• China is said to consider exempting some US goods from tariffs as costs increase with Chinese authorities considering removing additional levies for medical equipment and some industrial chemicals like ethane, according to Bloomberg citing sources familiar with the matter.
• China's Foreign Ministry says it is not having any consultations or negotiations with the US on tariffs; on tariff exemptions, says not familiar with specifics.
• European bourses edge higher on positive Chinese trade reports; US futures mixed, GOOGL +5.5% pre-market after strong Q1 results.
• DXY recovers amid trade hopes, JPY weakens amid outflows from haven FX and despite hotter Tokyo CPI.
• Bonds trade rangebound as participants await further tariff updates.
• Crude modestly firmer, XAU slips given the positive risk tone and stronger USD.
• Looking ahead, BoE's Greene, ECB's Nagel, Rehn & Cipollone, Earnings from, SLB, AbbVie, Phillips 66 & Centene.

TRADE

TARIFFS/TRADE

• China held a meeting on responding to trade frictions, according to the Commerce Ministry; said Trade frictions enter a high-intensity phase and are facing difficulties and challenges China said to stay confident in handling trade tension; adopt strategic approaches. To focus on preventing and resolving trade risks. Trade frictions enter a high-intensity phase and are facing difficulties and challenges. Cultivate new opportunities in crisis.
• China's Foreign Ministry said it is not having any consultations or negotiations with the US on tariffs; on tariff exemptions, said not familiar with specifics
• China is said to consider exempting some US goods from tariffs as costs increase with Chinese authorities considering removing additional levies for medical equipment and some industrial chemicals like ethane, according to Bloomberg citing sources familiar with the matter. It was also reported that several Chinese tech companies confirmed that eight tariff codes related to semiconductors and integrated circuits are now exempt from additional tariffs, according to Caijing.
• US Treasury Secretary Bessent said he had a good meeting with South Korea and they are moving faster than thought, while they will talk technical terms and could get to terms next week.
• South Korea's Trade Minister said South Korea and the US agreed in principle on the framework for trade talks. It was also reported that South Korea's Finance Minister said they will try their best to produce meaningful results by July 8th and that autos were in focus during talks, while the two countries reached common ground on discussing measures on tariffs and non-tariff barriers, economic security, investment cooperation, and currency policy. Furthermore, technical-level talks between South Korea and the US will be held in Seoul on May 15th-16th and South Korea's Industry Minister said they reached a common ground on shipbuilding cooperation with the US.
• Japanese Finance Minister Kato met US Treasury Secretary Bessent and told him that US tariffs are deeply regretful, while they agreed the FX rate should be set by markets and that excessive volatility has an adverse effect on the economy. It was also reported that Japan is weighing buying more US soybeans as part of a tariff deal and is also considering boosting US corn imports.
• Canadian Finance Minister Champagne said they need to fight against the US tariffs, which are still affecting a large portion of Canadian goods. Furthermore, he said the scheduling was too tight for a bilateral meeting with US Treasury Secretary Bessent but they did interact at the G7 meeting in Washington.
• US reportedly seeks India trade deal on e-commerce, crops, and data storage, according to Bloomberg sources.

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 +0.4%) opened entirely in the green with sentiment boosted by positive trade updates from China, and following a stellar Alphabet earnings report. However, around the time of the European cash open, sentiment waned a touch - but this ultimately proved fleeting.
• European sectors opened with a strong positive bias but is a little more mixed now. Travel & Leisure takes the top spot, with the sector propped up by post-earning strength in Accor (+4%) and Evoke (+1%). The former topped Q1 revenue expectations and highlighted that it saw “no cracks in demand” so far (re. hotels).
• US equity futures are mixed, with very modest outperformance in the NQ, boosted by post-earning strength in Alphabet. The Co. beat on both top- and bottom-lines, with other inner-metrics such as Search advertising also strong; the Co. also lifted its dividend by 5% – shares currently trade higher by 5.5% in pre-market trade.
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KEY EARNINGS:

• Alphabet (GOOGL) Q1 2025 EPS 2.81 (exp. 2.00), Rev. 90.23bln (exp. 89.28bln), Co. authorised USD 70bln buyback of shares and raised dividend by 5%. Shares +5.5% in pre-market trade
• Intel (INTC) Q1 2025 Adj. EPS 0.13 (exp. 0.01), Rev. 12.70bln (exp. 12.20bln). Shares -5.5% in pre-market trade
• T-Mobile US (TMUS) Q1 2025 EPS 2.58 (exp. 2.48), Rev. 20.89bln (exp. 20.61bln). Shares +5.5% in pre-market trade

FX

• DXY is nursing some of its recent losses after retreating amid the broad risk-on sentiment on Wall St. Price action during the European morning has been rather contained, with the index in a 99.43-99.89 range at the time of writing. Sentiment today has been boosted by reports that China is considering exempting some US goods from tariffs as costs increase.
• EUR gave back some of the prior day's gains after hitting resistance just shy of the 1.1400 handle as the greenback regained composure. EUR/USD resides in a 1.1315-1.1394 intraday range.
• JPY breached the 143.00 level to the upside which was facilitated by a rebound in the dollar and the positive risk appetite, while there were also some suggestions of Gotobi demand, whilst a flight out of safe-havens were seen on reports that China is said to consider exempting some US goods from tariffs as costs increase. Tokyo CPI data saw an acceleration, but failed to lift the JPY.
• GBP faded some of Thursday's advances and eventually gave up the 1.3300 status as the Dollar picked up. Little reaction was also seen this morning to the substantial beat in UK Retail Sales, which was stronger-than-expected. On the trade front, UK Chancellor Reeves said she understands US concerns on trade imbalances, especially in China and they don't always agree with the US on policy prescriptions but is confident a trade deal can be done.
• Antipodeans are both subdued amid the upticks in the Dollar and overall cautious risk tone amid the uncertain trade environment, whilst markets were closed on both sides of the Tasman for ANZAC Day.
• PBoC set USD/CNY mid-point at 7.2066 vs exp. 7.2898 (Prev. 7.2098).
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FIXED INCOME

• USTs are flat in what has been a rangebound morning thus far as traders digest the latest Bloomberg reports on China, which suggest China is said to consider exempting some US goods from tariffs as costs increase. UST futures rate in a narrow 111.02+ to 111.09 range at the time of writing; docket ahead is thin.
• German debt is taking a breather after steadily climbing to just shy of the 132.00 level, whilst a slew of ECB commentary failed to trigger much price action. In terms of a recent ECB commentary on tariffs, ECB rhetoric leans towards an initial disinflationary narrative around tariffs, with Lagarde calling them a negative demand shock and noting the net inflation impact remains unclear. Knot flagged that a 25% US tariff could shave 0.3ppts off EZ growth.
• Gilts are conforming to price action across peers despite little notable move seen from the above-forecast UK retail sales metrics. On the trade front, UK Chancellor Reeves said she understands US concerns on trade imbalances, especially in China and they don't always agree with the US on policy prescriptions but is confident a trade deal can be done. Gilt Jun'24 futures currently reside around the middle of a 92.90-93.14 range.
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COMMODITIES

• The crude complex has been choppy, trading on either side of the unchanged mark. Early morning sentiment was boosted by reports that China is to consider exempting some US goods from tariffs as costs increase. Around the European cash open, some modest pressure was seen in the complex, but the downside has since stabilised. Brent'Jun 25 currently trading within a USD 66.48-67.11/bbl range.
• Precious metals hold a negative bias, with losses in spot gold more pronounced vs peers, due to the positive risk tone and relatively stronger Dollar. XAU currently towards the lower end of a USD 3,287.16-3,370.79/oz range.
• Base metals are entirely in the red, with losses driven by the relatively stronger Dollar and potentially due to the conflicting commentary of US-China trade talks. 3M LME Copper currently trading in a USD 9,359.5-9,458.8/t range.
• UK's Unite said TotalEnergies (TTE FP) workers balloted for strike action and that around 50 Unite members based on the Elgin Franklin and North Alwyn platforms are involved.
• Iranian oil minister said Tehran will sign USD 4bln agreement with Russian companies to develop seven oil fields, via state TV.
• ExxonMobil (XOM) reports flaring event at Joliet, Illinois refinery (275k BPD).
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NOTABLE DATA RECAP

• UK Retail Sales MM (Mar) 0.4% vs. Exp. -0.4% (Prev. 1.0%, Rev. 0.7%); ONS said Retail Sales will contribute 0.08ppts to GDP in Q1 2025.
• UK Retail Sales Ex-Fuel YY (Mar) 3.3% vs. Exp. 2.2% (Prev. 2.2%, Rev. 1.8%); Retail Sales Ex-Fuel MM (Mar) 0.5% vs. Exp. -0.4% (Prev. 1.0%, Rev. 0.7%); Retail Sales YY (Mar) 2.6% vs. Exp. 1.8% (Prev. 2.2%)
• UK GfK Consumer Confidence (Apr) -23.0 vs. Exp. -22.0 (Prev. -19.0)
• French Business Climate Overall (Apr) 96 (Prev. 97); EU Data French Business Climate Mfg (Apr) 99.0 vs. Exp. 96.0 (Prev. 96.0)

NOTABLE EUROPEAN HEADLINES

• SNB Chairman Schlegel said the main instrument is interest rate, but forex interventions can also be used to influence monetary conditions. Trade policy situation is creating high uncertainty for all countries, including Switzerland; could fragment the global economy Economic slowdown in Switzerland cannot be ruled out. Price stability cannot prevent trade policy-related uncertainty, but remains very important.
• UK will reportedly be expected to pay a fee to guarantee UK companies access to a EUR 150bln EU weapons fund, according to the FT citing diplomats.

NOTABLE US HEADLINES

• Fed's Kashkari (2026 voter) said a resolution of trade frictions would relieve uncertainty and would be optimistic, while he is worried that businesses will resort to layoffs amid uncertainties and noted some businesses say they are scenario planning for potential layoffs if uncertainty lasts although he is not seeing an uptick in layoffs yet. Furthermore, Kashkari said the frequency of announcements out of Washington has created a challenge for policymakers and for everybody.
• US President Trump signed an executive order boosting the deep-sea mining industry, while the order instructs the Commerce Secretary to expedite permits under the Deep Seabed Hard Mineral Resource Act, as well as instructs the Commerce and Interior Departments to issue a report on opportunities for seabed mineral exploration on the US outer continental shelf.
• US Republicans in Congress are to unveil a USD 150bln defence spending package including USD 27bln for President Trump’s Golden Dome missile defence and USD 29bln for shipbuilding.

GEOPOLITICS

MIDDLE EAST

• "Haaretz citing sources: No significant progress in the negotiations of the exchange deal between Hamas and Israel so far", according to Al Jazeera
• China, Russia, and Iran IAEA representatives met with the IAEA Director General on Thursday and had in-depth communication on how the IAEA can play its role in serving the political and diplomatic settlement process of the Iranian nuclear issue.
• US is poised to offer Saudi Arabia an over USD 100bln arms package during President Trump’s visit to the kingdom in May.

RUSSIA-UKRAINE

• Russian Foreign Minister Lavrov said the US and Russia are moving in the right direction towards the deal.
• NATO Secretary General Rutte said he had a good meeting with US President Trump and discussed Ukraine, while he does not know if Russian President Putin wants peace but added that something is on the table for Russia-Ukraine and the ball is in Russia's court. Furthermore, Rutte said it is not accurate that the US pressured Ukraine to accept a deal that favours Russia.

OTHER

• "AFP quotes Pakistani official: overnight exchange of fire on border with India", via Sky News Arabia.

CRYPTO

• Bitcoin is on a firmer footing, in-fitting with the risk tone; currently trading above USD 93.5k.
• US Federal Reserve withdrew guidance requiring banks to seek advance notice before pursuing crypto activities and with the FDIC and Office of the Comptroller of the Currency, withdrew 2023 statements urging banks to exercise vigilance around crypto activities.
• Fed's Kashkari (2026 voter) said crypto is useless in an advanced economy and it has been 15 years, and a use-case hasn't been demonstrated, while he added it is up to Congress to regulate crypto.

APAC TRADE

• APAC stocks mostly gained as the region took impetus from the rally on Wall St amid trade-related optimism after President Trump suggested that the US and China held talks despite a denial by the latter. However, conditions were somewhat quieter for most of the session with the absence of markets in Australia and New Zealand for a holiday, although there was a slight boost on reports that China is said to consider exempting some US goods from tariffs.
• Nikkei 225 rallied at the open but with further gains initially capped as participants digested firmer-than-expected Tokyo CPI before the China tariff story provided a late tailwind.
• Hang Seng and Shanghai Comp were somewhat varied as the Hong Kong benchmark rallied amid strength in property, tech and casino stocks, while the mainland lagged following the conflicting statements by the US and China on whether trade talks took place.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo said China's fiscal policy will be more proactive, economic recovery needs to be further reinforced; China to cut RRR and rates when needed and in a timely manner; Vows to fully prepare emergency plans for external shocks. Use well moderately loose monetary policy China to cut RRR and rates when needed and in a timely manner. To create new structural monetary tools Vows to fully prepare emergency plans for external shocks. Improve policy toolbox for stabilising employment and the economy. Implement established policies early. Will speed up issuance of ultra-long bonds.
• PBoC Governor Pan affirmed monetary policy is to be moderately loose and said they will defend global economic stability, while he vowed to drive the Chinese economy and said China’s economy is off to a good start, continues to rebound positively, and the financial market is running smoothly.
• China’s Finance Minister attended the G20 meeting in Washington and said the current world economic growth momentum is insufficient and tariff wars and trade wars have further affected economic and financial stability.
• Japanese PM Ishiba said he decided on a package of measures to deal with US tariffs and instructed cabinet members to do the utmost to aid small and medium-sized enterprises that will be affected.
• Donald Trump Jr is to meet South Korean business leaders on April 30th, according to Yonhap.
• PCA sees China's April car sales up 14.4% to 1.75mln Units, via Bloomberg

DATA RECAP

• Tokyo CPY YY (Apr) 3.5% vs Exp. 3.4% (Prev. 2.9%)
• Tokyo CPY Ex. Fresh Food YY (Apr) 3.4% vs Exp. 3.2% (Prev. 2.4%)
• Tokyo CPY Ex. Fresh Food & Energy YY (Apr) 3.1% vs Exp. 2.8% (Prev. 2.2%)