US stocks mostly traded with a positive bias amid tech strength and despite early headwinds from hot PPI data, while focus turns to the Trump-Xi summit - Newsquawk Daily Asia-Pac Market Open

US stocks closed with an upward bias as the Nasdaq 100 outperformed, buoyed by strength in Mag-7 (ex-MSFT), with NVDA and MU being particularly fruitful as their CEOs accompany President Trump on his trip to China, while Micron also saw a chunky BofA PT lift. As such, both the S&P 500 and NDX printed fresh record highs, while the focus resided around the Trump/Xi summit and the Middle East situation, albeit with little incrementally new, although VP Vance thinks they are making progress on Iran talks and is focused on a diplomatic pathway for now. Furthermore, US PPI data spurred an initial hawkish reaction, as it was much hotter than expected, which saw US indices and treasuries fall, while the dollar rose as the data pointed to broader price pressures beyond energy. However, the early pressure in stocks was reversed, and sectors were predominantly firmer, with Communications and Tech sitting atop the pile, while Utilities and Financials lagged.
USD was supported after another hot inflation report as PPI accelerated more notably than CPI and spurred a hawkish reaction across markets as both headline and core PPI readings saw striking accelerations. Particularly, the 1.4% increase in April from March's +0.5%, and most worryingly, that 60% of the rise can be attributed to a 1.2% advance in the index for final demand services (higher energy prices, not the no.1 force), although components that feed into PCE were more mixed.
Looking ahead, highlights include Japanese Money Supply, Australian MI Inflation Expectations, Trump-Xi Summit, Supply from Japan.

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LOOKING AHEAD

Highlights include Japanese Money Supply, Australian MI Inflation Expectations, Trump-Xi Summit, Supply from Japan.
Click for the Newsquawk Week Ahead.

IRAN CONFLICT

US VP Vance said on Iran talks that he thinks they are making progress and are focused on a diplomatic pathway for now, while he agrees with the President that Iran should not possess nuclear weapons.
US CENTCOM said American forces had redirected 67 commercial vessels, up from 65 D/D, while allowing 15 humanitarian aid support vessels to pass and disabling four vessels to ensure compliance. In relevant news, a Chinese supertanker crossed the Strait of Hormuz without paying tolls with Iran allowing a COSCO tanker passage without a USD 2mln fee, according to the WSJ.
Iran’s Foreign Minister said that in a clear attempt to sow discord, Kuwait unlawfully attacked an Iranian boat and detained 4 Iranian citizens in the Persian Gulf, which took place near an island used by the US to attack Iran, while they demand the immediate release of their nationals and reserve the right to respond.
Iranian Foreign Ministry spokesman said Tehran would obtain a more accurate assessment of the US position through Pakistani mediators, while reiterating that Iran rejected what it described as maximalist and unjust demands regarding its nuclear programme, according to Al Araby TV.
Iranian NSC spokesperson said new confrontations with the US are possible and they are preparing a law regarding navigation in the Strait of Hormuz, while the spokesperson said they forced the US to back down, and it is responsible for the escalation.
Iranian Army spokesperson said the Strait of Hormuz remained under the strategic control of Iran’s armed forces and declared that Iran would no longer allow American weapons to transit the waterway en route to regional bases, while the spokesperson added that any country seeking passage through the strait would require Iranian armed forces supervision.
Iran is using the Caspian Sea, highways and a railroad to China to bypass the US blockade of Hormuz.
Iraqi sources reported hearing the sound of several explosions in Erbil, Iraq, while a drone strike hit an Iranian opposition camp north of Iraq's Erbil, according to Fars. It was also reported shortly after that a second drone strike hit an Iranian opposition camp north of Erbil, according to security sources.
Chinese companies have been discussing arms sales with Iran, plotting to send the weapons through other countries to mask the origins of the military aid, according to NYT citing US officials.
Saudi warplanes reportedly struck Iran-backed militia sites in Iraq during the war.
Israeli PM Netanyahu reportedly made a secret visit to the UAE in the midst of the Iran operation, where he met with UAE President Mohamed bin Zayed Al Nahyan, while the visit resulted in a historic breakthrough in relations between Israel and the UAE. However, the UAE later denied the report of a visit.

US TRADE

US stocks closed with an upward bias as the Nasdaq 100 outperformed, buoyed by strength in Mag-7 (ex-MSFT), with NVDA and MU being particularly fruitful as their CEOs accompany President Trump on his trip to China, while Micron also saw a chunky BofA PT lift. As such, both the S&P 500 and NDX printed fresh record highs, while the focus resided around the Trump/Xi summit and the Middle East situation, albeit with little incrementally new, although VP Vance thinks they are making progress on Iran talks and is focused on a diplomatic pathway for now. Furthermore, US PPI data spurred an initial hawkish reaction, as it was much hotter than expected, which saw US indices and treasuries fall, while the dollar rose as the data pointed to broader price pressures beyond energy. However, the early pressure in stocks was reversed, and sectors were predominantly firmer, with Communications and Tech sitting atop the pile, while Utilities and Financials lagged.
SPX +0.58% at 7,444, NDX +1.04% at 29,367, DJI -0.14% at 49,698, RUT +0.04% at 2,844.
Click here for a detailed summary.

TARIFFS/TRADE

US and China were reportedly weighing tariff cuts on USD 30bln worth of imports, and Presidents Trump and Xi are expected to discuss a managed trade push in Beijing, while Washington had shifted its focus toward numerical trade targets rather than model reform, according to Reuters sources.
White House had reportedly not ruled out potential direct Chinese investment into the US, according to Semafor.
China’s Foreign Ministry said Beijing welcomed President Trump’s state visit and that discussions would cover major issues affecting Sino-US ties as well as world peace and development, while it added that China was prepared to work with the US on the basis of equality, mutual respect and mutual benefit while expanding cooperation and managing differences.
China viewed the months-long conflict with Iran as potentially strengthening Beijing’s negotiating position with President Trump, while sources said the situation could present China with an opportunity ahead of expected difficult midterm elections for Trump, who was seen as eager to deliver tangible wins to US voters, including large Chinese purchases of US agricultural products and Boeing aircraft. Furthermore, sources said Beijing viewed the Trump-Xi summit as an opportunity to secure a more stable long-term relationship with the US, according to CNN.

NOTABLE HEADLINES

US Senate confirmed Kevin Warsh as Fed Chair.
Fed's Kashkari (2026 voter) said inflation is too high, while he commented that there is a huge question mark about how long the Hormuz Strait will be closed and that will have a big effect on inflation.
Fed’s Collins (2028 voter) said she expected the Federal Reserve would need to maintain restrictive policy for some time but hoped the economy would eventually permit more rate cuts later this year. Collins also warned that further rate hikes could become necessary to cool inflation pressures and said current Fed policy remained “well positioned” to address risks.
NY Fed said the desk plans to conduct ~USD 16.3bln in reinvestment purchases between May 14th and June 11th, while it plans an additional ~USD 10bln in reserve management purchases over the same period.
US House Financial Services Committee took up legislation that would amend the Federal Reserve Act to eliminate the Fed’s dual mandate and focus solely on price stability. The bill proposed replacing the phrase “maximum employment, stable prices” with “stable prices” in Section 2A of the Federal Reserve Act.

DATA RECAP

US PPI MM (Apr) 1.4% vs. Exp. 0.5% (Prev. 0.5%)
US PPI YY (Apr) 6.0% vs. Exp. 4.9% (Prev. 4.0%)

FX

USD was supported after another hot inflation report as PPI accelerated more notably than CPI and spurred a hawkish reaction across markets as both headline and core PPI readings saw striking accelerations. Particularly, the 1.4% increase in April from March's +0.5%, and most worryingly, that 60% of the rise can be attributed to a 1.2% advance in the index for final demand services (higher energy prices, not the no.1 force), although components that feed into PCE were more mixed.
EUR softened in early trade, then proceeded relatively sideways with little reaction seen to the slew of commentary from ECB speakers.
GBP saw two-way price action and rebounded from a brief dip beneath the 1.3500 handle, while participants await quarterly GDP data and if UK Health Secretary Streeting triggers a Labour leadership contest.
JPY continued to give up ground to the firmer buck with USD/JPY edging closer towards the 158.00 level.
BoC Minutes stated that Governors felt the situation could change quickly and rates might have to go up to guard against persistent inflation, while GC members agreed they had scope to be patient ahead of the April 29th rate announcement.
Riksbank minutes showed market expectations regarding central bank policy rates had become closely linked to inflation risks stemming from energy prices.

FIXED INCOME

T-notes were choppy as hotter-than-expected PPI data initially weighed on Treasuries, before lower crude prices helped support the market later in the session.

COMMODITIES

Oil prices ended the day in the red following choppy trade as focus resides around the Trump/Xi summit, as well as geopolitics, while there were reports late in the session of drone strikes that hit the Iranian opposition camp north of Iraq's Erbil.
US EIA Crude Oil Stocks Change (May/08) -4.306M vs. Exp. -2.1M (Prev. -2.314M)
OPEC Monthly Oil Market Report said crude oil production by countries participating in the Declaration of Cooperation fell by 1.74mln BPD month-over-month in April to average 33.19mln BPD, according to secondary sources. OPEC also revised down 2026 demand for DoC crude by 0.2mln BPD from the previous month’s assessment to 42.7mln BPD, although this remained around 0.4mln BPD above 2025 levels.
IEA Oil Market Report projected global oil supply would fall by 3.9mln BPD in 2026 under assumptions that Strait of Hormuz flows gradually resumed from June, compared with the prior forecast of a 1.5mln BPD decline. It also forecast world oil supply would run 1.78mln BPD below demand in 2026, versus the previous forecast for supply to exceed demand by 0.41mln BPD. IEA also said that global oil demand would decline by 420k BPD in 2026 due to the Iran conflict, compared with the previous projection for 80k BPD decline.
German government spokesperson said kerosene reserves were sufficient for the year and there have been no problems with Germany’s energy supply.

GEOPOLITICAL

RUSSIA-UKRAINE

Ukraine’s military said it had struck a Russian oil refinery in Yaroslavl.
Russian President Putin said they would continue developing missile systems capable of overcoming all current and future missile defence systems and would continue modernising its strategic nuclear forces, according to TASS.

EU/UK