China Maintains Grip on Rare Earths Despite Easing Some U.S. Export Restrictions

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Summary:

While China temporarily relaxed certain export controls on 28 U.S. companies and lifted restrictions on 17 others, it continues to block shipments of seven key rare earth elements essential to American defense...

Strategic Minerals Remain Off-Limits Despite Diplomatic Concessions

Following a tentative trade truce between the United States and China reached in Geneva over the weekend, China’s Ministry of Commerce announced a 90-day pause on export restrictions for 28 American companies. It also lifted non-tariff measures on 17 entities previously listed on its “unreliable entity list.” These measures signal a shift in tone from Beijing and are aligned with China’s commitment, outlined in the Geneva joint statement, to suspend or withdraw non-tariff countermeasures imposed since April 2, 2025.

However, a conspicuous exception remains: China is still withholding exports of seven critical rare earth elements—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These materials are indispensable for U.S. sectors ranging from aerospace and clean energy to defense and semiconductors. Their absence from the rollback package suggests that Beijing is not willing to relinquish its most powerful strategic resource in this early stage of trade normalization.

Rare Earths as a Bargaining Lever

The strategic calculus is clear. China supplies more than 70% of the world’s refined rare earth elements (REEs), making it the linchpin in global advanced manufacturing. U.S. industries—particularly those producing missiles, electric vehicles, and renewable energy components—remain heavily dependent on Chinese rare earths. Beijing’s decision to retain control over these exports serves as a calculated maneuver to maintain geopolitical leverage, especially as tariff negotiations continue under a highly transactional Trump administration.

Adding weight to this interpretation, China’s Commerce Ministry issued a same-day statement emphasizing the need for “comprehensive control” over strategic minerals. It justified ongoing restrictions by referencing national security concerns and smuggling risks, effectively framing rare earth policy as a sovereignty issue rather than a commercial one.

Companies Granted Temporary Relief

Among the 28 U.S. companies given a 90-day reprieve from dual-use export restrictions are frequent targets of Chinese sanctions due to their connections to American defense and technology operations. These include Universal Logistics Holdings, Cyberlux, Hudson Technologies, and Oceaneering International. On April 9, shortly after President Trump imposed sweeping new tariffs, an additional 12 firms—including Teledyne Brown Engineering, Kratos Unmanned Aerial Systems, and Insitu—were added to the list.

The 17 companies removed from the unreliable entity list also include high-profile drone manufacturers such as Sierra Nevada Corporation and Kratos. While the suspension grants these firms temporary freedom to conduct limited business with China, they remain in a precarious position as Beijing reserves the right to reimpose controls once the 90-day window closes.

Unanswered Questions and Strategic Silence

China’s refusal to include rare earth exports in its list of relaxed measures has gone largely unexplained. When questioned during a routine press briefing, the Commerce Ministry declined to offer specifics, reinforcing the view that rare earths are being deliberately withheld as a future bargaining chip.

This aligns with subtle messaging from state-linked media. A social post by CCTV-affiliated account Yuyuantantian pointedly asked, “With U.S. defense industries now ‘strangled by rare earth shortages’, what changes might occur in American weapons and equipment?” This rhetorical question underscores Beijing’s awareness of its market dominance and its willingness to exploit this advantage selectively

China’s recent easing of certain export curbs appears to be a tactical gesture designed to defuse short-term tensions without sacrificing long-term leverage. The continued hold on rare earth shipments illustrates that these materials remain a cornerstone of China’s strategic posture. While the Geneva truce may have temporarily reduced the temperature of U.S.-China relations, the deeper contest over technological supremacy and economic security remains unresolved—and rare earths sit at its core. As the 90-day reprieve clock ticks down, the future of U.S. access to these essential resources may well define the trajectory of broader trade diplomacy.

Source: CNBC

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China–U.S. Trade War

Economic

Trump’s Gulf Strategy: Wealth, Power, and Pragmatism

President Donald Trump’s high-profile Middle East tour has been as much a diplomatic campaign as a symbolic realignment of America’s global posture. From red electric supercars and camel processions in Saudi Arabia to towering praise for Gulf cities’ futuristic ambition, Trump’s message was clear: the United States, under his leadership, is open for business—with no questions asked.

Trump announced that within just 48 hours, his administration secured $1.8 trillion in investment promises from Gulf states, including $600 billion publicly confirmed on May 13. He framed this economic diplomacy as a golden opportunity to fuse "America First" with the Gulf’s state-led capitalism, calling it a new “Golden Age” of U.S.-Middle East partnership.

Admiration for Authoritarian Efficiency

The tone of Trump’s engagements has raised eyebrows globally. He praised Saudi Crown Prince Mohammed bin Salman—implicated in the murder of journalist Jamal Khashoggi—for his “visionary” leadership, even joking, “I like him too much, that’s why we give too much.” In Riyadh, he lauded skyscraper projects as “genius,” and in Abu Dhabi and Doha, he expressed admiration for rapid development unencumbered by democratic hurdles.

At the heart of Trump’s approach is a rejection of the traditional American ideal of moral leadership. “Too many presidents try to look into foreign leaders’ souls,” he declared. “That’s God’s job. My job is to protect America.” This blunt ethos aligns with a growing U.S. retreat from promoting democratic values abroad, replaced instead by transactional, deal-centric diplomacy.

The Qatar Question: Diplomacy and Controversy

In Doha, Trump celebrated Qatar’s outsized diplomatic influence. The small but strategically crucial nation has facilitated U.S. negotiations with actors ranging from Iran to Hamas and played a role in recent hostage rescues and ceasefire deals. Qatar’s Al Udeid airbase, once secretive, now anchors America’s regional command center.

But goodwill came with controversy. Qatar reportedly offered Trump a Boeing 747-8 to replace the aging Air Force One—a gesture many saw as unconstitutional and potentially compromising. Critics, including Senator Rand Paul, warned that accepting such a gift could blur lines between diplomacy and influence-buying, particularly given Qatar’s troubled human rights record.

Human Rights and the Price of Realpolitik

Trump’s embrace of Gulf leaders came without mention of human rights abuses, media suppression, or political imprisonment in the region. This omission wasn’t accidental—it reflects his deliberate pivot to what some call a "hyper-pragmatic" foreign policy. Trump himself framed it starkly: “God will judge world leaders. My job is peace, stability, and prosperity for America.”

While U.S. intelligence agencies are now reviewing the jet gift’s legality and safety, the broader concern is Trump’s apparent comfort with authoritarian power structures, especially when paired with capital-rich allies. Critics argue this risks turning America’s foreign agenda into a mirror of Gulf politics: top-down, opaque, and power-driven.

President Trump’s Middle East tour has redrawn the contours of American foreign policy. With $1.8 trillion in investment pledges and warm ties with Gulf monarchs, he presents a vision of a U.S. unconstrained by moral frameworks, judicial oversight, or free press critique. Whether this marks a “new golden era” or a dangerous departure from democratic values remains one of the most divisive questions of his second term. What is certain is that Trump sees in the Gulf not just money—but a model of power without restraint.

Source: CNN

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Powell Flags Structural Shift in Interest Rate Outlook

Speaking at the Thomas Laubach Research Conference in Washington on May 15, Federal Reserve Chair Jerome Powell warned that long-term interest rates are likely to remain elevated due to a changing economic landscape and persistent monetary uncertainty. Powell noted that the U.S. is transitioning out of the ultra-low rate environment that defined the 2010s, and that “the era of near-zero rates is unlikely to return soon.”

The Fed’s benchmark interest rate currently sits at 4.25–4.5%, with recent trades near 4.33%. This is a stark contrast to the 2008–2015 period, when rates were effectively zero for seven years. Powell’s remarks come amid lingering inflation pressures and the potential for recurring global supply disruptions, which he described as “major shocks” that could persistently affect both inflation and central bank policy responses.

Supply Shocks, Inflation, and the Trump Trade Effect

Powell emphasized that the Federal Reserve now views inflation volatility and supply-side disturbances—such as those seen during the pandemic and energy crises—as more structural than previously assumed. While he did not directly reference President Trump’s trade policies, Powell acknowledged in prior remarks that tariffs can both slow growth and fuel inflation, adding to the policy dilemma the Fed faces.

Currently, the U.S. is in a 90-day tariff de-escalation period with China, but further trade uncertainty looms. Powell stressed that the central bank must remain cautious in loosening policy, especially after previously misjudging the persistence of inflation in 2021.

Fed’s Five-Year Strategic Policy Framework

To guide decision-making in this complex environment, the Fed will undertake a comprehensive five-year review of its policy framework. This initiative will revisit key elements such as how the Fed forecasts economic conditions, how it communicates uncertainty to markets, and how it responds to deviations from inflation and employment targets.

The last major framework overhaul occurred in 2020 during the height of the COVID-19 pandemic, when the Fed adopted a flexible average inflation targeting (FAIT) strategy—allowing inflation to exceed 2% temporarily to support job growth. However, this strategy came under fire after inflation surged far beyond expectations, forcing the Fed into one of its most aggressive rate-hiking cycles in decades.

In the upcoming review, Powell noted that there will be particular attention paid to how the Fed defines and responds to “shortfalls” in inflation or employment, and whether those terms create confusion or policy inertia. Many Fed officials have since conceded that the 2021 inflation spike was initially mischaracterized as "transitory."

Improving Policy Communication in a Volatile Era

Powell emphasized that improving how the Fed communicates with markets and the public will be a central focus of the new framework. While the Fed is widely praised for its transparency, Powell admitted that during turbulent periods, “conveying the degree of uncertainty clearly becomes essential.”

He added that clarity around how the Fed interprets economic shocks—particularly those related to supply constraints, labor markets, and geopolitical instability—will be crucial to maintaining credibility and anchoring expectations.

Preparing for an Era of Complexity

Powell’s remarks reflect a broader institutional realization that the post-pandemic economy is less predictable, more shock-prone, and structurally different from the past. The Federal Reserve’s new five-year strategic review signals a commitment to adapting its tools, language, and flexibility in response to an evolving economic environment.

The full details of the framework are expected to be released “in the coming months.” While Powell did not confirm the venue, speculation suggests the Jackson Hole Symposium, where the 2020 policy pivot was first unveiled, may again serve as the platform for announcing the Fed’s next chapter.

Source: CNBC

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Stocks

Stock Markets Enjoy Momentum, But Clouds Gather

The S&P 500 climbed 0.41% on Thursday, marking its fourth straight session of gains and capping a 4.54% rise over four days. The Dow Jones Industrial Average gained 0.65%, while the Nasdaq dipped 0.18%. European stocks also joined the rally, with the pan-European Stoxx 600 and FTSE 100 rising 0.56% and 0.57% respectively, aided by better-than-expected U.K. GDP data.

Yet beneath this rally lies a current of unresolved uncertainty. While investors welcomed the temporary U.S.-China tariff truce, unresolved disputes over rare earth exports, high interest rates, and tense diplomacy still pose downside risks.

Powell Flags Structural Risks Ahead

Fed Chair Jerome Powell delivered a sobering counterpoint to the upbeat market sentiment during a speech at a central bank conference. He warned that interest rates may remain higher for longer due to increased risk of persistent and frequent supply shocks. Though he did not reference U.S. tariffs directly, Powell’s remarks echo concerns that protectionist measures—like those advanced by President Trump—could disrupt supply chains and feed into long-term inflation volatility.

These remarks come as the Fed balances its inflation-fighting mandate with managing external shocks, including energy volatility, geopolitical disruptions, and trade restrictions.

Rare Earth Exports Still a Flashpoint

Despite last weekend’s U.S.-China trade deal, China continues to block exports of seven key rare earth elements to the U.S., materials vital for sectors including defense, EVs, and clean energy. This undercuts the short-term optimism around bilateral trade improvements and highlights the fragility of the current détente.

Beijing has only partially lifted restrictions, allowing 28 U.S. companies to apply for export licenses, but the most strategic materials remain restricted, leaving American manufacturers vulnerable.

Trump’s Trade Policy and the Apple Friction

President Trump’s personal intervention in trade negotiations has added another layer of complexity. His rebuke of Apple CEO Tim Cook for expanding production in India—despite ongoing U.S.-India trade talks—has raised eyebrows. Trump reportedly said, “I don’t want you building in India,” suggesting a push for reshoring U.S. manufacturing that could disrupt corporate global strategies and sour bilateral deals.

While India remains an attractive manufacturing base, Trump’s stance could strain tech supply chains and further complicate trade negotiations with New Delhi.

Geopolitical Pressures and Diplomatic Signals

Both President Trump and Russian President Vladimir Putin opted to skip Ukraine-Russia peace talks in Turkey, sending lower-level delegations instead. Ukraine’s President Zelenskyy interpreted this as a sign that Moscow isn’t serious about ending the war. The absence of the U.S. president also limits the weight Washington brings to de-escalation efforts.

Meanwhile, U.S.-U.K. trade deals are reportedly poised to benefit a European automaker with U.K. operations—underscoring how individual companies may benefit from political realignments while the broader EU still awaits its own bilateral arrangement with Washington.

India’s Resilience Amid Regional Tensions

Despite recent military tensions with Pakistan, India’s stock market has rebounded above pre-conflict levels. This resilience reflects investor confidence in India’s long-term fundamentals. For many global investors, border skirmishes, though significant, are now seen as manageable variables within a broader investment calculus that favors India’s scale, reforms, and demographic advantages.

The U.S. stock market is enjoying a moment of strength, powered by easing trade rhetoric and optimism around tech and global growth. However, Fed warnings on inflation volatility, strategic tensions over rare earths, and Trump’s unpredictable trade moves suggest that tailwinds could quickly become turbulence. Investors would be wise to temper their enthusiasm and brace for a market environment shaped as much by diplomacy and policy as by earnings and economic data.

Source: CNBC

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Economic

GDP Contraction Underscores Fragile Recovery

Japan’s economy contracted for the first time in a year, with real GDP shrinking 0.7% on an annualized basis in the first quarter of 2025, significantly worse than the 0.2% decline forecast by economists. This pullback followed a strong 2.4% expansion in Q4 2024, highlighting the fragile nature of Japan’s recovery as it braces for the impact of fresh U.S. trade tariffs.

The quarter-on-quarter contraction of 0.2%—double market expectations—was largely driven by flat private consumption and declining exports. Private consumption, which makes up over half of Japan’s GDP, showed no growth, reflecting subdued domestic sentiment. At the same time, exports fell by 0.6% while imports rose by 2.9%, resulting in external demand dragging GDP growth down by 0.8 percentage points.

Capital Spending Rises, But May Not Last

In contrast, capital expenditure increased by 1.4%, well above the 0.8% forecast. Analysts believe this rise reflects front-loading by firms preparing for upcoming U.S. tariffs, particularly in sectors like automobiles and electronics. However, the temporary nature of this uptick suggests that investment momentum may fade as trade tensions escalate.

Takeshi Minami of Norinchukin Research Institute warned that while Q2 might avoid negative growth, the absence of strong demand drivers could leave the economy directionless. The true impact of tariffs, he noted, will likely determine whether Japan’s modest recovery can be sustained or derailed.

Trump Tariffs Cast Long Shadow

The economic data was compiled before the April 2 announcement by U.S. President Donald Trump of sweeping "reciprocal" tariffs. With Japan’s economy heavily reliant on exports, particularly to the U.S., these tariffs pose a significant downside risk. Analysts like Yoshiki Shinke of Dai-ichi Life Research emphasized that Japan’s economy lacks strong internal momentum, making it particularly susceptible to external shocks.

If these tariffs intensify and dampen exports further, it could force policymakers to reconsider their strategy. Already, the Bank of Japan (BOJ) faces growing pressure as it tries to chart a course for monetary normalization.

BOJ Caught Between Recovery Hopes and Global Risks

The BOJ raised rates to 0.5% in January 2025, the first hike in over a decade, after ending its ultra-loose policy stance. Officials had signaled further hikes contingent on a steady recovery and inflation anchored above 2%. However, the latest GDP figures and global trade risks may delay this trajectory.

At its April 30–May 1 meeting, the BOJ cut its growth forecasts, acknowledging that rising global uncertainty could weaken the wage-led consumption recovery it had been banking on. If the Trump tariffs deliver a serious blow to business confidence or trade volumes, any further rate hikes could be postponed until late 2025 or even shelved altogether.

Fiscal Stimulus Debate Reignites

The contraction is also expected to trigger political pressure on Prime Minister Shigeru Ishiba to act. Lawmakers are calling for either a consumption tax cut or a new stimulus package to offset the potential economic damage from trade tensions. With no strong rebound in domestic demand and global headwinds building, fiscal expansion may become a necessary complement to BOJ's cautious monetary stance.

Japan’s worse-than-expected GDP decline reflects a delicate and vulnerable recovery, now exposed to mounting global risk factors. The looming U.S. tariff regime threatens to further undermine export-driven sectors, while domestic consumption shows no signs of compensating. As both the BOJ and the government reassess their strategies, the coming quarters will be critical in determining whether Japan can stabilize its growth trajectory—or slip back into stagnation.

Source: Reuters

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Daily News

[Quick Facts]

1. Trump announces $200 billion in deals with UAE as Middle East tour concludes.

2. Barr: Tariff-Related supply chain disruptions may lead to rising inflation.

3. Powell hints at Fed 'Scrapping' its monetary policy framework revamp, revisits average inflation targeting.

4. Japan's economy contracts for the first time in a year.

5. U.S. Homebuilder Sentiment drops to its lowest level since 2023.

6. U.S. April PPI delivers major 'Surprise' to the downside.

7. U.S. retail sales decline, suffer 'Waterloo' in April after March buying spree.

8. New round of Israel-Hamas negotiations begins, significant differences limit progress.

[News Details]

Trump announces $200 billion in deals with UAE as Middle East tour concludes

The White House announced that U.S. President Donald Trump finalized a $200 billion cooperation agreement with the UAE during his visit, including projects in artificial intelligence, which will boost the Gulf nation's technological ambitions. "These deals will significantly expand investment in the United States and U.S. market access in the United Arab Emirates," the White House said in a statement on Thursday. The announcement came during the third and final leg of Trump's Middle East tour. Earlier this week, he unveiled a $600 billion investment plan with Saudi Arabia and a 243 billion cooperation agreement with Qatar. The commercial deals have been a highlight of Trump's first foreign trip since returning to the White House. Thursday's agreement further solidifies the UAE's commitment, following a March meeting between Trump and Mohammed bin Zayed al-Nahyan, the UAE's national security advisor, to invest $1.4 trillion in the U.S. over the next decade, covering AI infrastructure, semiconductors, energy, and manufacturing.

Barr: Tariff-related supply chain disruptions may lead to rising inflation

Federal Reserve official Barr stated that the U.S. economy remains solid but warned that supply chain disruptions caused by tariffs could slow growth and increase inflation. Barr emphasized the importance of small businesses and their role in supply chains and the broader economy. He noted that trade policy has cast a shadow over the outlook, adding uncertainty. For small businesses, Potential disruptions to supply chains and distribution networks are "particularly acute", partly due to their limited access to credit. He added that small businesses often provide specialized inputs not easily sourced elsewhere, and their closures could further disrupt supply chains.

Powell hints at Fed 'Scrapping' its monetary policy framework revamp, revisits average inflation targeting

Federal Reserve Chair Jerome Powell indicated that policymakers are considering adjustments to the core elements of monetary policy guidance, including how they think about shortfalls in US employment and approach their inflation target. The Fed in 2020 revamped its approach to steering the economy in two important ways: After periods when inflation ran persistently below 2%, they would allow it to rise moderately higher for “some time.” They also signaled they wouldn’t preemptively raise interest rates during periods of low unemployment to head off potential inflationary pressures, an effort to mitigate “shortfalls” from their maximum employment goal. Speaking at a research conference on monetary policy frameworks on Thursday, Powell said Officials "have indicated that they thought it would be appropriate to reconsider the language around shortfalls. And at our meeting last week, we had a similar take on average inflation targeting."

Japan's economy contracts for the first time in a year

Japan's economy contracted in the first quarter of 2025 for the first time in a year, facing a bumpy road ahead due to the impact of U.S. trade policies. Preliminary data released by the Japanese government on Friday showed that real GDP fell 0.2% quarter-on-quarter in January-March, raising the risk of a technical recession. This contraction contrasts with a 0.1% decline expected by economists surveyed by Quick and follows 0.6% growth in the October-December quarter.

On an annualized basis, Japan's economy shrank 0.7% in Q1. The data comes amid concerns that U.S. tariffs could pressure Japanese exports and lead businesses to cut investment, potentially undermining Japan's hard-won economic recovery. In Q1, external demand (exports minus imports) dragged growth down by 0.8%. Capital expenditure rose 1.4% quarter-on-quarter, while private consumption was flat. Against a backdrop of strong corporate earnings, businesses have steadily increased investment and raised wages. Although food inflation has dampened household confidence, wage growth is expected to support a consumption recovery.

U.S. Homebuilder Sentiment drops to its lowest level since 2023

U.S. homebuilder sentiment fell in May to its lowest level since late 2023, as tariffs made it harder to price homes and anxious consumers hesitated to buy. The NAHB/Wells Fargo Housing Market Index dropped 6 points this month to 34, below all economists' estimates in a Bloomberg survey. All three sub-indices declined, with the gauge for expected sales over the next six months hitting an 18-month low. A current sales indicator fell to its lowest since late 2022, while buyer traffic hit a 1.5-year low.

U.S. April PPI delivers major 'Surprise' to the downside

Data from the U.S. Bureau of Labor Statistics on Thursday showed the PPI fell 0.5%, against expectations of a 0.2% rise. Excluding food and energy, the PPI dropped 0.4%, the largest decline since 2015. Stripping out food, energy, and trade, the PPI fell 0.1%, the first drop in five years.

The unexpected decline, the largest in five years, largely reflects shrinking profit margins, suggesting businesses are absorbing some of the impact of higher tariffs. It indicates U.S. manufacturers and service providers have yet to pass on the full cost of higher import tariffs to consumers. While producers feel the pressure of U.S. tariffs on imported materials and other inputs, the effect on consumers remains relatively muted.

U.S. retail sales decline, suffer 'Waterloo' in April after March buying spree

U.S. retail sales rose just 0.1% month-on-month in April, compared with expectations of 0% and a previous reading of 1.4%. The data showed virtually no growth in April retail sales, suggesting consumers scaled back spending amid concerns about tariff-driven price increases.

The April figures followed a surge in March, when sales posted their largest gain in over two years as consumers rushed to buy goods ahead of the implementation of most U.S. tariffs.

Strong consumer spending at the end of Q1 laid the groundwork for Q2 consumption growth. Despite a robust labor market and steady wage growth, households cut discretionary spending on services like airfare and hotel stays amid economic uncertainty and stock market declines.

New round of Israel-Hamas negotiations begins, significant differences limit progress

A new round of indirect talks between Israel and Hamas began on May 14th in Doha, Qatar. Based on signals from the first day, progress has been limited, with significant differences on key issues complicating the outlook. Qatar's Prime Minister and Foreign Minister, Mohammed, acting as a mediator, told media that Israel's ongoing large-scale military operations in Gaza, while participating in talks, suggest little interest in a ceasefire, and he expects no quick breakthroughs.

Israel, as usual, has taken a hardline stance, hoping to "negotiate through force." In recent days, Israel has escalated military operations in Gaza, causing heavy casualties. Netanyahu has repeatedly emphasized that talks can only proceed "under fire."

Hamas has explicitly rejected Israel's proposals, insisting on guarantees to end the war before releasing more hostages. However, Hamas has shown more flexibility in negotiations. Mediators say that if Israel agrees to end the war and withdraw from Gaza, Hamas is willing to compromise on disarmament and accept governance of Gaza by an independent committee.

While this round of talks has resumed, it appears more like a "gesture of consultation" with no immediate signs of a breakthrough. A real impasse-breaker will require more compromises, especially from Israel, which must clarify its strategic goals and soften its military stance-otherwise, these talks may again end in failure.

[Today's Focus]

UTC+8 20:30 U.S. April Building Permits MoM

UTC+8 20:30 U.S. April Housing Starts Annualized MoM

UTC+8 22:00 U.S. May UoM Consumer Sentiment

UTC+8 23:00 ECB Chief Economist Lane Speaks

UTC+8 23:00 BoE Deputy Governor Lombardelli Speaks

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Daniel Carter

Stocks

Economic

There's a lightness in the air in Wall Street. Stocks have been rising throughout the week. The S&P 500 has just ended its fourth straight session in the green, giving it a 4.54% bump so far over the past four days.

Tariffs are looking less thorny, for sure, as the U.S. negotiates agreements with other countries. But that's not to say it'll be a perfectly smooth path ahead.

For instance, despite its agreement with the U.S., China is still withholding rare earth metals, crucial for important industries such as defense and energy, from being exported to the U.S.

Similarly, even as India negotiates a deal with America, U.S. President Donald Trump appears to want more than just levies on U.S. imports cut. Trump told Apple CEO Tim Cook he doesn't want the Cupertino-based company "building in India." It's hard to imagine India agreeing to keep Apple's manufacturing out — or for The Big Apple to actually start producing Apple products.

U.S. Federal Reserve Chair Jerome Powell seemed cognizant of such complications and warned on Thursday that "supply shocks" could be "more frequent, and potentially more persistent" in the future.

The sense of buoyancy in markets, then, could be a head rush — evoked by the U.S.-China trade deal over the weekend — that could dissipate once the gravity of the economic headwinds takes over again.

What you need to know today

Powell warns of potential supply shocksU.S. Federal Reserve Chair Jerome Powell said Thursday at a Fed conference that longer-term interest rates are likely to be higher, given that "inflation could be more volatile going forward" because of the possibility of "more frequent, and potentially more persistent, supply shock" to the economy. Powell didn't name Trump's tariffs, but flagged risks around them at the Fed's May meeting.

S&P clocks fourth day of winsOn Thursday, the S&P 500 gained 0.41%, its fourth positive session, the Dow Jones Industrial Average rose 0.65% but the Nasdaq Composite underperformed, dropping 0.18%. The pan-European Stoxx 600 climbed 0.56%, recouping losses from early trading. The FTSE 100 added 0.57% as data showed that the U.K. economy grew by an unexpectedly strong 0.7% in the first quarter.

'A little problem with Tim Cook': TrumpWhile discussing on Thursday Washington's trade relations with India, Trump said that he doesn't want Apple CEO Tim Cook to build factories in India. "I had a little problem with Tim Cook yesterday," Trump said. "I said to him, 'my friend, I treated you very good. You're coming here with $500 billion, but now I hear you're building all over India.' I don't want you building in India."

Rare earth exports from China still blockedChina has temporarily paused export restrictions targeting 28 American companies following the trade agreement reached by Beijing and the Trump administration over the weekend. But it is continuing to block exports of seven rare earth metals to the United States. Those metals are essential for the U.S.' defense, energy and automotive industries.

Putin and Trump skip peace meetingRussia leader Vladimir Putin and his White House counterpart Trump opted to skip Ukraine-Russia peace talks in Turkey. Responding to the diplomatic slight as he arrived in Ankara on Thursday to meet Turkish President Recep Tayyip Erdogan, Ukraine President Volodymyr Zelenskyy said that the delegation of lower-ranking officials that Russia had sent to Turkey showed Moscow wasn't serious about talks.

U.K.-U.S. deal to benefit European automakerBritish businesses are still hashing out exactly what the recently-unveiled U.K.-U.S. trade deal means for them. The European Union is yet to strike its own deal. Despite this, one automaker from the bloc's biggest economy is about to see benefits due to its U.K. presence.

Indian Border Security Force (BSF) soldiers stand guard at the entrance of the India-Pakistan Wagah border post, about 35kms from Amritsar on April 24, 2025. India took a raft of punitive diplomatic measures against Pakistan on April 23, accusing Islamabad of supporting "cross-border terrorism" after a deadly attack on civilians in Kashmir.

India economic story not impacted by tensions with Pakistan

The Indian stock market has emerged from a volatile few weeks and soared past the level it was before the latest India-Pakistan flare-ups.

It shouldn't come as a surprise, though, because for a growing cohort of global investors focused on India, such border crises, while serious, are viewed as just one variable in a far more complex equation — for now.

Indeed, the risks from recent military flare-ups appear to have been offset by the fact that India is considered by many to be an attractive investment destination.