer from Kyiv on June 2nd talks, while it added the main thing right now is to continue the direct Russia-Ukraine talks and it is not constructive to claim Russia is delaying the process.
  • Ukraine's Foreign Ministry spokesman said Russia not sharing its memorandum before the meeting suggests it consists of unrealistic ultimatums.

ASIA-PAC

NOTABLE HEADLINES

  • Chinese Foreign Ministry said China firmly opposes the US plans to revoke Chinese student visas and the US is using ideology and national security as an excuse.

EU/UK

NOTABLE HEADLINES

  • BoE Governor Bailey said there is merit in seeking to increase the openness of financial markets by reducing non-tariff barriers, while he said their jobs are much harder if they face more inflexible and uncertain supply side conditions in their economies, as they appear to do today.
  • Slovakian court said ECB's Kazmir (Hawkish) has been found guilty of bribery and was given a fine.
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