US stocks clawed back early losses but with upside capped amid mixed data - Newsquawk Asia-Pac Market Open

• US stocks finished mostly in the green after clawing back early losses albeit with gains capped as participants reflected on a slew of data releases stateside including disappointing Retail Sales and softer-than-expected PPI data which pressured yields and saw money markets return to fully pricing in two Fed rate cuts by year-end. Nonetheless, the other data releases were mixed as Initial Jobless Claims matched estimates and both Philly Fed and NY Fed surveys topped forecasts but remained in negative territory, while the major indices were predominantly higher aside from the Nasdaq as all Mag 7 names declined including Meta (META) which was further pressured in late trade as WSJ reported it had delayed the rollout of its flagship AI model, Behemoth.
• USD was mildly pressured in the aftermath of a slew of data releases including disappointing Retail Sales and softer-than-expected PPI data which saw money markets revert to fully pricing two Fed rate cuts by year-end, while comments from Fed officials including Powell provided very little to shift the dial.
• Looking ahead, highlights include Japanese GDP, Singapore Non-Oil Exports, New Zealand Inflation Expectations, Comments from BoJ's Nakamura, Supply from Australia.

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LOOKING AHEAD

• Highlights include Japanese GDP, Singapore Non-Oil Exports, New Zealand Inflation Expectations, Comments from BoJ's Nakamura, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks finished mostly in the green after clawing back early losses albeit with gains capped as participants reflected on a slew of data releases stateside including disappointing Retail Sales and softer-than-expected PPI data which pressured yields and saw money markets return to fully pricing in two Fed rate cuts by year-end. Nonetheless, the other data releases were mixed as Initial Jobless Claims matched estimates and both Philly Fed and NY Fed surveys topped forecasts but remained in negative territory, while the major indices were predominantly higher aside from the Nasdaq as all Mag 7 names declined including Meta (META) which was further pressured in late trade as WSJ reported it had delayed the rollout of its flagship AI model, Behemoth.
• SPX +0.41% at 5,917, NDX +0.08% at 21,336, DJI +0.65% at 42,323, RUT +0.52% at 2,095.
• Click here for a detailed summary.

TRADE/TARIFFS

• US President Trump said India offered to drop all tariffs on the US.
• US President Trump’s administration told the EU it wants to discuss EU's agricultural food tariffs and non-tariff barriers in trade talks, while the US also wants to address economic security which is a term often used to refer to concerns about China's economic dominance in certain sectors and supply chains, as well digital issues, according to WSJ citing sources.
• US President Trump’s administration targets Europe’s digital laws as a threat to basic rights and US business, according to WSJ.
• EU trade chief Sefcovic said he agreed with the US Commerce Secretary Lutnick to accelerate trade talks.
• US reportedly considering the possibility of revising Japan-US trade agreement in bilateral tariff negotiations, according to JiJi.

NOTABLE HEADLINES

• Fed Chair Powell said April PCE likely around 2.2% Y/Y (vs 2.3% Y/Y in March) and that officials agree strategic language around both shortfalls of employment and average inflation need to be reconsidered, while he added the Fed is undertaking a two-day review of revisions to its framework adopted in 2020.
• Fed's Barr (Vice Chair Supervision) said the US economy is on a solid footing with inflation heading to 2% although trade policies have clouded the outlook while he added the trade shock could be particularly hard on small businesses and trigger price increase if supply chains are affected or firms fail.
• US House Speaker Johnson said they are very close to a SALT deal and remain on the path to pass the tax bill next week.
• Qatar wealth fund plans to invest USD 500bln in US over next 10 years, according to Bloomberg.
• Meta Platforms (META) is delaying the rollout of a flagship AI model, prompting internal concerns about the direction of its multibillion-dollar AI investments, according to WSJ.

DATA RECAP

• US Retail Sales MM (Apr) 0.1% (Prev. 1.4%, Rev. 1.7%)
• US Retail Sales Ex-Autos MM (Apr) 0.1% vs. Exp. 0.3% (Prev. 0.5%, Rev. 0.8%)
• US Industrial Production MM (Apr) 0.0% vs. Exp. 0.2% (Prev. -0.3%)
• US PPI Final Demand MM (Apr) -0.5% vs. Exp. 0.2% (Prev. -0.4%, Rev. 0.0%)
• US PPI Final Demand YY (Apr) 2.4% vs. Exp. 2.5% (Prev. 2.7%, Rev. 3.4%)
• US NY Fed Manufacturing (May) -9.2 vs. Exp. -10.0 (Prev. -8.1)
• US Philly Fed Business Index (May) -4.0 vs. Exp. -11.0 (Prev. -26.4)
• US Initial Jobless Claims w/e 229.0k vs. Exp. 229.0k (Prev. 228.0k, Rev. 229k)
• US Continued Jobless Claims w/e 1.881M vs. Exp. 1.89M (Prev. 1.879M, Rev. 1.872M)

FX

• USD was mildly pressured in the aftermath of a slew of data releases including disappointing Retail Sales and softer-than-expected PPI data which saw money markets revert to fully pricing two Fed rate cuts by year-end, while comments from Fed officials including Powell provided very little to shift the dial.
• EUR traded indecisively on both sides of the 1.1200 level and only marginally benefited from the pressure in the greenback.
• GBP eked mild gains with tailwinds from the better-than-expected UK GDP data, partially offset amid the underperformance in cyclical peers.
• JPY strengthened as havens were underpinned following the weak data and subsequent decline in US yields.
• Mexican Interest Rate (May) 8.5% vs. Exp. 8.5% (Prev. 9.0%) with the decision unanimous, while it estimates that it could continue calibrating the monetary policy stance and consider adjusting it in similar magnitudes.

FIXED INCOME

• T-notes were underpinned following soft PPI and downbeat Retail Sales data.

COMMODITIES

• Oil prices declined with headwinds seen following comments from US President Trump that the US is getting close to doing a deal with Iran and is in serious negotiations to achieve peace, while it was also reported that the Trump administration presented Iran with a written proposal for a nuclear deal during negotiations on the weekend. However, oil prices are off today's worst levels with a partial rebound after comments from the Iranian side cast doubts as an official noted that they have not received any fresh US proposal to resolve outstanding issues in the nuclear dispute.
• IEA lifted the 2025 average oil demand growth forecast by 20k BPD to 740k BPD due to an upward revision to the GDP growth forecast and lower oil prices but sees global oil demand growth dropping to 650k BPD for remainder of 2025, from 990k BPD in Q1.

GEOPOLITICAL

MIDDLE EAST

• US President Trump said the US is getting close to doing a deal with Iran and they are in serious negotiations to achieve peace, while he doesn't want to take a second step and threaten Iran. Trump added that Iran has "sort of" agreed to the terms of a deal and is "very lucky" to have the support of Qatar's Emir.
• US President Trump's administration reportedly presented Iran with a written proposal for a nuclear deal during negotiations on the weekend, according to Axios citing sources. However, a senior Iranian official said that they have not received any fresh US proposal to resolve outstanding issues in the nuclear dispute.
• Top commander of Iran's Guards told US President Trump that the Iranian nation viewed him as the "murderer" of Quds Force commander Soleimani who was killed in 2020.
• US issued new sanctions targeting Iran-backed Hezbollah, according to the Treasury Department website.

RUSSIA-UKRAINE

• US President Trump said nothing is going to happen until he gets together with Russian President Putin.
• Ukraine was considering sending someone at the "appropriate" level to attend talks with Russia in Turkey, while it was reported that Ukrainian President Zelensky would not participate in Russia-Ukraine peace talks in Turkey but would send a delegation.
• Kremlin said the Russian delegation is in Istanbul and was waiting for the Ukrainian side which was not there yet, while it said there were no preparations for a Putin visit in the coming days and nothing has been agreed, when asked if Putin would consider going to Istanbul if Trump does. Furthermore, Kremlin spokesperson Peskov said there was no chance Russian President Putin would take part in Turkey talks.
• Russian ambassador said a ceasefire in Ukraine is only possible once a strategy for settling the conflict has been agreed, according to TASS.
• US Secretary of State Rubio does not have high expectations for Ukraine talks and said he will meet Friday in Istanbul with the Turkish Foreign Minister and the Ukrainian delegation. Rubio said will see what happens in Friday talks and then decide on the timeline for a possible Trump-Putin meeting, while he noted that the level of team sent by the Russian side does not indicate a breakthrough.
• Turkish Foreign Minister and US Secretary of State Rubio agreed during their meeting in Turkey that efforts for direct Ukraine-Russia talks would continue, according to Reuters citing a Turkish diplomatic source.

OTHER

• Russia sent a fighter jet to "check the situation" as Estonia was attempting to detain a Russian shadow fleet tanker and the jet violated NATO territory for "around a minute", according to the Estonian Foreign Minister.
• Pakistan’s PM said they want to give the message to India that they are ready to talk about peace.

ASIA-PAC

NOTABLE HEADLINES

• Chinese Premier Li said need to place strengthening domestic economic circulation in a more prominent position and need to accurately and effectively help trade enterprises, while they also need to do everything possible to stabilise employment, as well as boost consumption and expand effective investment, according to CCTV.
• China tightened control over AI data centres, according to The Information.

EU/UK

NOTABLE HEADLINES

• EU leaders urged UK PM Starmer to improve mobility deal in last-ditch ‘reset’ talks, according to FT.
• French Finance Minister Lombard said after talks with Chinese Vice Premier Lifeng, that they did not find a solution to the cognac trade issue with China although the door remains open to talks.
• ECB's De Guindos said financial stability in the euro area has remained sound throughout the market turbulence and major uncertainty.

DATA RECAP

• UK GDP Prelim QQ (Q1) 0.7% vs. Exp. 0.6% (Prev. 0.1%)
• UK GDP Prelim YY (Q1) 1.3% vs. Exp. 1.2% (Prev. 1.5%)
• UK GDP Estimate MM (Mar) 0.2% vs. Exp. 0.0% (Prev. 0.5%)
• UK GDP Estimate YY (Mar) 1.1% vs. Exp. 1.0% (Prev. 1.4%)
• UK GDP Estimate 3M/3M (Mar) 0.7% vs. Exp. 0.6% (Prev. 0.6%)
• UK Manufacturing Output MM (Mar) -0.8% vs. Exp. -0.5% (Prev. 2.2%, Rev. 2.4%)
• UK Manufacturing Output YY (Mar) -0.8% vs. Exp. -0.5% (Prev. 0.3%, Rev. 0.5%)
• UK Industrial Output MM (Mar) -0.7% vs. Exp. -0.5% (Prev. 1.5%, Rev. 1.7%)
• UK Industrial Output YY (Mar) -0.7% vs. Exp. -0.9% (Prev. 0.1%, Rev. 0.4%)
• EU GDP Flash Estimate QQ (Q1) 0.3% vs. Exp. 0.4% (Prev. 0.4%)
• EU GDP Flash Estimate YY (Q1) 1.2% vs. Exp. 1.2% (Prev. 1.2%)
• EU Industrial Production MM (Mar) 2.6% vs. Exp. 1.8% (Prev. 1.1%)
• EU Industrial Production YY (Mar) 3.6% vs. Exp. 2.5% (Prev. 1.2%, Rev. 1.0%)