• APAC stocks were mostly positive as risk sentiment gradually improved following the negative lead from Wall St where the S&P 500 slipped into a technical correction amid tariff concerns after President Trump threatened 200% tariffs on EU wine and champagne.
• US President Trump said he is not going to change his mind on April 2nd tariffs and won't bend on Canada metals or April 2nd tariffs, while he added they don't need Canada's cars, energy or lumber.
• Russian President Putin supported the idea of a ceasefire but stressed that the ceasefire must lead to a final settlement of the conflict and solve the root causes of the conflict.
• US Senate Minority Leader Schumer said he will vote to keep the government open and not shut it down.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.5% after the cash market closed with losses of 0.6% on Thursday.
• Looking ahead, highlights include German Wholesale Price Index, UK GDP, US UoM Survey, Trump executive orders, Fitch to review France; US Government Funding Expires, Comments from ECB’s Cipollone, Earnings from BMW, Daimler Truck, Bechtle & Li Auto.

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US TRADE

EQUITIES

• US stocks extended on losses and the S&P 500 slipped into correction territory with sentiment weighed on by trade tensions after US President Trump threatened a 200% tariff on alcohol within the EU in response to the 50% EU tariff on US whiskey.
• Aside from trade, data and geopolitics also took the limelight in which US PPI data printed softer than expected but was offset by upward revisions, while the PCE components were hotter than the prior, and both Initial and Continued Jobless claims fell beneath analyst forecasts.
• The data saw two-way price action in T-notes, with T-notes hitting session lows once the data was digested, although the downbeat risk tone reignited the flight-to-quality bid which saw T-notes settle higher across the curve.
• In geopolitics, Russian President Putin supported the idea of a ceasefire but stressed that the ceasefire must lead to a final settlement of the conflict and solve the root causes of the conflict, while Ukrainian President Zelensky claimed that Russian President Putin is preparing a rejection of the ceasefire proposal but is scared to say this directly to US President Trump.
• SPX -1.39% at 5,522, NDX -1.89% at 19,225, DJI -1.30% at 40,814, RUT -1.62% at 1,994.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said he is not going to change his mind on April 2nd tariffs and won't bend on Canada metals or April 2nd tariffs, while he added they don't need Canada's cars, energy or lumber.
• Canada's Finance Minister LeBlanc said they agreed to continue discussions in the meeting with US Commerce Secretary Lutnick, while they have been clear that they will not reopen USMCA provisions on dairy and didn't discuss that with Lutnick.
• Canada's Industry Minister Champagne said there was a mutual understanding that there is an impact on both sides of the border from tariffs and they talked about issues around economic security and national security with US Commerce Secretary Lutnick. Furthermore, they talked about Canadian aluminium steel and how they can help the US
• Ontario's Premier Ford said they had a productive meeting with US Commerce Secretary Lutnick and will have another meeting next week, while he feels temperatures are decreasing and said it was the best meeting they had since tariff talks began.
• US Secretary of State Rubio said they have seen a level of cooperation from the Mexican authorities that they have never seen in the past, but added it is not enough.
• ECB President Lagarde said US President Trump's policy decisions cause concern and warned trade conflict will damage the worldwide economy, according to an interview with BBC.

NOTABLE HEADLINES

• US President Trump is to sign executive orders on Friday at 12:00EDT/16:00GMT.
• US Vice President Vance said can never predict the future but thinks the economy is strong when asked if he could rule out a recession, according to a Fox News interview,
• US Treasury Secretary Bessent said they hopefully won't get a recursive 'Biden-flation' and said they are very vigilant and it could happen again. Bessent added that before they can bring down inflation, they also want to help affordability and as they bring down inflation, they want to bring the absolute price level down through deregulation and bringing down interest rates for house payments and car payments.
• US Commerce Secretary Lutnick said President Trump suggested he wants to waive taxes for those earning under USD 150k when he balances the budget and they want it to take three years to balance the budget, while Lutnick added there will be no tax on tips, overtime and social security.
• US Senate Minority Leader Schumer said he will vote to keep the government open and not shut it down. It was separately reported that multiple US Democratic Senators and aides indicated sufficient Democratic support for cloture on the House-passed continuing resolution in Friday morning’s vote, according to Punchbowl.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive as risk sentiment gradually improved following the negative lead from Wall St where the S&P 500 slipped into a technical correction amid tariff concerns after President Trump threatened 200% tariffs on EU wine and champagne.
• ASX 200 gained as strength in mining, materials, resources and utilities atoned for the losses seen in the energy, financials and tech industries.
• Nikkei 225 staggered at the open with pressure from recent currency strength but then recovered soon after as the yen steadily pared its recent gains.
• Hang Seng and Shanghai Comp advanced with the Hang Seng resuming the outperformance which has helped the index notch gains of around 22% so far this year, while the PBoC reiterated support pledges and stated that it will lower rates and the RRR at a 'proper time', keep liquidity ample and guide social financing costs lower.
• US equity futures clawed back some of the prior day's losses with some encouragement as the US looks on course to avert a government shutdown.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.5% after the cash market closed with losses of 0.6% on Thursday.

FX

• DXY held on to the prior day's gains and briefly reclaimed the 104.00 level following US President Trump's latest tariff threat and with the US likely to avert a government shutdown this week as multiple Democratic Senators and aides indicated sufficient Democratic support for cloture on the House-passed continuing resolution, while Senate Democratic leader Schumer also announced to support the funding bill.
• EUR/USD languished firmly beneath the 1.0900 level amid the escalation in the trade tiff after Trump threatened 200% tariffs on alcohol products from France and EU-represented countries, with the single currency also not helped by the conflicting opinions regarding talks between Germany's CDU and Greens on a financial package.
• GBP/USD was lacklustre but with losses stemmed amid a lack of catalysts ahead of GDP estimates.
• USD/JPY extended on its rebound from the prior day's trough and the 5-month lows seen earlier this week to return to above the 148.00 level as risk appetite improved.
• Antipodeans were rangebound after the prior day's retreat and amid a lack of tier-1 data releases.
• PBoC set USD/CNY mid-point at 7.1738 vs exp. 7.2463 (Prev. 7.1728).

FIXED INCOME

• 10yr UST futures lacked demand after yesterday's two-way price action owing to data and risk sentiment, while the latest 30yr auction stateside was overall weaker-than-average.
• Bund futures treaded water amid the US-EU tariff tiff and ahead of German wholesale prices.
• 10yr JGB futures pared some of the earlier gains as risk appetite in Asia somewhat improved but then found a floor after the latest enhanced liquidity auction from Japan.

COMMODITIES

• Crude futures nursed some of the prior day's losses as risk assets rebounded overnight.
• Qatar lowered the May term price for Al-Shaheen crude oil to USD 1.29/bbl above Dubai quotes.
• Russian President Putin and Saudi Arabia's Crown Prince MBS discussed cooperation in OPEC+, as well as US-Russia ties and the Ukraine conflict.
• US President Trump’s administration unlocked a USD 4.7bln loan for TotalEnergies (TTE FP) that was frozen since 2021 and which is for a LNG project in Mozambique, according to FT.
• Spot gold took a breather after climbing to a fresh record high near the USD 3,000/oz level.
• Copper futures remained afloat amid tariff risks and predictions of a widening global copper market deficit.

CRYPTO

• Bitcoin steadily gained as risk sentiment improved and briefly returned above USD 82,000.

NOTABLE ASIA-PAC HEADLINES

• China's financial regulator said financial institutions should boost financial support for consumption and will provide loan renewal support to eligible personal consumption loan borrowers.
• DeepSeek is focusing on research over revenue and customers from sectors such as healthcare and finance bought API access to DeepSeek’s R1 and V3 models. Furthermore, DeepSeek's founder declined to entertain interest from China’s tech giants and venture and state-backed funds to invest in the group for the time being, while it may find limited access to NVIDIA's (NVDA) new generation of more advanced chips a potential bottleneck in the long run and could consider future partnerships that can help solve this issue, according to FT citing sources.

GEOPOLITICS

MIDDLE EAST

• Israel's Channel 12 quoted an Israeli source stating if there is no progress in negotiations within the next two days, the team will return to Israel, according to Al Jazeera.
• US and Israel look to Africa for resettling Palestinians uprooted from Gaza, according to AP.
• UN Security Council agreed to the Russia and US-drafted statement condemning widespread violence in Syria's Latakia and Tartus, while the statement called for Syria's interim authorities to protect all Syrians, regardless of ethnicity or religion and to hold the perpetrators of the mass killings accountable.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said Russian President Putin is preparing a rejection of the ceasefire proposal but is scared to say this directly to US President Trump, while he added they need to impose sanctions that put pressure on Russia and will continue to work with our partners to force it to end the war. Furthermore, he said Russia is setting conditions on a ceasefire to try to delay it or make it not happen.
• Ukrainian President's Chief of Staff said Ukraine will never agree to a frozen conflict and noted they agreed with the US that European representatives will definitely take part in the peace process.
• US President Trump does not think Russia will attack US allies and said they'll make sure it doesn't happen, while Trump said he still has a good relationship with North Korea’s leader.US President Trump said Special Envoy Witkoff was in serious discussions in Russia and he is getting word things are going ok in Russia, while he added that hopefully Russian President Putin and others want to end this nightmare.
• EU Foreign Policy chief Kallas said she is quite optimistic G7 can reach accord on a joint communique and if they cannot agree on G7 communique, it shows division between member countries. Kallas also said it is most likely that Russia will say yes to the US proposal for a ceasefire with Ukraine but with conditions and the US is telling G7 members they understand the Russians may want to extend the process by blurring the picture. Furthermore, she said the red line is Ukraine giving away territory and that territorial integrity is an important element, as well as noted that without the EU, any deal cannot be implemented because there are elements for which Europe has the card.
• US is placing more restrictions on Russia's oil, gas and banking sectors by further restricting Russian access to US payment systems as the Treasury Department on Wednesday allowed a 60-day exemption put in place by the Biden administration in January to lapse, according to four people familiar with the plans cited by CBS. The exemption had allowed specific energy transactions involving sanctioned Russian banks to continue and by letting the waiver lapse, the banks may no longer access US payment systems to conduct major energy transactions.
• Saudi Crown Prince MBS and Russian President Putin spoke on the phone and the Saudi Crown Prince affirmed the kingdom's commitment to exerting all efforts to facilitate dialogue and achieve a political solution to the Ukraine crisis.

OTHER

• Senior officials from China, Iran and Russia hold talks in Beijing over Iran's nuclear issues, according to CCTV.
• NATO SecGen Rutte said Europe is committing to much higher defence spending and needs to produce more weapons but added it is not doing enough and is lagging behind the Russians and the Chinese.
• US Pentagon has been tasked with providing military options to ensure US access to the Panama Canal, according to CNN.
• US President Trump said they are going to have to make a deal on Greenland and thinks the annexation will happen, while he added the US is going to order 48 icebreakers.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer reportedly suffered a cabinet uprising over planned welfare and public spending cuts, but insisted tough choices are needed and said he will not bend fiscal rules to allow more borrowing, according to FT.
• Portugal's President disbanded parliament and called an early parliamentary election on May 18th after the government recently lost a confidence vote.