• US President Trump is expected to soften the impact of his automotive tariffs, according to WSJ citing sources.
• Canada's ruling Liberals, led by Mark Carney, won the national election but will need to form a minority government.
• APAC stocks were mostly in the green but with gains capped following the choppy performance stateside.
• European equity futures indicate a slightly positive open with Euro Stoxx 50 future up 0.1% after the cash market finished with gains of 0.3% on Monday.
• DXY is attempting to claw back some of yesterday's losses, EUR/USD has slipped back onto a 1.13 handle, USD/JPY bounced from support at 142.
• Looking ahead, highlights include German GfK Consumer Sentiment, Spanish GDP, HICP, EZ Business Sentiment, US Advance Goods Trade, JOLTS Job Openings, ECB’s Cipollone, BoE’s Ramsden, SNB’s Martin & US Treasury Secretary Bessent, Supply from UK & Italy.
• Earnings from Starbucks, Visa, Snap, PPG, SoFi, PayPal, JetBlue, Coca-Cola, UPS, Pfizer, Royal Caribbean, Spotify, HSBC, BP, AstraZeneca, Ocado, Entain Lufthansa, Porsche AG, Deutsche Bank, Capgemini, Amundi, Rexel, Scor, URW, Carlsberg, Novartis, Logitech & BBVA.

SNAPSHOT

US TRADE

EQUITIES

• US stocks were choppy although most major indices eventually finished in the green after clawing back the losses from an early tech-led sell-off as Huawei's AI chip ambitions continued to hit NVIDIA (NVDA) and with sentiment also weighed on by a disappointing Dallas Fed Manufacturing survey. Nonetheless, a recovery was seen intraday despite little newsflow with the S&P 500 re-emerging from a brief dip beneath the psychological 5,500 level to notch its fifth consecutive daily gain but with the upside limited ahead of this week's key earnings and data releases.
• SPX +0.06% at 5,529, NDX -0.03% at 19,427, DJI +0.28% at 40,228, RUT +0.41% at 1,966.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump is expected to soften the impact of his automotive tariffs by preventing duties on foreign-made cars from stacking on top of other tariffs he imposed and easing some levies on foreign parts used to manufacture cars in the US, according to WSJ citing sources. Furthermore, a White House official said those actions are expected on Tuesday and Commerce Secretary Lutnick said President Trump is building an important partnership with both the domestic automakers and American workers, while Lutnick added this deal rewards companies who manufacture domestically, as well as provides a runway to manufacturers who have expressed commitment to invest in America and expand their domestic manufacturing.
• White House Press Secretary said trade talks with the UK are moving in a very positive way.
• Chinese Foreign Minister Wang Yi said concession and retreat will only make the bully more aggressive.
• China's MOFCOM said on the report that Boeing flew back three 737 MAX planes to be delivered to Chinese airlines, that China and the US have maintained long-term mutually beneficial cooperation in the field of civil aviation, while it added the US wielded the big stick of tariffs to seriously impact the stability of global industrial and supply chains, and many enterprises were unable to carry out normal trade and investment activities.
• The hold-up in the Japan tariff deal is due to the level of commitment to buy oil from the Alaska pipeline, according to FBN's Gasparino.

NOTABLE HEADLINES

• US President Trump posted on Truth "As we reach our Historic First 100 Days, I am proud to announce that the Presidential Personnel Office has surpassed 80% of all Political Hires across our largest Departments, including the United States Department of Justice, State, Defense, Treasury, Veterans Affairs, and Commerce." Trump also posted "The USA lost Billions of Dollars A DAY in International Trade under Sleepy Joe Biden. I have now stemmed that tide, and will be making a fortune, very soon. Stay tuned as we MAKE AMERICA GREAT AGAIN!!!"
• White House said US President Trump wants tax cuts in this reconciliation package, while it was separately reported that Treasury Secretary Bessent said he hopes the Trump tax bill can be done by July 4th.
• US Treasury Financing Estimates (Q2): expects to borrow USD 514bln in privately-held net marketable debt, assuming end of June cash balance of 850bln (prev. guided USD 123bln, assuming end of June cash balance USD 850bln).

GLOBAL NEWS

• Canada's ruling Liberals led by Mark Carney won the national election but will need to form a minority government, according to CTV.

APAC TRADE

EQUITIES

• APAC stocks were mostly in the green but with some of the gains capped following the choppy performance stateside and in holiday-thinned conditions with Japanese markets closed for a holiday, while reports that US President Trump is expected to soften the impact of his automotive tariffs saw a muted reaction.
• ASX 200 gained amid outperformance in the energy, tech and resources sectors, while miners were also lifted as participants digested output updates.
• Hang Seng and Shanghai Comp were varied as the mainland lagged owing to uncertainty from the US-China trade war with US Treasury Secretary Bessent recently commenting that it is up to China to de-escalate and that he has an "escalation ladder in his back pocket", while China's Foreign Ministry reiterated its denial regarding a Trump-Xi call and Foreign Minister Wang Yi warned that compromise and backing down would only embolden the bully.
• US equity futures (ES +0.1%) eked mild gains but with the upside limited ahead of upcoming key releases and mega-cap earnings.
• European equity futures indicate a slightly positive open with Euro Stoxx 50 future up 0.1% after the cash market finished with gains of 0.3% on Monday.

FX

• DXY nursed some of yesterday's losses after weakening against all G10 peers amid lower US Treasury yields and a dismal Dallas Fed survey, while there was some pressure on the buck overnight as its counterparts were briefly supported including CAD after projections that Canada's ruling Liberals won the election although this eventually petered out and the CAD gave back its gains as it emerged that the Liberals are on course for a minority government.
• EUR/USD faded some of its recent gains and failed to sustain the 1.1400 status with recent price action largely driven by moves in the greenback.
• GBP/USD lingered around a 7-month high after steadily ascending on Monday despite the lack of notable catalysts although there were some optimistic comments on trade talks from the White House Press Secretary who noted discussions with the UK are moving in a very positive way.
• USD/JPY marginally rebounded from support around the 142.00 level after sliding yesterday owing to the early initial risk aversion and lower US yield environment but with the recovery limited in the absence of Japanese participants.
• Antipodeans was indecisive as the data calendar remained very quiet and with participants bracing for upcoming risk events.
• PBoC set USD/CNY mid-point at 7.2029 vs exp. 7.2781 (Prev. 7.2043).

FIXED INCOME

• 10yr UST futures took a breather after advancing during Wall St trade amid the choppy risk environment and ahead of a week full of key data releases, while the overnight cash treasuries market was shut owing to the holiday closure in Tokyo.
• Bund futures traded sideways with demand subdued following recent selling pressure and ahead of German GfK Consumer Sentiment.

COMMODITIES

• Crude futures remained subdued following yesterday's declines with pressure from ongoing trade uncertainty as opposed to any oil-related headlines.
• US Energy Secretary Wright said the administration is refilling the strategic oil reserve now, according to CNBC.
• Spain's PM said the government will release 3 days worth of strategic oil reserves, while the grid operator later restored nearly all power.
• Spot gold pulled back from the prior day's peak after rallying on the back of a weaker dollar.
• Copper futures swung between gains and losses with initial support from the positive risk appetite in Asia although the gains were eventually wiped out as sentiment in its largest buyer lagged.
• China's copper supplies are on track to be depleted in just a few months as the market suffers one of the greatest tightening shocks due to fears of US tariffs, according to commodities trading house Mercuria cited by FT.

CRYPTO

• Bitcoin marginally retreated with prices back beneath the USD 95,000 level.

NOTABLE ASIA-PAC HEADLINES

• Japan and Malaysia are reportedly exploring broader economic ties including AI and automotive.
• Alibaba (9988 HK) introduced Qwen3 to set a new benchmark in open-source AI with hybrid reasoning.

GEOPOLITICS

MIDDLE EAST

• Gaza talks in Cairo are said to be witnessing a "significant breakthrough" and parties agreed on a number of issues including consensus on a long-term ceasefire in Gaza, although some sticking points remain including Hamas arms, according to Reuters citing two Egyptian sources.
• Israeli media reported that Shin Bet chief Ronen Bar announced to resign and will step down on June 15th.
• The fourth round of US-Iran talks is expected to be held in Rome on Saturday, according to Axios' Ravid citing two sources. It was separately reported that Iran proposed to meet France, Britain and Germany in Rome on May 2nd to discuss the nuclear programme and Europeans have yet to respond to the Iranian proposal for talks this week, according to Reuters sources.
• IAEA deputy chief met with Iran’s deputy nuclear chief in Tehran to discuss outstanding safeguards issues, while they agreed on how to proceed with the issues, continue talks and implement understandings reached.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said the world does not want to wait till May 8th for a ceasefire for it to only be for a few days before killing resumes, while he also commented that a minerals agreement with the US after negotiations has become stronger and more equitable.
• Explosions were heard in Kyiv after the Ukraine air force issued air raid alerts and air defence systems were engaged in repelling a Russian air attack.
• EU and Ukrainian officials fear US President Trump is on the brink of walking away from peace negotiations with Kyiv and Moscow, potentially using minor progress in talks as an “excuse” to say his job is done, according to FT citing sources.
• US Secretary of State Rubio spoke with Russian Foreign Minister Lavrov on Sunday in which they talked about the next steps in Russia/Ukraine peace talks.

EU/UK

DATA RECAP

• UK BRC Shop Price Index YY (Apr) -0.1% vs Exp. -0.2% (Prev. -0.4%)