U.S. Non-manufacturing Sector Shows Unexpected Strength, ISM PMI Rises to 51.6

Economic

Forex

Summary:

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) reported an unexpected rise in the non-manufacturing sector, indicating an expansion in the economy. The actual index value was reported at 51.6, surpassing forecasted and previous values.

The actual PMI figure of 51.6 outperformed the forecasted figure of 50.2. This indicates a more robust expansion in the non-manufacturing sector than analysts had predicted. The index, a composite measure of business activity, new orders, employment, and supplier deliveries, reflects the overall health of the non-manufacturing sector. A reading above 50 suggests expansion, while a figure below 50 indicates contraction.

In comparison to the previous month, the current ISM Non-Manufacturing PMI also shows an improvement. The previous month’s index was reported at 50.8, meaning that the non-manufacturing sector has seen a stronger expansion this month. This improvement is a positive sign for the U.S. economy, as the non-manufacturing sector represents a significant portion of the country’s GDP.

The data for the ISM Non-Manufacturing PMI is compiled from monthly responses to questions asked of more than 370 purchasing and supply executives in over 62 different industries. These industries span nine divisions from the Standard Industrial Classification (SIC) categories, providing a comprehensive view of the non-manufacturing sector’s performance.

The unexpected rise in the ISM Non-Manufacturing PMI is a positive sign for the USD. Higher than expected readings are generally taken as bullish for the USD, as they suggest a stronger economy. Conversely, lower than expected readings are seen as bearish for the USD, indicating a weaker economy. This month’s higher than expected PMI figure suggests that the non-manufacturing sector, and by extension the U.S. economy, is in a stronger position than previously thought.

Source: Investing

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Glendon

Economic

Forex

The latest data on the Services PMI (Purchasing Managers’ Index) reveals a decline in the sector’s performance. The index, which is released monthly by Markit Economics, registered an actual figure of 50.8. This number indicates a slight improvement in the sector, but it falls short of the forecasted 51.4.

The Services PMI is a key economic indicator, gauging the health of the service sector by surveying over 400 executives in private sector service companies. The survey encompasses a wide range of industries, including transport and communication, financial intermediaries, business and personal services, computing & IT, hotels, and restaurants. An index level of 50 denotes no change since the previous month, whereas a level above 50 signals an improvement and below 50 indicates a deterioration.

The actual PMI number of 50.8 not only missed the forecasted figure of 51.4 but also showed a decline from the previous month’s reading of 54.4. This indicates a slowdown in the growth of the service sector, which could potentially be a cause for concern for the US economy.

A stronger-than-forecast PMI reading is generally supportive (bullish) for the USD, indicating a robust service sector. Conversely, a weaker-than-forecast reading is generally negative (bearish) for the USD. In this case, the lower-than-expected PMI of 50.8 may exert some downward pressure on the USD.

Despite the decline, the PMI remains above the 50-mark threshold, suggesting the service sector is still in expansion mode, albeit at a slower pace. This slowdown could be attributed to a variety of factors, and it will be important to monitor future PMI releases to identify whether this is a temporary blip or the start of a longer-term trend.

In light of the recent data, investors and market watchers will likely keep a close eye on the upcoming economic indicators for any signs of sustained weakness in the service sector.

Source: Investing

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Gerik

Economic

Commodity

Impact of US Tariff Measures

Recent US surcharges targeting vessels built in Chinese shipyards have exerted a direct relationship on port-calling patterns and operating costs. By imposing additional millions of dollars in port fees for China-built ships, US policy aims to resuscitate domestic shipbuilding but, in turn, prompts major lines such as MSC, Maersk and Hapag-Lloyd to consolidate cargo and reduce calls at American ports. As these higher fees are passed on to shippers, demand for direct sailings to the United States is likely to diminish, triggering route adjustments and raising per-container costs by several hundred dollars.

Under the International Maritime Organization’s new emissions pricing and trading framework—expected to generate up to $40 billion by 2030—shipping lines face a direct relationship between compliance and fleet renewal. With heavy fuel oil vessels responsible for roughly 3 percent of global CO₂ output, carriers are now compelled to order zero-emission ships powered by green methanol or other clean propulsion systems. Hapag-Lloyd’s €4 billion order for 24 such vessels exemplifies how regulatory pressure translates into capital expenditure. Meanwhile, leading cargo owners like Ikea and Adidas are correlating their own sustainability goals with demand for greener shipping services, intensifying the investment imperative.

Rerouted Voyages Around the Suez Canal

Heightened tensions in the Red Sea have prompted a shift in voyage planning that shows a direct relationship between security concerns and sailing distances. Major operators including Maersk and MSC now bypass the Suez Canal via the Cape of Good Hope, adding approximately 6,000 kilometers and increasing fuel consumption. According to BIMCO data, weekly container transits through Suez fell from pre-conflict daily levels to about 100,000 per week in 2024, less than half the prior throughput. This extended routing not only ties up more vessels but also drives up operating expenses, further exacerbating capacity mismatches.

After pandemic-era profits—Maersk reported $20 billion in pre-tax earnings in 2021, Hapag-Lloyd $13 billion—carriers placed record orders that expanded container fleet capacity by 12 percent in 2024 and an anticipated additional 6 percent this year. Yet BIMCO forecasts a 2 percent decline in trade volumes for 2025, indicating a correlational link between fleet growth and underutilization. Should trans-Pacific volumes fall by 7.5 percent, as Flexport’s Sanne Manders warns, the shock to shipping companies would be severe, with empty container slots and idled tonnage dragging on revenues.

The confluence of policy-induced cost increases, environmental compliance outlays, security-driven reroutings and a looming demand downturn leaves executives weighing complex trade-offs. To navigate this shifting environment, carriers must pursue capacity management measures, diversify trade lanes, and accelerate fleet decarbonization. Only by aligning vessel deployment with evolving trade patterns—and by forging stronger partnerships with shippers on sustainability—can the industry adjust to these new headwinds without sacrificing financial resilience.

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Adam

Commodity

OPEC+ Supply Surge Pressures Oil Prices as Market Eyes Demand Outlook

Crude oil futures opened sharply lower on Monday, as traders reacted to OPEC+’s decision to accelerate output hikes, stoking concerns of a growing supply surplus in an already fragile demand environment. West Texas Intermediate (WTI) briefly dipped to $55.30 before finding support just above the long-term level at $55.55, narrowly avoiding a retest of the April 9 low at $54.48.

OPEC+ Output Acceleration Weighs on Market Sentiment

OPEC+ announced over the weekend it would increase crude production by 411,000 barrels per day (bpd) in June, marking the second consecutive monthly hike. This move lifts total production additions to 960,000 bpd for April through June—roughly 44% of the 2.2 million bpd in voluntary cuts made since 2022. Saudi Arabia, the group’s de facto leader, is reportedly pushing for faster unwinding of cuts to pressure non-compliant members like Iraq and Kazakhstan.

The decision added immediate downside pressure to oil markets, with both Brent and WTI falling over $1 per barrel in early trading. As the session progressed, oil futures began clawing back some losses. However, the bearish tone remains dominant given heightened supply concerns.

Demand Uncertainty Compounds Bearish Tone

Traders remain wary of the demand side of the equation. ING cited ongoing demand uncertainty driven by tariff risks and weak refined fuel consumption, particularly in Asia. Vortexa data shows a 150 million barrel build in global onshore and floating crude inventories since mid-February, reinforcing the surplus narrative.

Adding barrels into a demand-constrained market has compressed the Brent futures curve. The prompt spread narrowed to just 10 cents per barrel, down from 47 cents the previous session, and briefly dipped into contango—a bearish market structure where future prices exceed spot levels.

Forecasts Cut as Market Reassesses Fundamentals

Investment banks have revised their oil prices projections in response to OPEC+’s move. Barclays cut its 2025 Brent forecast by $4 to $66, while ING now expects Brent to average $65 this year, down from $70. Analysts at Saxo Bank noted that Saudi Arabia’s push appears tactical—meant to both punish quota violations and put pressure on U.S. shale producers.

Bearish Oil Price Outlook Persists

Technically, WTI’s failure to break below $55.30 suggests some support, but bearish momentum persists unless prices reclaim resistance at $59.67. With OPEC+ bringing more barrels online and inventories swelling, traders are bracing for further downside unless demand signals improve. The oil prices forecast remains bearish in the near term, with supply concerns outweighing any tentative signs of a rebound.

source : fxempire

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Gerik

Economic

Vietnam Among Priority Countries in U.S. Trade Negotiations

Speaking at the opening of the 9th session of the 15th National Assembly on May 5, Prime Minister Pham Minh Chinh confirmed that Vietnam is one of six countries selected by the United States for expedited tariff negotiations. The first negotiation round will commence on May 7, following the technical delegation’s arrival in Washington on May 1.

The move comes as the global economy faces heightened volatility, with President Donald Trump’s high reciprocal tariffs creating ripple effects across global supply chains. These tariffs were recently suspended for 90 days—except for China—and temporarily adjusted to a 10% rate to allow for bilateral talks.

The Vietnamese government has responded promptly and strategically, aiming to protect legitimate national interests and foster balanced and sustainable trade. In preparation for the talks, Vietnam is implementing a new decree on strategic trade controls, enhancing export-origin monitoring, and expanding access to alternative markets.

U.S. Tariff Negotiation Landscape: Vietnam in Strong Position

According to Vietnam's Trade Counselor in the U.S., Do Ngoc Hung, Vietnam shares the negotiation table with India, the UK, Japan, South Korea, and Indonesia. Among these, India, Japan, and South Korea have reportedly made progress, but President Trump remains cautious, indicating he may impose separate terms if outcomes fall short of U.S. expectations.

Despite acknowledging these developments, Trump emphasized that the current tariff framework benefits the U.S., placing it in a strong bargaining position. This underscores Vietnam’s need to move swiftly and strategically during the upcoming negotiation sessions.

Strategic Economic Measures and Growth Goals

Despite external challenges, Vietnam remains committed to its 2025 targets: over 8% GDP growth, an economic scale of over $500 billion, and per capita income exceeding $5,000.

To achieve this, the government has outlined an aggressive fiscal and monetary policy plan. It aims to increase state budget revenue by over 15%, and is prepared to raise the budget deficit to 4–4.5% of GDP if needed, to create space for development investments. Operating expenditures will be minimized to prioritize disbursement for national infrastructure and public investment projects.

Additionally, restructuring the banking system and resolving bad debts remain central to financial reform. Banks under special supervision will receive targeted solutions to restore normal operations.

Crackdown on Trade Violations and Regulatory Overhaul

The government has emphasized tough enforcement against smuggling, counterfeit goods, and deceptive advertising, especially for pharmaceuticals and nutritional supplements. Prime Minister Chinh called for the elimination of unnecessary investment conditions and committed to cutting administrative processing times by at least 30%.

In a broader strategic shift, the government is pushing for a new resolution from the Politburo and National Assembly to position private enterprise as a central driver of the economy. Local firms are being encouraged to participate more deeply in global supply and production chains.

With Vietnam now in the priority group for U.S. trade negotiations, the outcome of the talks could play a decisive role in mitigating tariff risks, stabilizing exports, and preserving growth momentum. The coordinated domestic reforms and proactive diplomacy signal that Vietnam is not only ready for negotiation but also positioning itself to turn challenges into opportunity.

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Adam

Stocks

Economic

How Wall Street's rally extends as strong jobs data fuels market optimism

US stock markets locked in a second week of gains as robust economic data and potential easing of US-China trade tensions boosted investor confidence, with all eyes now on the upcoming Fed decision.

US markets extend winning streak

US stock markets rallied on Friday, locking in a second consecutive week of gains, fuelled by strong economic data and the potential easing of trade tensions between the US and China.

For the week, the US Tech 100 surged by 3.45%, while the Wall Street gained 1,207 points or 3%. The US 500 increased by 2.11% for the week, achieving its longest winning streak—nine consecutive days—since 2004.

Jobs report exceeds expectations

Friday's Non-Farm Payrolls report was robust as headline nonfarm payrolls increased by 177,000 in April, compared to the 135,000 expected. The unemployment rate held steady at 4.2% and would have dropped to 4.0% if not for the rise in the participation rate to 62.6% from 62.5%.

The resilient labour market data alleviates worries about an economic slowdown for now and bolsters confidence in the Federal Reserve's ability to remain patient with policy adjustments. It remains to be seen if there will be meaningful deterioration in the hard data, or if the recent de-escalation and the potential of "framework deals" prevent the hard data from following the soft data lower.

Key events in focus this week

Attention this week will focus on potential tariff negotiations between the US and China, and the Federal Reserve's interest rate decision, previewed below. Investors will also closely watch Q1 earnings reports from companies including Ford, AMD, Walt Disney and Uber. Finally, the ISM Services PMI is expected to fall to 50.2 from 50.8 to narrowly remain in expansion territory.

FOMC interest rate decision

Thursday, 8 May at 4.00am AEST

At the last FOMC meeting in mid-March, the Fed kept the Fed Funds rate on hold at 4.25%–4.50%, citing solid economic growth, low unemployment, and slightly elevated inflation.

The Fed's projections (Dots) showed that members still expected to deliver two 25 basis point (bp) rate cuts in 2025. The Fed's updated forecasts, as expected, showed an increase in inflation and unemployment forecasts while lowering its GDP forecasts, reflecting the overall impact of increased tariffs.

The significant reciprocal tariffs announced on "Liberation Day" have raised fears of higher inflation and a slowdown in the labour market, testing both elements of the Fed's dual mandate.

As such, the Fed is expected to keep the Fed's Funds rate unchanged this week at 4.25%-4.50%. It is expected to emphasise ongoing economic uncertainty, particularly due to potential tariff effects and the need to remain patient as it waits for more data. No Summary of Economic Projections or "dot plot" update is due for this meeting.

Following Friday's firm Non-Farm Payrolls report, the likelihood of a Fed rate cut in June eased to about 35% from around 55%. The July meeting is fully priced for a 25bp rate cut with a cumulative 78 basis points of Fed rate cuts priced by year-end.

Fed funds rate chart

US Tech 100 technical analysis

The rally from the 16,542 low of April 7 to Friday night's 20,176 high has at this stage unfolded in three waves (ABC). This follows a three-wave decline from the 22,222 record high to the 16,542 low, which leaves the picture somewhat messy when viewed through an Elliott Wave (EW) lens.

With the jury out from an EW perspective, we will continue to lean against the 200-day moving average at 21,777, which the US Tech 100 tested on Friday night. Specifically, while the US Tech 100 remains below the 200-day moving average, currently at 21,177, medium-term downside risks remain, including a retest of the April 16,542 low. If the US Tech 100 sees a sustained break above the 200-day MA, it would indicate that the decline from the 22,222 record high to the 16,542 low is complete and that the uptrend has resumed.

US Tech 100 daily chart

US 500 technical analysis

The rally from the 4835 low of April 7 to Friday night's 5700 high has at this stage unfolded in three waves (ABC). This follows a three-wave decline from the 6147 record high to the 4835 low, which leaves the picture somewhat messy when viewed through an Elliott Wave lens.

With the jury out from an EW perspective, we will continue to lean against the 200-day moving average at 5746, which the US 500 fell narrowly short of on Friday night.

Specifically, while the US 500 remains below the 200-day moving average, currently at 5746, medium-term downside risks remain, including a retest of the April 4835 low. If the US 500 sees a sustained break above the 200-day MA, it would indicate that the decline from the 6147 record high to the 4835 low is complete and that the uptrend has resumed.

US 500 daily chart

Source : ig

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Michelle

Economic

Stocks

Investors in Hollywood's top studios and streaming services were spooked Monday after President Donald Trump proposed implementing a 100% tariff on movies made overseas.

Shares of Netflix, Disney, Paramount and Warner Bros. Discovery fell ahead of the opening bell, with Comcast-owned Universal also trading slightly down. Here's how those share moves shook out:

Netflix down more than 5%
Disney down more than 3%
WBD down more than 3%
Paramount down more than 2%
Comcast down less than 1%

Trump called tax incentives offered by foreign countries "a national security threat" in a post on Truth Social Sunday night. He said he was authorizing the Department of Commerce to impose a levy on all films produced abroad that are sent to the United States.

How Trump intends to implement these duties is unclear, as is exactly who is being targeted and who would foot that potential tariff bill.

Hollywood studios have long filmed movies overseas, either for tax benefits or to capture the natural setting of international locations. Some films are shot in multiple countries, with many studios having satellite production hubs around the globe.

When Trump first instituted a 25% tariff on imports from Canada, a popular filming location for Hollywood movies and television shows, industry experts told CNBC that it wouldn't have a major impact on production. After all, the majority of projects are shot digitally, and transporting the final product can be done online or with a data storage device. There isn't a physical good that exchanges hands in the same way as, say, toys or clothing that's made in another country.

Questions are already swirling. What part of the production process would be hit with this duty? Would it apply only to movie projects or will TV shows filmed internationally also incur this levy? Are already completed projects exempt?

Additionally, as with the first round of tariff announcements earlier this year, industry experts worry about how these duties will impact relationships with other countries. Hollywood relies on international box office sales to recoup lofty film budgets. China has already closed its doors to Hollywood product. Other regions could retaliate and do the same.