EU To Set Out Plans To Halt Russian Gas Imports By End-2027

Catherine Richards

Economic

Commodity

Energy

Summary:

The European Union will publish plans on Tuesday to ban new Russian gas deals by the end of this year, and phase out existing contracts with Moscow by the end of 2027, three EU officials told Reuters.

The bloc had set a non-binding aim to end Russian fossil fuel imports by 2027 after Moscow's full-scale invasion of Ukraine in 2022.

The EU Commission's plan includes a commitment to propose in June a ban on new Russian gas import deals and spot contracts by the end of 2025, the officials told Reuters.

It will also make a legal proposal to ban Russian gas and liquefied natural gas imports under existing contracts by the end of 2027, said the officials, who wished to remain anonymous to discuss the confidential plans, which could still be changed before they are published.

The legal proposals would need approval from the European Parliament and a reinforced majority of EU countries.

The EU has imposed sanctions on Russian coal and seaborne oil shipments, but not on gas due to opposition from Slovakia and Hungary, which receive Russian pipeline supplies and say switching to other suppliers would hike energy prices. Sanctions require unanimous approval from all 27 EU countries.

Around 19% of Europe's gas still comes from Russia, via the TurkStream pipeline and liquefied natural gas shipments.

That's far below the roughly 40% Russia supplied before 2022. But European buyers still have "take-or-pay" contracts with Gazprom which require those that refuse gas deliveries to pay for much of the contracted volumes.

The Commission has been assessing legal options to allow European companies to break existing Russian gas contracts without facing financial penalties.

The EU officials did not specify how Brussels intends to do this. Lawyers have said it would be difficult to invoke "force majeure" to quit these deals, and that buyers could face penalties or arbitration for doing so.

Russian gas pipeline imports fell sharply since late 2021, while LNG imports rose

Uncontracted "spot" purchases made up around 31% of the Russian LNG Europe bought last year, Rystad Energy data show.

As it attempts to cut decades-old energy ties with Russia, the European Commission has signalled willingness to buy more U.S. LNG, a step President Donald Trump has demanded from Europe as a way of shrinking its trade surplus with the United States.

A pie chart showing the various natural gas suppliers to the European Union in 2024. Norway 33.6%, Russia 18.8%, United States 16.7%, Algeria 14.1%, United Kingdom 4.8%, Azerbaijan 4.2%, Qatar 4.1%, Others 3.7%.

The Commission is also concerned about energy prices, and has said any measures to restrict Russian energy imports must hurt Moscow more than the EU, and take into account the impact on fuel costs.

The U.S. is pushing Russia for a peace deal with Ukraine, which, if reached, may reopen the door for Russian energy and ease sanctions.

The European Commission had originally planned to publish its roadmap in March, but delayed it in part due to uncertainty around these developments.

Source: Reuters

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Economic

Stocks

Indian IPO Market Loses Its Shine Amid Global Uncertainty

India’s IPO landscape, which ranked among the world’s most active last year, has entered a subdued phase. At least two upcoming IPOs—those of Avanse Financial Services and Anthem Biosciences, worth a combined $759 million—are reportedly being postponed, joining a growing list of companies hesitating to go public. According to investment bankers, the weakening risk appetite among institutional and retail investors, largely due to global trade friction and geopolitical tension, is driving this slowdown.

The situation reflects broader concerns about the economic climate. U.S. President Donald Trump’s escalating tariff policies and the lingering India-Pakistan tensions have increased volatility, clouding the outlook for capital markets in emerging economies. In response, many firms are pressing pause on capital-raising efforts, waiting for greater market stability before launching IPOs.

Data Points to Broad-Based Decline in Public Listings

India has seen a 58% drop in IPO activity on its main exchanges so far in 2025, according to data from PRIME Database. Total IPO fundraising across all platforms has declined 18%, per LSEG figures. Currently, 58 companies with regulatory approval are yet to initiate their public offerings. With many of these clearances set to expire soon, affected firms face the choice of restarting the IPO process or seeking regulatory extensions—both of which carry financial and procedural burdens.

This disruption marks a sharp departure from 2024, when India trailed only the U.S. in IPO volume. Now, uncertainty over macroeconomic policy and tariff spillovers has disrupted the momentum that once positioned India as a global IPO hotspot.

Investor Sentiment Turns Cautious Despite Full Subscription for Ather Energy

The muted performance of Ather Energy's debut on May 6 served as a real-time indicator of cautious investor mood. Despite achieving full subscription for its $352 million IPO, the electric vehicle company had to slash its valuation target by 44% and reduce the offering size. Pre-market trading saw shares hovering near the issue price of ₹321 ($3.81), signaling a lackluster start.

Retail investors have become particularly wary. After suffering losses during recent market swings, their appetite for new listings has diminished, resulting in tepid responses to offerings that just months ago might have been met with exuberance.

Bankers Advise Patience, Realignment on Valuations

In the face of increased volatility and valuation compression, investment bankers are urging potential IPO candidates to adjust expectations. Bhavesh Shah, managing director at Equirus, outlined a critical trade-off: “If the issue is important, you may need to reconsider valuations. If valuation is important, then waiting is your best option.”

Other firms are already deferring timelines. Online automobile platform Droom, for example, has opted not to file draft IPO papers by June as originally planned, citing prolonged uncertainty. These decisions illustrate how pervasive caution has become, even among high-profile, tech-oriented ventures.

The retreat in India’s IPO momentum underscores how global macroeconomic policy—particularly erratic tariff decisions—can ripple into emerging markets and reshape capital-raising strategies. With more companies delaying or downsizing offerings, the IPO pipeline remains crowded but frozen. Unless global and regional stability returns, and investor sentiment recovers, India’s public markets may remain in a state of cautious paralysis well into the second half of 2025.

Source: Reuters

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Forex

Economic

Dollar Stabilizes After Wave of Selling, But Trade Concerns Persist

Markets opened Tuesday with a tempered tone as the U.S. dollar found temporary support following a sharp, two-day selloff driven by Asian currency surges—particularly the Taiwan dollar. The rally in regional currencies had previously sparked widespread dollar repositioning, reflecting heightened sensitivity to Washington's unpredictable tariff strategy. However, with no confirmed breakthroughs in trade negotiations, the positive sentiment that followed Beijing’s openness to U.S. talks last week has begun to wane.

Investors remain cautious, interpreting the dollar’s pause not as a reversal, but as a breather before more clarity emerges—especially from the Federal Reserve’s policy decision due Wednesday. European markets are also expected to open flat, with futures signaling little momentum as traders await macroeconomic signals and hard data.

Asian Currencies Drive Global FX Narrative

The Taiwan dollar’s nearly 3% rally against the greenback on Monday remains a headline driver, underscoring the powerful repricing in regional FX markets. Other currencies also joined the trend: the Malaysian ringgit surged 1.5% on Monday, reaching its strongest point since October, though it has since pulled back slightly. The Hong Kong Monetary Authority once again intervened to maintain the peg, stepping into markets for the fourth time this month as the local currency tested the upper limit of its trading band.

Market speculation is growing that some Asian economies are deliberately allowing their currencies to appreciate as leverage in ongoing or upcoming trade negotiations with the U.S., potentially using FX strength to signal policy flexibility in return for tariff concessions.

While this strategy may offer diplomatic benefits, it also invites risks—particularly for export-driven economies. Rapid currency appreciation can undermine export competitiveness even as it helps dampen imported inflation and reduce dollar-denominated debt burdens.

European Focus: PMI Data and Trade-Sensitive Sectors

In Europe, attention is shifting to the release of April PMI figures for France, Germany, the UK, and the broader eurozone. These indicators are expected to shed light on how the region’s industrial activity is coping with global trade disruptions.

Sectors exposed to U.S. trade policy—such as automotive—are under scrutiny. Ford Motor's decision to suspend its annual guidance due to U.S. policy uncertainty reverberated across the industry and put pressure on European carmakers. Meanwhile, earnings reports from Ferrari and Telenor are due, adding to a mixed outlook for equities.

Fed Outlook: Message More Important Than Action

Although the Federal Reserve is widely expected to hold interest rates steady at its policy meeting this week, investors will be parsing the language of its statement closely. The central bank is navigating a complex environment where inflation pressures—exacerbated by tariffs—are building, but growth momentum is fragile.

Economists expect a "hawkish hold," signaling concern about inflation without a readiness to hike further. Traders are still pricing in 75 basis points of rate cuts for 2025, with the first move potentially in July, based on LSEG data.

The current market backdrop is defined by hesitation. While the U.S. dollar's recent losses appear to have stalled, investor positioning remains vulnerable to headline volatility, especially related to trade policy. Asian currency strength, driven by both technical positioning and diplomatic signaling, has shifted the center of gravity in global FX markets. As the Federal Reserve, European data, and tariff headlines converge, this week could redefine near-term market sentime

Source: Reuters

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Grace Montgomery

Cryptocurrency

Central Bank

Economic

Key Points:

● Federal Reserve to maintain interest rates affecting dollar value predictions.

● Market trends suggest a declining dollar, impacting US economic prospects.

● Interest rate stability aligns with cautious economic monitoring amid tariffs.

The Federal Reserve is set to maintain interest rates during its meeting on May 7, 2025, amid economic uncertainties. This move aligns with earlier projections from experts like UniCredit's Roberto Mialich and signals continued caution concerning tariff impacts.

The Federal Reserve's stance on holding interest rates steady highlights its cautious approach amid unclear economic signals. Observers predict a weak dollar, aligning with market trends favoring downside bets on the currency.

Fed's Interest Rate Hold Pressures U.S. Dollar

The upcoming Federal Reserve meeting has the financial markets attentively watching the decision to maintain current interest rates. Analysts, including Roberto Mialich of UniCredit, expect this course of action to offer minimal support for the U.S. dollar. Federal Reserve Chairman Jerome Powell previously indicated a waiting approach to assess tariffs' effects.

Market trends show an inclination towards a weaker dollar, with the options market favoring bets on its decline. Investors remain cautious, and the EUR/USD is forecasted to trade around the 1.13 mark.

"The Federal Reserve will likely keep interest rates unchanged at its upcoming meeting on Wednesday, May 7, 2025." - Roberto Mialich, Foreign Exchange Analyst, UniCredit Bank.

Digital Assets Stay Resilient Amid Rate Stability

Did you know? The Federal Reserve's interest rate decisions can significantly influence global currency markets.

According to CoinMarketCap, Bitcoin (BTC) currently trades at $94,387.86 with a market cap of $1.87 trillion, dominating 63.87% of the market. Trading volume in the past 24 hours reached $23.27 billion, reflecting an 11.16% change. Despite minor fluctuations, Bitcoin has shown modest short-term resilience.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 05:49 UTC on May 6, 2025.

Insights from the Coincu research team suggest that sustained interest rates may prolong uncertainty, maintaining pressure on digital assets. Regulatory outcomes could influence future economic assessments, with historical trends suggesting cautious optimism.

Source: CryptoSlate

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Forex

Stocks

Cautious Markets Await Fed Clarity as Tariff Uncertainty Lingers

On May 6, global financial markets opened the week on a tentative note. Equities hovered in narrow ranges while the U.S. dollar attempted a modest recovery, especially against surging Asian currencies. The day’s trading was shaped by investors recalibrating expectations amid U.S. tariff volatility, with markets awaiting Wednesday’s Federal Reserve policy decision for clearer guidance on the interest rate outlook.

President Donald Trump’s unpredictable tariff maneuvers—including a sudden 100% tax on foreign-produced films and ongoing uncertainty over trade negotiations with China—continued to weigh on market sentiment. While headlines hint at potential breakthroughs in trade talks, details remain vague, leaving investors to trade on shifting signals rather than concrete developments.

Taiwan Dollar and Asian FX Take Center Stage

The sharp strengthening of several Asian currencies has become a focal point for investors, signaling a broad repositioning away from the U.S. dollar. Bloomberg’s Asia currency index recently reached a six-month high, led by the Taiwan dollar, which touched a near three-year high on Monday at 29.59 before stabilizing around 30.185 per U.S. dollar on Tuesday. The offshore Chinese yuan also strengthened to 7.23 per dollar, its highest since March 20.

The sudden appreciation in regional currencies is interpreted as both a reaction to tariff expectations and a technical correction. Years of trade surpluses in Asia have created large dollar reserves among exporters and insurers, which are now being reassessed. Charu Chanana, chief strategist at Saxo Bank, warned that further sharp appreciation could trigger a “reverse Asian currency crisis,” where a rapid revaluation disrupts capital flows and triggers bond market volatility.

Hong Kong's de facto central bank intervened on Tuesday, spending $7.8 billion to prevent the local currency from breaching its dollar peg—highlighting concerns about excessive FX movements. Taiwan’s central bank has also indicated potential intervention should its currency continue to surge uncontrollably.

Stock Markets React Cautiously Ahead of Trade and Rate Signals

Equity markets mirrored the broader tone of caution. MSCI’s Asia-Pacific index (excluding Japan) rose 0.2% with Japan closed for a holiday. Chinese stocks rebounded from a break, with the blue-chip CSI 300 gaining nearly 1%, while the Hang Seng index climbed 0.69%. Taiwan’s benchmark was little changed after recent gains.

European stock futures pointed to a subdued start, with traders eyeing incoming manufacturing data that may reflect the economic cost of U.S. tariffs. U.S. futures also slipped, suggesting that Wall Street is awaiting more definitive developments before making directional bets.

Traders Look to Fed for Guidance on Inflation-Tariff Nexus

Attention now turns to the Federal Reserve’s policy meeting, where rates are expected to remain unchanged. However, with U.S. service sector data showing acceleration in April and input prices rising at their fastest pace in over two years, pressure is mounting on the Fed to address inflation risks stemming from tariffs.

Christian Scherrmann, chief U.S. economist at DWS, noted that the Fed is likely to strike a hawkish tone, not by raising rates, but by signaling a prolonged pause. Market data from LSEG indicates that traders expect a total of 75 basis points of rate cuts this year, with the first move possibly in July—though that outlook remains highly sensitive to both inflation data and tariff developments.

Commodities Reflect Broader Risk Sentiment

In the commodities space, oil prices stabilized after hitting four-year lows on Monday following an OPEC+ announcement to raise output. Safe-haven demand pushed gold prices to a one-week high, underscoring market nervousness amid geopolitical and economic uncertainty.

The current landscape reflects a market in transition. As investors grapple with U.S. trade policy unpredictability and rising inflation pressures, focus has shifted to Asia—where currencies are rallying and policymakers are becoming increasingly active. With the Fed walking a tightrope between inflation control and economic support, this week’s decisions will be pivotal in shaping global risk sentiment for the months ahead.

Source: Reuters

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Economic

Growth Undershoots Expectations Amid Mounting Economic Headwinds

Indonesia, Southeast Asia’s largest economy, started 2025 with a disappointing GDP growth rate of 4.87% in the first quarter—the slowest quarterly expansion since Q3 2021. This figure fell short of Reuters’ economist forecast of 4.91% and highlights persistent structural fragilities, as the nation struggles to reignite post-pandemic momentum. President Prabowo Subianto’s ambitious target of 8% annual growth for 2025 is now facing significant skepticism, especially as key growth drivers show signs of exhaustion.

The economy had managed to hover around the 5% mark since the COVID-19 crisis, but Q1’s performance signals a broader deceleration. Consumer spending, the backbone of Indonesia’s economy, grew only 4.89%—its slowest pace in five quarters—while public investment rose just 2.12%, the weakest in two years. Simultaneously, government expenditure contracted, and inflation-adjusted wages failed to keep up with living costs.

Weakened Middle Class and Employment Layoffs Limit Recovery

One of the most concerning trends undermining Indonesia’s growth is the erosion of its middle class. In 2024, the share of Indonesians classified as middle class fell to 17.1%, down from 21.4% in 2019. This contraction reflects longer-term aftershocks of the pandemic, elevated interest rates, and widespread layoffs in labor-intensive industries. In just the first two months of 2025, an estimated 40,000 workers—predominantly from the textile and footwear sectors—were laid off, further curbing household spending and social stability.

While exports grew 6.93% year-on-year in Q1, led by manufacturing and processing sectors, this external demand alone is insufficient to counterbalance the stagnation in domestic consumption and investment. Furthermore, Indonesia’s reliance on exports to China, which is experiencing its own slowdown, adds vulnerability to external shocks.

Macroeconomic Uncertainty Grows Amid Rupiah Weakness and Tariff Pressures

Currency depreciation is adding another layer of complexity. The Indonesian rupiah hit a record low in April, reflecting both global risk aversion and domestic fiscal anxieties. The ambitious social policies proposed by President Prabowo—such as a national free meal program for children—have raised investor concerns about fiscal sustainability.

Adding to these concerns, Bank Indonesia recently revised its 2025 GDP forecast to a range of 4.7%–5.5%, citing risks associated with U.S. tariff policies and potential disruptions in global trade flows. These projections suggest a heightened awareness of how external economic policy—especially from major trade partners—can influence domestic trajectories in emerging markets like Indonesia.

Indonesia’s weaker-than-expected Q1 growth underscores both cyclical and systemic challenges. While trade expansion offers some support, the fragility of consumer demand, an eroding middle class, and heightened unemployment point to deeper structural issues. The current environment demands a careful balance between fiscal ambition and macroeconomic discipline. Unless decisive steps are taken to strengthen labor markets, restore investor confidence, and stabilize the currency, Indonesia’s growth aspirations for 2025 may remain out of reach.

Source: Nikkei Asia

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Forex

Regional Currency Strength Reflects Shifting Trade and Rate Expectations

On May 5, Asian currencies witnessed a sharp rally, buoyed by signs of de-escalation in the U.S.-China trade standoff and growing investor anticipation of regional trade deals. Bloomberg’s Asia currency index rose to its highest level in six months, led by Taiwan’s dollar, which surged more than 5%—marking its strongest level in over two years. The Malaysian ringgit and offshore Chinese yuan also posted multi-month highs, while the Japanese yen, South Korean won, and Singapore dollar gained significant ground.

The momentum was catalyzed by Donald Trump’s statement a day earlier that he would consider reducing tariffs on Chinese goods “at some point,” citing concerns over stalled bilateral trade. The comment followed months of economic retaliation, where the U.S. imposed tariffs as high as 145% and China responded with 125% duties. Now, with both sides signaling openness to negotiation, market sentiment has turned sharply in favor of Asian assets.

Capital Rotation and Short Covering Amplify Currency Moves

The trade optimism triggered a flurry of adjustments in investor positioning. According to Peter Chia of United Overseas Bank, the softer tone in trade rhetoric gave investors confidence to re-enter previously undervalued Asian currencies, especially after months of outflows driven by Trump’s tariff policy. The rapid appreciation also prompted short-sellers to unwind positions, exacerbating the upswing.

SEB’s chief strategist Namik Immelbäck highlighted that many investors were reducing dollar exposure in anticipation of trade agreements, viewing the current moment as a turning point in cross-border financial flows. In Taiwan, the local currency gained added momentum from strong foreign inflows into chipmaker stocks and exporters hedging against further U.S. dollar depreciation.

China’s exporters mirrored this sentiment, with a Bloomberg survey showing a shift from stockpiling dollars to holding yuan amid declining faith in the dollar as a safe haven.

Central Banks Step In to Cool Currency Surge

The rapid gains have triggered concerns about export competitiveness and prompted some central banks to consider intervention. Taiwan’s central bank issued a rare warning that it may act if the currency appreciates too rapidly, while Hong Kong’s Monetary Authority spent a record HK$46.5 billion (approximately US$6 billion) buying U.S. dollars to temper the local currency’s strength.

A stronger local currency helps reduce import costs and attract foreign capital, but it simultaneously risks damaging export sectors by making goods more expensive on the global market. This trade-off is especially critical in export-dependent economies like Taiwan, Malaysia, and South Korea.

Dollar Weakness Rooted in Rate Outlook and Economic Anxiety

Despite robust U.S. job data released at the end of April, broader market confidence in the dollar remains weak. Hedge fund managers last week were reportedly more bearish on the dollar than at any time since September 2024. Goldman Sachs noted that April’s labor report reflects past economic activity rather than forward-looking strength, and emphasized that uncertainties surrounding future rate cuts and trade policy still weigh heavily on the greenback.

Morgan Stanley analysts echoed this view, citing the steepening U.S. yield curve as a warning signal of potential inflation pressures or an impending economic slowdown—both of which diminish the appeal of dollar-denominated assets. In such an environment, Asian currencies like the yuan, Taiwan dollar, and ringgit are increasingly viewed as attractive alternatives, particularly in the eyes of exporters and investors seeking yield and regional growth exposure.

The sudden rally in Asian currencies is more than a technical rebound—it reflects a broader recalibration of investor expectations amid shifting geopolitical and macroeconomic signals. While trade talks and U.S. tariff strategies remain in flux, the market’s response highlights renewed confidence in Asia’s economic outlook and growing skepticism toward the U.S. dollar’s near-term prospects. With central banks now on alert and global capital flows adjusting, Asia’s currency markets are poised for continued volatility and strategic intervention.