US stocks climbed amid some trade-related optimism and President Trump's softer tone on Powell - Newsquawk Asia-Pac Market Open

• US stocks gained with sentiment supported after President Trump recently softened his tone on Fed Chair Powell and amid positive rhetoric regarding China and US trade with the WSJ reporting that the White House is considering cutting China tariffs to de-escalate the trade war and that tariffs likely to be between 50-65%, although no final decision has been made. Nonetheless, some of the gains were then pared after officials noted the White House is not considering cutting tariffs on China unilaterally and that it would be part of negotiations which are yet to take place.
• USD strengthened and DXY climbed to just shy of the 100.00 level after US President Trump quashed the idea he would fire Fed Chair Powell and amid tariff-related updates including reports that the White House is looking at cutting tariffs on Chinese imports which was said to be potentially lowered to between 50-65%. However, the White House press secretary said there will be no unilateral reduction in tariffs and that China needs to make a deal.
• Looking ahead, highlights include South Korean GDP, Japanese Services PPI, Supply from Japan.

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LOOKING AHEAD

• Highlights include South Korean GDP, Japanese Services PPI, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks gained with sentiment supported after President Trump recently softened his tone on Fed Chair Powell and amid positive rhetoric regarding China and US trade with the WSJ reporting that the White House is considering cutting China tariffs to de-escalate the trade war and that tariffs likely to be between 50-65%, although no final decision has been made. Nonetheless, some of the gains were then pared after officials noted the White House is not considering cutting tariffs on China unilaterally and that it would be part of negotiations which are yet to take place.
• SPX +1.67% at 5,376, NDX +2.28% at 18,693, DJI +1.07% at 39,607, RUT +1.53% at 1,919.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump is to exempt carmakers from some US tariffs in which he is planning to spare carmakers from some of his most onerous tariffs, in another trade war climbdown following intense lobbying by industry executives over recent weeks, according to FT.
• US President Trump said the EU and China are ripping the US off and that they are going to have a fair deal with China.
• White House was reportedly mulling cutting China tariffs to de-escalate the trade war, while tariff cuts could be possibly by more than 50% with the tariff likely to come to between 50-65%, although no final decision was made and options remain open, according to WSJ sources.
• US Treasury Secretary Bessent said there is no unilateral offer from President Trump to cut China tariffs and a full China trade deal may take 2-3 years, according to Bloomberg. Furthermore, it was stated that they are 'very close' on a trade deal with India and that a satisfactory arrangement doesn’t mean an actual trade document, which continues to signal that initial deals with trading partners will be a broad framework rather than a detailed trade agreement.
• White House officials said they are not considering something unilaterally and it would be part of negotiations when talking about China, while they are not seeing evidence that the US is engaging in negotiations with China, according to CNBC's Javers. However, it was separately reported that the White House would look at lowering tariffs on Chinese imports pending talks with Beijing, while any steps would be in conjunction with China talks, not unilateral, according to Reuters citing sources.
• US President Trump's apparently softening stance in his trade war with China is motivated because the tariffs against the Chinese will hurt a key part of his base and sources said a China deal could take months, according to FBN's Gasparino.
• CEOs of Walmart (WMT), Target (TGT) and Home Depot (HD) privately warned US President Trump this week his tariffs could disrupt supply chains, raise prices and empty shelves, according to Axios citing sources familiar with the meeting.
• Chinese Foreign Ministry said the US cannot say that it wishes to reach an agreement whilst on the other hand maintaining extreme pressure and this is not the correct way to deal with China.
• Chinese embassy in the US posted a statement from an official saying “Our doors are open, if the U.S. wants to talk. If a negotiated solution is truly what the U.S. wants, it should stop threatening and blackmailing China and seek dialogue based on equality, respect and mutual benefit. To keep asking for a deal while exerting extreme pressure is not the right way to deal with China and simply will not work."
• US-China fentanyl talks are hanging by a thread amid the trade war, according to Reuters sources.
• CEOs who deal with the Chinese government said don’t count on President Xi jumping at the first offer of a trade truce from President Trump, while they believe Xi will play a long game based on what they know about dealing with the Chinese, according to Fox's Gasparino.
• WSJ's Lingling Wei said there is an opportunity right now to get the US and China talking, while she noted how a delegation of senior Chinese officials are in Washington next week for the IMF and World Bank meetings.
• China is to lift sanctions on MEPs in a bid to revive a trade deal with the EU, according to FT.
• EU's Dombrovskis said Europe will not negotiate over value-added taxes and agricultural subsidies in tariff talks", while he added that such policies are not trade distortive and have no place in tariff talks, according to WSJ's Bade. It was also reported that EU's Dombrovskis will update the EU economic forecast next month and initial calculations point to the impact of tariffs will amount to 0.2% on the EU economy.
• UK Chancellor Reeves said the UK will not rush trade talks with the US and will not relax food standards to secure a deal, while she added that UK borrowing data reinforces the importance of controlling the public finances.
• Canadian PM Carney said he is looking for a comprehensive discussion with US President Trump and the meeting must be between "two sovereign nations", while he would prefer the meeting to be face to face.
• Japanese Economy Minister Akazawa said Japan has agreed with the US to make preparations to hold the next round of tariff talks as early as this month but has not yet been fixed.
• Chile’s President said the best way to respond to this trade war is not with high-sounding statements, while they are not going to respond with retaliation and are going to respond with greater integration. Furthermore, he said they must continue working hard to facilitate customs processes, promote investments to improve logistics.

NOTABLE HEADLINES

• US President Trump reportedly decided not to fire Fed Chair Powell after Treasury Secretary Bessent and Commerce Secretary Lutnick raised concerns, according to WSJ sources.
• White House Press Secretary Leavitt said US President Trump is to sign seven executive orders today focused on education and will hear from Trump again at 5PM EDT.
• Fed's Goolsbee (2025 voter) said the increase in productivity growth appears to be a tech-driven boom.
• Fed Beige Book stated economic activity was little changed since the previous report, but uncertainty around international trade policy was pervasive across reports. Furthermore, just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines.

DATA RECAP

• US S&P Global Manufacturing PMI Flash (Apr) 50.7 vs. Exp. 49.1 (Prev. 50.2)
• US S&P Global Services PMI Flash (Apr) 51.4 vs. Exp. 52.5 (Prev. 54.4)
• US S&P Global Composite PMI Flash (Apr) 51.2 (Prev. 53.5)
• US New Home Sales-Units (Mar) 0.724M vs. Exp. 0.68M (Prev. 0.676M, Rev. 0.674M)

FX

• USD strengthened and DXY climbed to just shy of the 100.00 level after US President Trump quashed the idea he would fire Fed Chair Powell and amid tariff-related updates including reports that the White House is looking at cutting tariffs on Chinese imports which was said to be potentially lowered to between 50-65%. However, the White House press secretary said there will be no unilateral reduction in tariffs and that China needs to make a deal.
• EUR slipped back beneath the 1.1400 handle against the firmer dollar, while a slew of ECB speakers and mixed Eurozone PMI data did little to underpin the single currency.
• GBP was mildly pressured with GBP/USD back below the 1.3300 handle, while there were comments from BoE Governor Bailey who stated that fragmenting the world economy will be bad for growth and that they do have to take the risk to growth from tariffs very seriously.
• JPY weakened with the positive risk appetite and firmer buck lifting USD/JPY back above the 143.00 level.

FIXED INCOME

• T-notes settled lower on what was a choppy session for treasuries and the curve continued to flatten with US President Trump announcing he will not be firing Fed Chair Powell but reiterated his call for lower rates.

COMMODITIES

• Oil prices declined with prices weighed on by Kazakhstan/OPEC headlines including reports that several OPEC+ members want the group to approve another accelerated oil output increase for June at its meeting on May 5th.
• US EIA Weekly Crude Stocks 0.244M vs. Exp. -0.77M (Prev. 0.515M).
• Several OPEC+ members want the group to approve another accelerated oil output increase for June at its meeting on May 5th, according to Reuters citing sources.
• Kazakhstan Energy Minister said national interests take priority over OPEC+ interests when it comes to oil output level, while he added they cannot reduce oil output from old oilfields as it would destroy them and cannot order oil majors to cut output either, via Reuters. However, it was later reported that Kazakhstan’s Energy Minister said Kazakhstan is committed to constructive work with OPEC+ and is fulfilling its OPEC+ obligations.
• IEA Executive Director Birol said oil prices may see further downward pressure and he expects oil demand to slow down.

GEOPOLITICAL

MIDDLE EAST

• Iranian Foreign Minister Araghchi said US talks are on the right track, and they are cautiously optimistic but added that new sanctions are illegal and contradict America's claims for dialogue and negotiation and show their lack of seriousness. It was also reported that Iran's Foreign Minister said the US goal of Iran not having nuclear weapons is achievable but noted impractical and illogical demands will cause problems.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Ukraine and European states 'presented their inputs at talks' and he hopes 'joint work' will lead to lasting peace, while he added that emotions ran high today.
• US President Trump posted on Truth that Ukrainian President Zelensky is boasting on the front page of WSJ that “Ukraine will not legally recognize the occupation of Crimea”, while Trump added that “This statement is very harmful to the Peace Negotiations with Russia...He has nothing to boast about! The situation for Ukraine is dire — He can have Peace or, he can fight for another three years before losing the whole Country." Trump added that "...We are very close to a Deal, but the man with “no cards to play” should now, finally, GET IT DONE".
• US Special Envoy Kellogg said there were positive talks in London with Ukraine. It was separately reported that President Trump’s admin did not feel that they were at a decisive point in the ongoing talks with Ukraine which led to Secretary of State Rubio cancelling his participation in Ukraine talks in London on Wednesday, according to sources cited by CNN.
• UK Foreign Office said Ukraine talks in London made significant progress on reaching a common position on the next steps. All parties reiterated their strong support for US President Trump's commitment to stopping the killing and achieving a just and lasting peace.

ASIA-PAC

NOTABLE HEADLINES

• Chinese President Xi told a UN leaders' meeting that China's effort to promote international cooperation will not weaken.
• PBoC Deputy Governor Lu Lei said enhancing cross-border financial services has become more important amid domestic and external changes. Lu added that China's external environment is becoming more complex, the global economic driving force is insufficient and protectionism is intensifying.
• Japan and the UK agreed to allow smoother cross-border transfers of personal data in academia and the public sector, a move seen as spurring drug development and medical research, according to Nikkei.

EU/UK

NOTABLE HEADLINES

• BoE Governor Bailey said fragmenting the world economy will be bad for growth and that the UK is an open economy so US relations with the rest of the world matter, while they do have to take the risk to growth from tariffs very seriously.
• ECB President Lagarde said levies are probably more disinflationary than inflationary and the net effect of tariffs is still uncertain.
• ECB's Chief Economist Lane said inflation should settle around the target in the absence of new shocks.
• ECB Nagel said the world economy is in a delicate situation and the Euro system is on a good path, while he noted a lot of good news when it comes to inflation but added the ECB has to be cautious and cannot exclude a German recession this year.
• ECB's Knot said a US tariff of 25% on imports from Europe would lower Euro area growth by about 0.3% and more with retaliation, while tariffs would leave a persistent decrease in output. Knot added that in the near term, inflation might well fall faster than in the March projections due to Euro appreciation, energy prices and the negative impacts of uncertainty and tariffs on growth, as well as noted that over the medium term, there is still a risk that disruptions in global supply chains will put upward pressure on prices.
• ECB's Muller said it is too soon to say whether June will be a cut or a pause, while he added monetary policy is no longer restrictive and rates may need to be cut below neutral on trade.
• ECB's Villeroy said tariff impact on Euro-zone inflation is more uncertain and it is appropriate that the ECB is likely to cut further this year, while he said the inflation impact may be on the downside overall.

DATA RECAP

• UK Flash Manufacturing PMI (Apr) 44.0 vs. Exp. 44 (Prev. 44.9)
• UK Flash Services PMI (Apr) 48.9 vs. Exp. 51.5 (Prev. 52.5)
• UK Flash Composite PMI (Apr) 48.2 vs. Exp. 50.4 (Prev. 51.5)
• French HCOB Manufacturing Flash PMI (Apr) 48.2 vs. Exp. 48.0 (Prev. 48.5)
• French HCOB Services Flash PMI (Apr) 46.8 vs. Exp. 47.6 (Prev. 47.9)
• French HCOB Composite Flash PMI (Apr) 47.3 vs. Exp. 47.8 (Prev. 48)
• German HCOB Manufacturing Flash PMI (Apr) 48.0 vs. Exp. 47.6 (Prev. 48.3)
• German HCOB Services Flash PMI (Apr) 48.8 vs. Exp. 50.2 (Prev. 50.9)
• German HCOB Composite Flash PMI (Apr) 49.7 vs. Exp. 50.4 (Prev. 51.3)
• EU HCOB Manufacturing Flash PMI (Apr) 48.7 vs. Exp. 47.5 (Prev. 48.6)
• EU HCOB Services Flash PMI (Apr) 49.7 vs. Exp. 50.5 (Prev. 51)
• EU HCOB Composite Flash PMI (Apr) 50.1 vs. Exp. 50.3 (Prev. 50.9)