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Stocks Climb on Hopes of Easing US-China Trade Tensions
Stocks Climb on Hopes of Easing US-China Trade Tensions

Globe and Mail

time2 days ago

  • Business
  • Globe and Mail

Stocks Climb on Hopes of Easing US-China Trade Tensions

The S&P 500 Index ($SPX) (SPY) today is up +0.21%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.11%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.46%. June E-mini S&P futures (ESM25) are up +0.21%, and June E-mini Nasdaq futures (NQM25) are up +0.42%. Stock indexes recovered from early losses and are moving higher today, with the Nasdaq 100 reaching a 3 1/2-month high. Stocks are climbing on hopes that trade tensions will ease between the US and China after China's state media Xinhua News Agency reported that US President Trump and Chinese President Xi Jinping spoke by telephone today. President Xi agreed to more talks with Mr. Trump and urged the US to remove 'negative' measures that have roiled trade tensions between the two countries. The Chinese president also said the countries should work to reduce misunderstandings and that Trump was welcome to visit China. Stocks also garnered support from today's economic news that showed the US trade deficit in April shrank to a 20-month low, a positive factor for Q2 GDP. Stocks were under early pressure today on concerns about the US labor market after weekly jobless claims unexpectedly rose to a 7-3/4 month high. Also, today's downward revision to US Q1 nonfarm productivity and upward revision to Q1 unit labor costs were bearish for stocks. In addition, higher bond yields are negative for stocks as the 10-year T-note yield is up +3 bp to 4.39% as it rebounded from a 4-week low of 4.31% on negative carryover from a slide in 10-year German bunds after ECB President Lagarde said the ECB was nearing the end to its rate cutting cycle. US weekly initial unemployment claims unexpectedly rose +8,000 to a 7-3/4 month high of 247,000, showing a weaker labor market than expectations of a decline to 235,000. The US Apr trade deficit shrank to a 20-month low of -$61.6 billion, narrower than expectations of -$66.0 billion. US Q1 nonfarm productivity was revised lower to -1.5% from -0.8%. Q1 unit labor costs were revised upward to 6.6% from the previously reported 5.7%. Comments Wednesday evening from Minneapolis Fed President Kashkari signal he favors keeping interest rates steady when he said, 'The economy is seeming like it's pretty resilient so far, and so for me right now is the time to get data, see how the tariff negotiations shake out before we reach any firm conclusions about the direction of interest rates.' The markets are discounting the chances at 1% for a -25 bp rate cut at the next FOMC meeting on June 17-18. The markets this week will focus on any fresh trade or tariff news. On Friday, May nonfarm payrolls are expected to climb +125,000, and the May unemployment rate is expected to remain unchanged at 4.2%. Finally, May average hourly earnings are expected to rise +0.3% m/m and +3.7% y/y. Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.02%. China's Shanghai Composite climbed to a 1-1/2 week high and closed up +0.23%. Japan's Nikkei Stock 225 closed down -0.51%. Interest Rates September 10-year T-notes (ZNU2 5) today are down -5 ticks. The 10-year T-note yield is up +3.0 bp to 4.385%. Sep T-notes today fell from a 4-week high, and the 10-year T-note yield rose from a 4-week low of 4.310% and is moving higher. T-notes gave up early gains today and turned lower as stocks rallied on hopes of easing US-Chian trade tensions after the Xinhua news agency reported that President Trump and President Xi Jinping spoke by telephone today. T-notes also have a negative carryover from a slide in 10-year German bunds on hawkish comments from ECB President Lagarde, who said the ECB is nearing the end of its rate-cutting cycle. In addition, T-notes fell after today's news that showed US Q1 nonfarm productivity was revised downward and Q1 unit labor costs were revised higher. T-notes today initially moved higher when weekly US jobless claims unexpectedly rose to a 7-3/4 month high, a sign of labor market weakness and a dovish factor for Fed policy. Also, an easing in inflation expectations is bullish for T-notes after the US 10-year breakeven inflation rate fell to a 3-week low today at 2.297%. European government bond yields today are moving higher. The 10-year German bund yield rebounded from a 4-week low of 2.476% and is up +5.8 bp to 2.587%. The 10-year UK gilt yield rebounded from a 3-1/2 week low of 4.554% and is up +2.1 bp to 4.628%. Eurozone Apr PPI fell -2.2% m/m and rose +0.7% y/y, weaker than expectations of -2.1% m/m and +1.1% y/y. German Apr factory orders unexpectedly rose +0.6% m/m, stronger than expectations of -1.5% m/m. The ECB, as expected, cut the deposit facility rate by -25 bp to 2.00% from 2.25% and said, 'Inflation is currently at around the Governing Council's 2% medium-term target.' ECB President Lagarde said risks to growth 'tilted to the downside' as recent survey data points to weaker near-term prospects for the Eurozone economy. However, a stronger labor market and rising incomes will help the economy, and she wouldn't exclude further upward revisions to growth. She added that the ECB is getting toward the end of its rate cut cycle with today's rate cut. Swaps are discounting the chances at 42% for a -25 bp rate cut by the ECB at the July 24 policy meeting. US Stock Movers The strength of chip makers is supportive of the broader market. Micron Technology (MU) is up more than +4% to lead gainers in the Nasdaq 100. Also, ARM Holdings NV (ARM), Texas Instruments (TXN), ASML Holding NV (ASML), Applied Materials (AMAT), and Microchip Technology (MCHP) are up more than +1%. In addition, Lam Research (LRCX) and Analog Devices (ADI) are up more than +0.90%. Mining stocks are climbing today as the price of gold rose to a 4-week high and silver prices soared to a 13-year high. As a result, Freeport-McMoRan (FCX) is up more than +4%, and Anglogold Ashanti Plc (AU) is up more than +1%. MongoDB (MDB) is up more than +15% after reporting Q1 adjusted EPS of $1.06, well above the consensus of 67 cents, and raising its 2026 adjusted EPS forecast to $2.94-$3.12 from a previous estimate of $2.44-$2.62, stronger than the consensus of $2.60. Five Below (FIVE) is up more than +7% after reporting Q1 comparable sales rose +7.1%, better than the consensus of +6.37%, and forecast 2026 comparable sales will climb +3% to +5%, the midpoint above the consensus of +3.78%. Dollar Tree (DLTR) is up more than +7% to lead gainers in the S&P 500 after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $111. Verint Systems (VRNT) is up more than +6% after reporting Q1 adjusted EPS of 29 cents, better than the consensus of 19 cents. Brown-Forman (BF.B) is down more than -17% to lead losers in the S&P 500 after reporting Q4 net sales of $894 million, well below the consensus of $968.4 million. PVH Corp (PVH) is down more than -17% after cutting its 2026 adjusted EPS forecast to $10.75-$1.00 from a previous forecast of $12.40-$12.75, well below the consensus of $12.46. Ciena Corp (CIEN) is down more than -11% after reporting Q2 adjusted EPS of 42 cents, weaker than the consensus of 52 cents. Tesla (TSLA) is down more than -3% to lead losers in the Nasdaq 100, adding to Wednesday's -4% slide, after reporting its May vehicle shipments from China fell -15% y/y to 61,662 units, the eighth straight monthly decline. Costco Wholesale (COST) is down more than -2% after reporting May total comparable sales rose +4.3%, weaker than the consensus of +4.7% Procter & Gamble (PG) is down more than -1% to lead losers in the Dow Jones Industrials after announcing it expects to take a $1.6 billion charge over the next two years as it cuts its workforce by 7,000 or 15%. Earnings Reports (6/5/2025) Broadcom Inc (AVGO), Brown-Forman Corp (BF/B), Ciena Corp (CIEN), Docusign Inc (DOCU), Lululemon Athletica Inc (LULU), Toro Co/The (TTC), Vail Resorts Inc (MTN).

Irish corporate tax receipts tumble and ECB cuts rates once again
Irish corporate tax receipts tumble and ECB cuts rates once again

Irish Times

time5 days ago

  • Business
  • Irish Times

Irish corporate tax receipts tumble and ECB cuts rates once again

It's been a heavy period of economic news. In Ireland, corporate tax receipts fell by 30 per cent in May, amounting to a loss of €1.1 billion on the same month last year, according to latest data from the Department of Finance , which pointed to 'once-off factors' that had boosted receipts last year and distorted the year-on-year comparison. Eoin Burke-Kennedy looked at the latest numbers which say much about our economy. And speaking of the economy, it grew by an eye-watering 10 per cent in the first quarter. Eoin Burke-Kennedy again analyses the data and makes the link with US tariffs. On a more individual level, the third piece of heavyweight economic news was the ECB's eighth rate cut in the last 12 months. Conor Pope explains that, give or take, this equates to a €13 per month saving for every €100,000 owed on a tracker mortgage. US government debt is now 120 per cent of its GDP, about what it was in 1945. In the OECD, only the Greek, Italian, and Japanese governments are more indebted. So what effect might Trump's economic policies have? In his column, John FitzGerald looks at some studies which explain the deleterious effects of tariffs may be greater to the US economy than to Europe. Could borrowing problems, given the size of its debt ratio, cause the US economic problems of Liz Truss-sized proportions, or will sanity prevail? READ MORE DAA, which runs Dublin Airport, has suggested forthcoming legislation may finally put paid to its passenger cap which at 32 million per year is extremely limited based on current demand. But then legal twists and turns mean it currently isn't even enforced, a piece of toothless regulation DAA chief executive Kenny Jacobs quipped was a 'zombie cap' at a press briefing attended by Barry O'Halloran. A former employee at the Keelings fruit and vegetable group was fired after they found he had brought the company into disrepute with 'false' posts on social media claiming excessive night work hours contributed to the deaths of two of his colleagues in 2013. The case is before the Workplace Relations Commission. The High Court has ordered a Co Wexford wind farm to shut down half of its six turbines and pay €360,000 in damages to a couple. Mary Carolan has details on the case in which the defendants were said to have failed to engage 'in any meaningful way' with the 'genuine and substantive' complaints made by the couple over a 12 year period. Denis Staunton took a look at the official Chinese summary of the phone call between Xi Jinping and Donald Trump , their first direct conversation since the beginning of the year. Xi requested a bit of mutual respect and told his American counterpart he should dispense with the 'negative measures' on trade. What it all means for the ebb and flow of US policy the world over is, as usual, unclear. TikTok has secured a court stay on a move by the Data Protection Commission to prevent the social media giant transferring data to China. Mr Justice Mark Sanfey said the stay would be in place until early October when the court will hear an application by TikTok seeking a longer stay, and until a full challenge to the direction can ultimately be dealt with. Bank of Ireland will be hoping for some final clarity when the UK's financial watchdog decides on whether to launch a compensation scheme for mis-sold car loans. The Irish bank has a 2 per cent share of the UK motor finance market. To date, as reported by Joe Brennan, it has set aside a provision of £143 million (€172 million) for a potential compensation scheme. Many analysts say the bill could rise. If you'd like to read more about the issues that affect your finances try signing up to On the Money , the weekly newsletter from our personal finance team, which will be issued every Friday to Irish Times subscribers.

Stocks Decline as Tariff Concerns Weigh on Market Sentiment
Stocks Decline as Tariff Concerns Weigh on Market Sentiment

Globe and Mail

time30-05-2025

  • Business
  • Globe and Mail

Stocks Decline as Tariff Concerns Weigh on Market Sentiment

The S&P 500 Index ($SPX) (SPY) today is down -0.40%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.48%. June E-mini S&P futures (ESM25) are down -0.42%, and June E-mini Nasdaq futures (NQM25) are down -0.48%. Stock indexes today are seeing downward pressure as concern about US trade policy weighs on market sentiment. Late Thursday, US Treasury Secretary Bessent said that trade talks with China were 'a bit stalled' and that a call between President Trump and Chinese President Xi Jinping may be needed to reach a deal. Stocks added to their losses today when President Trump accused China of violating an agreement with the US to ease tariffs but did not specify how China had violated the agreement. US economic news today was mostly supportive for stocks as Apr personal spending rose as expected and Apr personal income rose more than expected. Also, the Apr core PCE price index, the Fed's preferred inflation gauge, eased to its lowest level in more than 4 years, a dovish factor for Fed policy. US Apr personal spending rose +0.2% m/m, right on expectations. Apr personal income rose +0.8% m/m, stronger than expectations of +0.3% m/m and the biggest increase in 15 months. The US Apr core PCE price index, the Fed's preferred inflation gauge, rose +0.1% m/m and +2.5% y/y, right on expectations. The +2.5% y/y report was the smallest year-on-year advance in more than 4 years. The US May Chicago PMI unexpectedly fell -4.1 to 40.5, weaker than expectations of an increase to 45.0. Comments Thursday evening from Dallas Fed President Logan signaled the Fed could keep interest rates unchanged in the medium term when she said it might be 'quite some time' before Fed officials know how the economy will respond to tariffs and other policy changes and the Fed adjusts interest rates. The markets are discounting the chances at 2% for a -25 bp rate cut at the next FOMC meeting on June 17-18. Later today, the University of Michigan May US consumer sentiment index is expected to be revised upward by +0.7 points to 51.5 from the previously reported 50.8. Q1 earnings reporting season is winding down. So far, more than 90% of companies in the S&P 500 have reported quarterly results, and 77% have beaten estimates, the highest percentage since Q2 of 2024. Earnings growth in Q1 is running at +13.1%, compared with just +6.6% expected before the start of the season. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets today are mixed. The Euro Stoxx 50 is up +0.34%. China's Shanghai Composite closed down -0.47%. Japan's Nikkei Stock 225 closed down -1.22%. Interest Rates June 10-year T-notes (ZNM2 5) today are down -1 tick. The 10-year T-note yield is up +0.8 bp to 4.426%. June T-notes today fell from a 3-week high and are slightly lower, and the 10-year T-note yield rebounded from a 2-week low of 4.40% and is slightly higher. Today's weakness in European government bonds is weighing on T-notes. Also, hawkish comments from Dallas Fed President Logan undercut T-note prices when she said it may be 'quite some time' before the Fed adjusts interest rates. In addition, concerns about rising wage pressures are weighing on T-notes after today's news showed US Apr personal income posted its largest increase in 15 months. T-notes recovered most of their losses today on an increase in safe-haven demand for government debt when stocks fell after President Trump accused China of violating the tariff agreement with the US. T-notes also have support after the US Apr core PCE price index, the Fed's preferred inflation gauge, posted its smallest year-on-year advance in more than four years, a dovish factor for Fed policy. European government bond yields today are moving higher. The 10-year German bund yield rebounded from a 3-week low of 2.497% and is up +2.1 bp at 2.529%. The 10-year UK gilt yield is up +1.7 bp to 4.665%. Eurozone Apr M3 money supply rose +3.9% y/y, stronger than expectations of +3.7% y/y. German Apr retail sales unexpectedly fell -1.1% m/m, weaker than expectations of a +0.2% m/m increase and the biggest decline in more than 1-1/2 years. German May CPI (EU harmonized) rose +0.2% n/n and +2.1% y/y, stronger than expectations of +0.1% m/m and +2.0% y/y. Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Marvell Technology (MRVL) is down more than -6% to lead chip stocks lower after forecasting Q2 adjusted gross margin of 59% to 60%, with the midpoint slightly below the consensus of 59.6%. Also, GlobalFoundries (GFS), Applied Materials (AMAT), and Lam Research (LRCX) are down more than -2%. In addition, Advanced Micro Devices (AMD), Micron Technology (MU), Intel (INTC), NXP Semiconductors NV (NXPI), ON Semiconductor (ON), and Qualcomm (QCOM) are down more than -1%. Regeneron Pharmaceuticals (REGN) is down more than -17% to lead losers in the S&P 500 after its itepekimab, an experimental drug jointly developed with Sanofi for chronic obstructive pulmonary disease, showed disappointing results in late-stage trial. Cooper Cos (COO) is down more than -12% after cutting its full-year organic growth forecast to 5%-6% from a previous forecast of 6%-8%. The Gap (GAP) is down more than -19% after forecasting Q2 net sales about flat y/y and warned of a $250 million to $300 million hit to earnings should tariffs remain at current levels of 30% for most goods from China and 10% for other countries. Elastic NV (ESTC) is down more than -14% after forecasting 2026 revenue of $1.66 billion to $1.67 billion, below the consensus of $1.68 billion. Ulta Beauty (ULTA) is up more than +14% to lead gainers in the S&P 500 after reporting Q1 EPS of $6.70, well above the consensus of $5.80 and raised its 2026 EPS forecast to $22.65-$23.20 from a previous estimate of $22.50-$22.90, stronger than the consensus of $22.95. Zscaler (ZS) is up more than +7% to lead gainers in the Nasdaq 100 after reporting Q3 revenue of $678.0 million, better than the consensus of $666.3 million and raising its full-year revenue forecast to $2.66 billion from a previous forecast of $2.64 billion-$2.65 billion, above the consensus of $2.65 billion. UiPath (PATH) is up more than +4% after reporting Q2 total revenue of $356.6 million, above the consensus of $332.4 million, and forecasting 2026 revenue of $1.549 billion to $1.554 billion, stronger than the consensus of $1.52 billion. Costco Wholesale (COST) is up more than +2% after reporting Q3 EPS of $4.28, better than the consensus of $4.24. Dexcom (DXCM) is up more than +1% after Goldman Sachs initiated coverage on the stock with a buy recommendation and a price target of $104. Earnings Reports (5/30/2025) B Riley Financial Inc (RILY), Compass Diversified Holdings (CODI), Roadzen Inc (RDZN), Shoe Carnival Inc (SCVL), Sunnova Energy International Inc (NOVA).

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