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US stocks clawed back the prior day's losses amid some trade optimism - Newsquawk Asia-Pac Market Open

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Tuesday, Apr 22, 2025 - 10:15 PM
  • US stocks rallied and clawed back Monday's heavy losses with sentiment buoyed by trade-related optimism after Bloomberg reported that US Treasury Secretary Bessent told a closed-door investor summit that the tariff standoff with China is unsustainable and he expects the situation to de-escalate although FBN's Gasparino later posted on X that he's been told by a person close to Bessent that the reports on his remarks about a trade deal with China being imminent overstate what he said, while Politico reported that the White House is ‘close’ on Japan and India trade agreements but are likely to leave many of the details to be hashed out at a later date.
  • USD clawed back some of its recent losses as risk-taking returned to US asset classes with the buck also helped by remarks from Treasury Secretary Bessent who noted that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate, although a person close to Bessent stated that the reports on his remarks about a trade deal with China being imminent overstate what he said and he meant there is room for talks and de-escalation but much also depends on China's willingness to compromise on trade as well. Nonetheless, the White House said they have 18 proposals from countries on trade, but Politico reported that despite the US being "close" on agreements with Japan and India, it may take months to reach final deals.
  • Looking ahead, highlights include Australian & Japanese Flash PMIs, Malaysian CPI & Singapore CPI, Comments from Fed's Kugler, Supply from Australia.

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LOOKING AHEAD

US TRADE

  • US stocks rallied and clawed back Monday's heavy losses with sentiment buoyed by trade-related optimism after Bloomberg reported that US Treasury Secretary Bessent told a closed-door investor summit that the tariff standoff with China is unsustainable and he expects the situation to de-escalate although FBN's Gasparino later posted on X that he's been told by a person close to Bessent that the reports on his remarks about a trade deal with China being imminent overstate what he said, while Politico reported that the White House is ‘close’ on Japan and India trade agreements but are likely to leave many of the details to be hashed out at a later date.
  • SPX +2.51% at 5,288, NDX +2.63% at 18,276, DJI +2.66% at 39,187, RUT +2.71% at 1,890.
  • Click here for a detailed summary.

TARIFFS/TRADE

  • US President Trump posted on Truth that he spoke to Israeli PM Netanyahu relative to numerous subjects including trade and Iran, while the call went very well and they are on the same side of every issue. It was also reported that Israel is optimistic it will reach a trade agreement with the US, according to Reuters citing the Economy Minister.
  • White House is reportedly ‘close’ on Japan and India trade agreements to stave off massive US tariffs, although they are likely to leave many of the details to be hashed out at a later date, according to Politico. It was separately reported that White House Press Secretary Leavitt said they now have 18 proposals from countries on trade and the trade team meeting with 34 countries this week.
  • US Treasury Secretary Bessent told a closed-door investor summit Tuesday that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate, while Bessent added that negotiations haven’t started but a deal is possible, according to people who attended his session at an event hosted by JPMorgan in Washington cited by Bloomberg. Furthermore, Bessent said China negotiations will be a 'slog' and he described the current bilateral trade situation as an embargo, according to Reuters citing a person at the JPMorgan session.
  • FBN's Gasparino posted on X that "he's been told by a person close to US Treasury Secretary Bessent that the reports on his remarks about a trade deal with China being imminent overstate what he said, while he meant there is room for talks and de-escalation but much also depends on China's willingness to compromise on trade as well.
  • Chinese Premier Li Qiang sent a letter to Japanese PM Ishiba calling for a coordinated response for US tariff measures, according to Kyodo.
  • China recently asked South Korean firms not to export products containing China's rare earth minerals to US defence firms, according to Korea Economic Daily citing sources.
  • Japan’s government is considering expanding tariff-free imports of US-grown rice as part of negotiations over higher levies imposed by Washington, according to Nikkei citing sources.
  • US VP Vance said India and the US finalised the terms of reference for a trade deal and the US wants India to purchase more US military equipment, while he added that the US and India have much to gain by strengthening energy ties.

NOTABLE HEADLINES

  • US President Trump said the Fed should lower interest rates and would like the Fed chair to be early or on time, while he added there is no intention of firing the Fed chair and wants Powell to be more active on rates.
  • Fed's Kashkari (2026 voter) said independent monetary policy leads to better economic outcomes and is foundational, while he added that Fed policymakers are making the best call they can, based on data and it is too soon to judge the path of interest rates.
  • Fed's Barkin (2027 voter) said inflation expectations may have loosened and that firms are defensive, delaying and deferring investments, while he added there are a lot of reasons to be worried about consumer spending.
  • US Treasury will next week provide Congress with its estimate for when the federal government exhausts its ability to borrow money (X-Date), according to Punchbowl sources.

DATA RECAP

  • US Philly Fed Non-Manufacturing Business Outlook Survey (Apr) -42.7 (prev. -32.5)
  • US Rich Fed Comp. Index (Apr) -13.0 (Prev. -4.0)
  • US Rich Fed Mfg Shipments (Apr) -17.0 (Prev. -7.0)
  • US Rich Fed Services Index (Apr) -7.0 (Prev. -4.0)

FX

  • USD clawed back some of its recent losses as risk-taking returned to US asset classes with the buck also helped by remarks from Treasury Secretary Bessent who noted that the tariff standoff with China is unsustainable and that he expects the situation to de-escalate, although a person close to Bessent stated that the reports on his remarks about a trade deal with China being imminent overstate what he said and he meant there is room for talks and de-escalation but much also depends on China's willingness to compromise on trade as well. Nonetheless, the White House said they have 18 proposals from countries on trade, but Politico reported that despite the US being "close" on agreements with Japan and India, it may take months to reach final deals.
  • EUR was pressured amid the resurgence of the dollar and fell beneath the 1.1500 level with the single currency also not helped by weak EU consumer confidence data.
  • GBP faded the prior day's advances and reverted to sub-1.3400 territory against the dollar, while there were comments from BoE's Greene who argued US tariffs represent more of a disinflationary risk than an inflationary one for the UK but also noted that wage growth remains "pretty high".
  • JPY weakened amid the improvement in risk sentiment which alongside the firmer dollar, facilitated the rebound in USD/JPY following a brief test of the 140.00 level to the downside.

FIXED INCOME

  • T-notes settled relatively unchanged and reversed the prior day's Trump vs Powell steepening.

COMMODITIES

  • Oil prices gained amid the improved risk sentiment and after the US imposed fresh sanctions against Iran.
  • Russian government revised down its expected oil and gas export revenues for 2025/27 and lowered its oil output forecast for 2025 to 516mln tonnes (prev. 518.6mln), according to a document seen by Reuters.
  • Senior EU official said the EU Commission is looking at legal options to allow companies to break Russian gas contracts without facing penalties and is looking at legal options that could forbid EU companies from signing new Russian gas and LNG contracts.

GEOPOLITICAL

MIDDLE EAST

  • Israeli media reported the cabinet meeting tonight will address the issue of the continuation of the ground operation in Gaza and the possibility of expanding the war, according to Sky News Arabia.
  • Times of Israel journalist posted an Israeli official told him that Israel's campaign in Gaza is showing signs of pushing Hamas towards accepting Israeli demands at the negotiating table.
  • Iran Foreign Ministry said expert-level Iran-US talks are to be held on Saturday instead of Wednesday.
  • Iranian authorities seized two Tanzania-flagged vessels carrying 'smuggled fuel' in the gulf, according to Fars.
  • US issued fresh Iran-related sanctions in which it sanctioned two individuals alongside energy and shipping entities, according to the Treasury Department website.
  • US President Trump wrote to the US House on Houthi militants stating "We will continue these decisive military operations until the Houthi threat to United States forces and navigational rights and freedoms in the Red Sea and adjacent waters has abated".
  • White House said US President Trump will travel to Saudi, Qatar, and UAE from May 13th-17th.
  • Russian President Putin and Sultan of Oman discussed Iran's nuclear program, according to TASS.

RUSSIA-UKRAINE

  • Ukrainian President Zelensky said the Ukrainian delegation has a mandate to discuss a full or partial ceasefire at talks on Wednesday in London and once a ceasefire is in place, Ukraine is ready for talks with Russia in any format. Zelensky added it is impossible to agree on all terms of a peace deal quickly and that Ukraine will not recognise Russian occupation of Crimea De Jure which would be unconstitutional.
  • US reportedly proposes recognizing Crimea as Russian as peace talks ramp up, while proposals include eventually lifting sanctions against Russia under a future accord, according to WaPo.
  • Russian President Putin offered to halt the invasion of Ukraine across the current front line as part of efforts to reach a peace deal with US President Trump, according to FT.
  • Russia's Kremlin said there are no concrete plans for talks with Ukraine and if Ukraine is willing, then steps must be taken to remove obstacles in the way of contacts.
  • Kremlin aide said US Special Envoy Witkoff is to arrive in Moscow this week, according to Interfax.

ASIA-PAC

NOTABLE HEADLINES

  • Chinese Foreign Minister Wang said China and the EU should shoulder international responsibilities, jointly defend the multilateral trading system, and jointly build an open world economy, while he added that China is willing to further strengthen high-level exchanges with the EU, consolidate the foundation of mutual trust, and properly manage differences. Furthermore, Wang held a phone call with his British counterpart and stated that China and the UK have the responsibility to safeguard multilateral trading systems and uphold international order in the face of "rampant unilateral bullying".
  • Chinese FX regulator said the CNY's two-way fluctuations after the US President's tariffs were normal market reactions and reflect economic fundamental support for the currency.
  • Chinese tech names are reportedly considering US listings despite "market ructions" with Walnut Coding, CloudSky, Zaihui & Zhonghe said to be considering IPOs in the US, according to Bloomberg citing sources.
  • IMF cut its 2025 global growth forecast to 2.8% (prev. 3.3%) and cut 2026 forecast to 3% (prev. 3.3%), while it cut its China 2025 and 2026 growth forecast to 4.0% each from 4.6% and 4.5%, respectively. Furthermore, it does not see a US recession, but noted the risk of a recession increased to 40%.

EU/UK

NOTABLE HEADLINES

  • BoE's Greene (hawkish) said market pricing for BoE rate cuts has been moving around a lot but not all of it has to do with the UK.
  • ECB President Lagarde said a disinflationary path is clearly on its way and tariff impact on growth is negative, while she added either the ECB cuts or pauses, but will be data-dependent to the extreme, according to CNBC.
  • ECB's Kazimir said the June decision will depend on data, forecasts and risks to the outlook, while he noted rates are now within the neutral range.
  • French President Macron is reportedly considering a fresh snap election as soon as Autumn 2025, according to Bloomberg citing sources. Furthermore, one option would be waiting until 2026 to dissolve parliament to hold the legislative alongside municipal elections, while the source reportedly told Macron that dissolving parliament early would be a bad idea.
  • German government lowered its growth forecasts to 0.0% (prev. 0.1%) for 2025 and around 1% (prev. 1.1%) for 2026 (including the US base tariff of 10% as well as on steel, aluminium and cars), according to Handelsblatt's Olk.

DATA RECAP

  • EU Consumer Confid. Flash (Apr) -16.7 vs. Exp. -15.5 (Prev. -14.5)
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