UK, India Agree Trade Deal Amid Fallout of Trump Tariff Wars

Glendon

Forex

Economic

China–U.S. Trade War

Summary:

India and the UK agreed a trade deal aimed at boosting economic ties between the world’s fifth and sixth-largest economies, as Washington’s disruptive tariff policies continue to reshape global trade.

“The conclusion of a balanced, equitable and ambitious FTA, covering trade in goods and services, is expected to significantly enhance bilateral trade, generate new avenues for employment, raise living standards, and improve the overall well-being of citizens in both countries,” the Indian government said in a statement Tuesday. “It will also unlock new potential for the two nations to jointly develop products and services for global markets.”

The deal is a critical one for UK Prime Minister Keir Starmer and his Indian counterpart Narendra Modi as countries globally race to insulate themselves from the fallout of US President Donald Trump’s tariff wars. For India, the deal burnishes its credentials as an emerging destination among investors looking to diversify away from China.

Source: Bloomberg Europe

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Adam

Economic

The steep recovery in equity markets over the past two weeks is typical of bear market rallies, and the erratic swings mean almost every investor will experience pain whichever direction the market suddenly moves.

Goldman Sachs Group Inc. (GS) strategist Peter Oppenheimer said “the asymmetry for equity investing is poor. Sharp rallies within bear markets are the norm, not the exception.”

The biggest market driver is still uncertainty, with no real long-term bullish or bearish conviction seen from investors. Price action is mainly fueled by short-term headlines and guesswork on how the quickly evolving US tariffs story will be told through corporate earnings and resetting valuations.

“If the tariff announcements are reversed quickly with little lasting economic damage, this does suggest that the downside risks are limited. Nonetheless, at current valuations, we also think the upside is limited,” Oppenheimer wrote in a note.

Investing becomes far more difficult in such a regime, when both upside and downside are seen as limited and decision making is caught in foggy headline risk. Market participants have to choose between chasing a fading rally then risk exiting too late, or missing out entirely on another squeeze higher. They want to avoid trap doors in a tricky macroeconomic environment while still being able to capture opportunities.

“This equities trade is nasty, and the one scenario that nobody wanted,” Nomura Securities cross-asset strategist Charlie McElligott said. Many investors were forced to de-risk when there was zero visibility on tariffs in early April, but are now being forced to buy into a rally very few had enough exposure to fully benefit from its performance.

There is confirmation of “holding your nose and forced to buy-back exposure” playing out in stock-index options, “despite most investors hating the eventual macro growth outlook ahead,” McElligott wrote in a note.

If history is any guide, one of the sharpest intra-month rebounds in stock market history in April may have exhausted gains. Since 1980, the global stock market underwent several bear market rallies, which on average lasted for 44 days and saw gains of 14%. And while this year’s global stocks decline isn’t officially a bear market, prices are up 18% from an intraday low hit on April 7.

“Rates and risk assets will continue to be headline driven,” said Academy Securities macro strategist Peter Tchir. “Policies and deals will take their turns driving markets.” On the plus side are indications of “some cooling” in the US tariff stance on China as well as the US budget getting going, but with the Fed unlikely to help as of now, “a lot has already been priced in,” he noted.

The funding spread — a measure of demand for long exposure through equity derivatives such as swaps, options and futures - has decoupled from the latest leg higher in stocks. “This suggests macro investors trimmed their equity exposure on the recent strength,” Goldman Sachs managing director John Marshall wrote in a separate note. He expects this week to be particularly volatile given the mid-week Federal Reserve meeting, where “commentary regarding June/July will be particularly important.”

Buying from systematic investors is growing steadily and lends a supportive stance to the rally. Goldman Sachs traders noted that buying from systematic macro investors climbed to $51 billion last week, with $57 billion in purchases expected for this week. “The size of the overall buying is not trivial, but also not bigger, because if signals are flipping back and forth quickly it can reduce the immediate pace of the flows, and the volatility environment is higher than before,” they wrote.

Other supporting buying flows during the bounce are arguably looking more stretched. JPMorgan Chase & Co.’s Tactical Positioning Monitor is currently in a neutral state, with one-week change showing a “moderate positioning increase.”

Hedge fund gross leverage rebounded month-over-month and is now at the 96th percentile on a long-term basis. Meanwhile Mom and Pop kept add more risk. “Retail saw strongest month of buying on our data since 2017, buying both single stocks and ETFs,” according JPMorgan’s Positioning Intelligence team lead by John Schlegel.

source :finance.yahoo

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Adam

Stocks

Economic

China–U.S. Trade War

Major US indices saw broad profit-taking on 5 May, ending the S&P 500’s nine-day winning streak. The S&P 500 fell 0.6%, the Nasdaq 100 -0.7%, the Dow Jones Industrial Average -0.2%, and the Russell 2000 -0.8%. Losses extended into today’s Asian session (6 May), with S&P 500 and Nasdaq 100 E-mini futures down 0.3% and 0.5%, respectively.

Market sentiment has turned cautious, with growing concerns over the medium-term economic drag from US trade tariffs. Despite ongoing negotiations, the US is expected to maintain a base 10% universal tariff alongside selective product- and country-specific duties. According to Kyodo News, US officials denied Japan’s request for full exemption from the 14% reciprocal tariff but may consider a reduction or extension of the current 90-day suspension depending on progress.

The US dollar weakened for a second session, with the Dollar Index falling 0.3% after failing to break above its 20-day moving average (approx. 99.95). It is now hovering near 99.80 in Asian trading.

In contrast, safe haven assets rebounded. Gold (XAU/USD) surged 2.9%—its best day since 16 April—and gained another 0.8% in today’s session. The Japanese yen also strengthened, rallying 1.6% over two sessions to 143.70/USD from 145.90.

Despite a weaker China Caixin Services PMI for April (50.7 vs. 51.9 in March), the Hang Seng Index rose 0.9% to a one-month high, supported by broad US dollar weakness.

Chart of the day – Bullish momentum remains intact for Hong Kong 33

Fig 2: Hong Kong 33 CFD Index minor trend as of 6 May 2025

Since 24 April 2025, the price actions of the Hong Kong 55 CFD Index (a proxy of the Hang Seng Index futures) have managed to trade above its 20-day moving average and started to evolve within a minor ascending channel since 16 April minor swing low of 20,840 (see Fig 2).

Watch the 22,110 key short-term pivotal support to maintain its current short-term bullish momentum condition. A clearance above 22,790/22,990 (also the 50-day moving average) may see the next intermediate resistance coming in at 23,360.

On the other hand, a break below 22,110 invalidates the bullish scenario to kickstart a minor corrective decline sequence towards the intermediate support of 21,605 (also the 20-day moving average).

source : marketpulse

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Warren Takunda

Economic

Stocks

Wall Street is pointing toward losses Tuesday ahead of a two-day meeting of the Federal Reserve, which is facing the diametrically opposed challenges of potential inflation and a softening employment landscape.

Futures for the S&P 500 lost 0.7% and futures for the Dow Jones Industrial Average retreated 0.6%. Nasdaq futures slid 1%.

The Fed is expected to hold its benchmark interest rate steady for the third consecutive meeting after trimming them three times to close out 2024. Uncertainty over President Donald Trump’s trade policy — namely tariffs — has officials concerned about a potential resurgence of inflation, which has been hovering just above the Fed’s target rate of 2%.

The U.S. economy shrank 0.3% in the first quarter, the first drop in three years.

After enormous sell-offs with the market roiling from back-and-forth tariff announcements from the White House, Wall Street had been on a nine-day winning streak, its longest since 2004. That momentum lost steam Monday and the S&P 500 fell 0.6%.

This week’s pause coincides with a growing number of U.S. corporations pulling guidance do to uncertainty about what the tariffs will bring, and spelling out the economic hits they’ll take.

Shares of Ford Motor Co. fell 2.5% before the bell after the automaker said Monday it expects to take a $1.5 billion hit to its operating profit from tariffs this year. That followed General Motors, which last week trimmed its 2025 guidance and said it was anticipating a potential $5 billion tariff impact

Clorox sank 3.2% after it missed sales and profit targets in its most recent quarter and lowered its forecast to reflect “macroeconomic uncertainty” related to tariffs.

DoorDash tumbled more than 5% in premarket after the food delivery app said it was acquiring Britain’s Deliveroo for 2.9 billion pounds ($3.9 billion) in cash, expanding its business in Europe, Asia and the Middle East.

In reporting its most recent financial results, DoorDash said demand for deliveries remained strong in the first quarter, even as more Americans feel increasingly uneasy about the U.S. economy.

Elsewhere, markets in China advanced after reopening from “Golden Week” holidays.

When asked at a routine briefing about comments Trump’s comments on NBC that he won’t cancel tariffs on China to pave the way for trade talks, a Chinese Foreign Ministry spokesperson reiterated Beijing’s stance that the U.S. “should stop threatening and pressuring and engage in dialogue with China on the basis of equality, respect, and mutual benefit.”

“If they want to fight, we will fight to the end; if they want to talk, the door is open,” Lin Jian said.

Late last week, China’s Commerce Ministry said it was evaluating various U.S. missives about holding talks.

The Shanghai Composite index added 1% to 3,311.89, while the Hang Seng in Hong Kong was up 0.7% at 22,651.65.

A monthly survey measuring future activity in China’s services sector fell to its lowest level ever, excluding the pandemic, in a further sign the escalation of Trump’s trade war is hitting the world’s second-largest economy.

A drastic increase in tariffs on U.S. imports of Chinese products, to 145%, has caused a sharp drop in shipping and other logistics.

“Overall optimism among Chinese firms weakened to the lowest level since this series began in April 2012, resulting in further job cuts in April,” said the report by Caixin, a financial media group.

However, reports showed a sharp increase in tourism revenues during the holidays that ended Monday, suggesting robust domestic demand, economists said.

Elsewhere in Asia, Australia’s S&P/ASX 200 lost 0.2% to 8,148.40.

India’s Sensex fell 0.2%, while Taiwan’s Taiex slipped less than 0.1%. In Indonesia, the JSX was up 1%.

Germany’s DAX fell 1%, while the CAC 40 in Paris lost 0.4%. Britain’s FTSE 100 dipped 0.2%.

Oil prices gained more than $1 early Tuesday, bouncing back from a 4-year low following a decision by the OPEC+ group of oil producing nations to raise their output by 411,000 barrels per day as of June 1.

U.S. benchmark crude oil picked up $1.23 to $58.36 per barrel, while Brent crude, the international standard, surged $1.27 to $61.50 per barrel.

Source: AP

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Glendon

Economic

Forex

The U.S. Trade Balance, a key indicator of the nation’s economic health, has reported a larger deficit for the most recent period. The actual figure came in at -$140.50 billion, indicating that the U.S. imported significantly more goods and services than it exported.

This actual number not only surpassed the forecasted deficit of -$136.80 billion but also exceeded the previous deficit of -$123.20 billion. The widening of the trade deficit signals a potentially worrying trend for the U.S. economy, as it implies that more money is leaving the country to pay for imports than is coming in from exports.

The Trade Balance measures the difference in value between imported and exported goods and services over a reported period. A positive number indicates that more goods and services were exported than imported, which is generally seen as a favorable situation for a country’s economy. Conversely, a negative number, or trade deficit, signifies that a country is importing more than it’s exporting, which can lead to job losses in certain sectors and an increase in foreign debt.

The higher than expected reading of the trade deficit is likely to be interpreted as negative or bearish for the U.S. dollar. This is because a trade deficit means that more U.S. dollars are being exchanged for foreign currencies to pay for imports, which can put downward pressure on the dollar’s value.

The widening of the trade deficit comes at a time when the U.S. is grappling with various economic challenges. It underscores the importance of strengthening the nation’s export capabilities and reducing its dependence on imports.

In the coming months, investors and policymakers will be closely monitoring the Trade Balance figures, as they play a crucial role in shaping the country’s economic policies and the value of the U.S. dollar. It remains to be seen how the U.S. will address its growing trade deficit and what impact this will have on its economy and currency.

Source: Investing

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Adam

Commodity

Crude Oil News Today: Bargain Buying Lifts Oil, But Headwinds Remain

Oil prices rebounded sharply on Tuesday, driven by technical buying and bargain hunting after hitting multi-year lows in the previous session. U.S. West Texas Intermediate (WTI) crude surged nearly 3%, recovering from a low of $55.30—its weakest since April 9—after a gap lower open. Despite bearish fundamentals, price action appears to have established a short-term value zone between $55.30 and $54.48.

At 10:03 GMT, Light Crude Oil Futures are trading $58.75, up $1.62 or +2.84%.

Technical Support and Bargain Buying Trigger Upside

Daily Light Crude Oil Futures

Tuesday’s gains were largely technical, with market participants reacting to perceived oversold levels. Analysts noted that the drop below $60 a barrel triggered fresh buying interest, with $60 acting as a key psychological pivot. Brent crude also snapped a six-day losing streak, supported by similar sentiment. However, the market still faces resistance at $59.68 and $60.09. A sustained move above these levels could reinvigorate bullish momentum.

OPEC+ Output Strategy Fuels Uncertainty

Overhang from OPEC+ remains a major concern. The group’s decision to increase output for a second straight month has undermined bullish sentiment. While Saudi Arabia did modestly cut its official selling prices, analysts argue it’s not an aggressive bid for market share but rather a cautious recalibration. Still, expectations that supply will exceed demand have pushed oil over 20% lower since April.

Demand Signals Mixed as China Returns, U.S. Services Pick Up

The return of Chinese buyers following a five-day holiday added marginal support, as the world’s top importer likely took advantage of discounted prices. Additionally, U.S. economic data surprised to the upside, with the ISM services PMI rising to 51.6, indicating modest expansion in the largest oil-consuming economy. But ongoing trade risks and broader demand uncertainties remain key limiting factors.

Analysts Slash Oil Prices Forecast on Fundamentals

Major institutions have revised their oil prices projections downward. Barclays cut its Brent forecast by $4 to $70 per barrel for 2025 and lowered its 2026 estimate to $62, citing weakened fundamentals and trade tensions. Goldman Sachs also trimmed its outlook, factoring in an expected 400,000 bpd supply boost from OPEC+ in July. These revisions underscore growing concerns that any short-term rally may be unsustainable.

Market Outlook: Bearish Bias Until Key Resistance Clears

While Tuesday’s rebound provided technical relief, broader fundamentals remain skewed to the downside. Oversupply fears, uncertain demand, and downgraded price forecasts all suggest continued bearish pressure. WTI must decisively clear resistance near $60 to alter sentiment. Until then, rallies are likely to face selling into strength.

Source: fxempire

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Glendon

Stocks

Political

Global stocks dropped on Tuesday as concerns about tariffs and their impact on the economy lingered and as German conservative leader Friedrich Merz unexpectedly failed to secure the parliamentary votes required to become chancellor.

Markets were processing the surprise from the Bundestag where Merz failed to garner the votes required, dealing a major blow to his proposed government that has promised to revive economic growth at a time of global uncertainty.

"I didn't expect what happened today to have happened at all," said George Lagarias, chief economist at Forvis Mazars.

"Markets are going to be extremely negatively surprised if Merz fails to be elected as chancellor and Germany falls into disarray."

Merz now has 14 days to try and win parliamentary support, and while this is not seen as a fatal setback, his failure to win parliamentary backing at the first time is a first for post-war Germany.

Germany's DAX (.GDAXI), opens new tab fell by as much as 2% but was last down about 1.3%. Britain's FTSE 100 (.FTSE), opens new tab was down 0.3%.

Investor attention remains on the possibility of easing trade tensions between the U.S. and China after Beijing last week said it was evaluating an offer from Washington to hold talks over tariffs.

U.S. President Donald Trump said on Sunday that Washington is meeting with many countries, including China, and that his main priority with China is to secure a fair deal.

"We've seen a backpedalling and the trade risk has become lower," said Lars Skovgaard, senior investment strategist at Danske Bank.

But with few details coming out about trade discussions, investors have been left trying to make sense of headlines coming out of the White House.

"Now we need to see some deals being announced otherwise the rise in stocks will fade again," Skovgaard added.

Europe's STOXX 600 (.STOXX), opens new tab was down 0.7% on Tuesday but remains close to its closing level on April 2, the day Trump announced his tariff proposals.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), opens new tab, was down 0.1% with Japan closed for a holiday.

Chinese markets returned from an extended holiday with the blue-chip index (.CSI300), opens new tab and Hong Kong's Hang Seng (.HIS), opens new tab both up about 1%.

The Federal Reserve begins its two-day policy meeting on Tuesday, where the central bank is widely expected to keep rates steady but the spotlight will be on how policymakers are likely to navigate a tariff-ridden path.

"The Fed remains caught between a rock and a hard place," said Christian Scherrmann, DWS chief U.S. economist. "We think they will opt for a slightly more hawkish tone, but more in the direction of an extended pause than a potential hike."

Traders are pricing in 75 basis points of easing this year with the first move possible in July, LSEG data showed.

U.S. stock futures were falling on Tuesday, with S&P futures down 0.7%.

DOLLAR SLIPS, RISES VS ASIAN FX

Trump's erratic trade policies have fuelled significant waves of dollar selling since April as investors shifted away from U.S. assets, pushing the euro, yen and Swiss franc higher.

The euro on Tuesday was little changed against the dollar at $1.1315, trimming an earlier rise after Germany's parliamentary vote. The yen was up 0.3% at 143.24 per dollar .

The dollar selling has spread to other Asian FX, underscored by the Taiwan dollar's record surge in recent sessions, which has stoked speculation that a revaluation of regional foreign exchange was possible to win U.S. trade concessions.

The Taiwan dollar was fairly sedate on Tuesday last fetching 30.28 per U.S. dollar, not far from the near three-year high of 29.59 it touched on Monday.

The focus has turned to Hong Kong, where the de facto central bank bought $7.8 billion to stop the local currency from strengthening and breaking its peg to the greenback.

"If these currencies keep strengthening sharply, it could spark fears of a 'reverse Asian currency crisis', with potential ripple effects in the bond market amid fears that Asian institutions reassess their unhedged exposure to Treasury holdings," said Charu Chanana, chief investment strategist at Saxo.

The Hong Kong Monetary Authority said on Tuesday it has been diversifying currency exposure in its investment portfolio to manage risks.

On the mainland, China's yuan strengthened to its highest level since November at 7.2105 per dollar.

In commodities, oil rose after hitting four-year lows in the previous session that was driven by an OPEC+ decision to accelerate output increases. Brent crude futures were last up 2.7% at $61.87 per barrel.

Gold prices rose 1.4% to a two-week high of $3,386/oz on safe-haven demand.