HFMarkets (hfm.com): New market analysis services.

[HFM]

Date: 14th May 2025.

Is the Dow Jones Oversold Despite Pharmaceutical Stock Selloff?

Trading Leveraged products is Risky

All US indices rose in value on Tuesday except for the Dow Jones, which fell 0.64%. Very rarely, almost all global indices increase in value while one of the largest declines. What, then, is driving the Dow Jones’ decline despite the favourable market conditions?

Pharmaceutical Stocks Crash

One of the reasons why the Dow Jones was unable to mirror the bullish tone seen amongst the S&P 500 and NASDAQ was due to the Pharmaceutical sector. Approximately 14% of the weight within the Dow Jones is exposed to Pharmaceutical stocks, which significantly declined on Tuesday. The downward price movement within this sector was due to President Trump confirming that prescription drug prices must fall by almost 60%.

Here is the performance of pharmaceutical stocks in the Dow Jones on Tuesday:

* UnitedHealth Group stocks fell 17.79%
* Amgen Inc. stocks fell 1.57%
* Johnson & Johnson stocks fell 3.70%
* Merck & Co. stocks fell 4.72%

According to President Trump, the cost of prescription drugs in the US is sometimes up to 10 times higher than in other countries. This is despite the drug being ‘produced in the same laboratory’ using the same method and ingredients. Therefore, Trump is proposing that pharmaceutical companies lower the cost in the US and increase the cost elsewhere. However, this is triggering fear amongst investors and is prompting a selloff in the sector.

US Drug Prices Vs Other Countries

In addition to this, UnitedHealth Group stocks are under immense pressure due to the above and the company’s CEO has resigned. UnitedHealth Group in this quarter missed their earnings and revenue expectations for the first time since the 2008 banking crisis, and also gave poor guidance for the upcoming quarter.

Defensive Stocks Weaken Due To Improved Sentiment

Another reason for the Dow Jones’ weak price movement is its exposure to defensive stocks. Defensive stocks tend to do well during ‘risk-off’ conditions, while they may underperform in favourable stock market conditions. Defensive stocks within the Dow Jones include the following stocks:

McDonald’s - Stock fell 1.04% on Tuesday

Procter and Gamble - Stock fell 1.35% on Tuesday

Coca-Cola - Stock fell 0.82% on Tuesday

However, not all components are defensive stocks. The Dow Jones also has growth stocks within the index, which include the likes of NVIDIA and Microsoft. NVIDIA stocks were the best-performing stocks on Tuesday, increasing 5.63%. However, NVIDIA stocks only hold a weight of 1.78%.

Dow Jones - Upcoming Performance

The price movement of the Dow Jones is largely moving sideways on Wednesday after the decline on Tuesday. However, investors should note that some of the positive developments driving other indices higher also apply to the Dow Jones, even if its price has not reflected the same movement.

This includes the lower inflation figures from yesterday. The US Consumer Price Index (inflation rate) fell from 2.4% to 2.3%, the lowest since 2021, and core inflation figures remained at 2.8%. The lower inflation rate is likely to allow the Federal Reserve to opt for a cautious rate cut in July, even though this has not yet been signalled. Nonetheless, interest rate cuts and a better economic outlook are likely to positively influence all indices globally. Currently, the Dow Jones is 7.00% away from its all-time high.

Notably, analysts at Goldman Sachs Group Inc. yesterday reduced their projected likelihood of a US recession by year-end from 45% to 35%, while also raising their economic growth forecast from 0.5% to 1.0%.

Dow Jones - Daily Chart

The price of the Dow Jones is trading within a range during this morning’s Asian Session, but continues to remain above most trend lines. The VWAP is also slightly lower than the current price, giving a bullish bias. If the price increases above the $42,220.00, buy signals are likely to materialise due to the bullish breakout and crossover. However, if the range continues, the average price will be $42,174.18.

Key Takeaway Points:

* The Dow Jones does not follow the market trend and remains one of the only global indices falling in value. However, some analysts believe the index is partially oversold.
* Dow Jones fell 0.64% as pharma stocks dropped sharply after Trump called for major drug price cuts.
* UnitedHealth stock fell nearly 18% after missing earnings, weak guidance, and news of the CEO’s resignation.
* Defensive names like Coca-Cola and McDonald's declined as risk-on sentiment hurt safe-haven stocks.
* Lower inflation and reduced recession fears support a positive outlook, but the Dow still trails other indices.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 15th May 2025.

The US Dollar, The Fed And Producer Inflation!

Trading Leveraged products is Risky

Lower inflation tends to have a negative impact on the US Dollar, particularly due to political pressure for the Federal Reserve to cut interest rates. However, the US Dollar has been increasing in value over the past week. The upward price movement is largely driven by less trade tensions and US economic deals with the Middle East. However, the producer inflation release will be key for the day.

The US Dollar And Upcoming US Data

The performance of the US Dollar is likely to depend on today’s economic data, which will be made public at 12:30 GMT. The US will release the monthly Producer Inflation, weekly unemployment claims and Retail Sales. Ideally, USD-buyers will be hoping for the producer inflation and retail sales to read higher than the current expectations, while the weekly unemployment claims to read lower. Analysts currently expect the producer price index year over year to fall from 2.7% to 2.5%.

A reading above 2.5% could notably support the US Dollar, reinforcing the Federal Reserve’s previous guidance. On Wednesday, Fed Vice Chair Philip Jefferson stated that, despite the newly agreed lower tariff levels, inflation is still expected to rise, even if temporarily. He also told journalists that the economy may experience a slowdown as a result of the tariffs. Nonetheless, most economists are lowering the possibility of a recession.

Some economists remain pessimistic, only lowering the possibility of a recession to 45%, while others are lowering it to 30%. Barclays is currently one of the only banks which advise the US is not likely to see a recession in 2025, and the current possibilities are no more than 10%.

The Currency Market

The US Dollar Index is trading lower on Thursday during the Asian Session. However, as the European market opens and the Asian session gets closer to its close, the US Dollar Index improves. If the US Dollar Index increases above 100.75, the price will be above the trend line and will form a breakout. As a result, the index will indicate a possible upward price movement. Currently, the best-performing currencies of the day are the Japanese Yen and Swiss Franc, while the worst are the US Dollar and Canadian Dollar.

USDCAD 1-Hour Chart

Based on the current performance of individual currencies, if the US Dollar were to increase in value, it would do so more easily against the Canadian Dollar. The Canadian Dollar has been the worst-performing currency of 2025 so far after the US Dollar.

The US and the Middle East

Over the past 2 days, President Trump has been undergoing a tour of the Middle East, including Saudi Arabia and Qatar. So far, the tour has been seen as a success. President Trump secured a comprehensive $600 billion investment commitment from Saudi Arabia, encompassing various sectors such as defense, energy, technology, and infrastructure. In Doha, Trump announced a landmark $200 billion agreement between Qatar Airways and Boeing for the purchase of 160 aircraft.

The deal signs are positive for the US and even the US Dollar in the long term. However, these developments will not mean much if the producer inflation and retail sales do not beat expectations. In the short to medium term, this will be key.

Key Takeaway Points:

* Despite falling inflation and rate cut pressure, the USD has strengthened, driven by easing trade tensions and Middle East deals.
* Producer inflation, unemployment claims, and retail sales will shape short-term USD performance. Stronger data could boost the currency.
* The US Dollar Index may break higher if it climbs above 100.75. The Canadian Dollar remains the weakest performer of 2025.
* Trump’s $800B in agreements with Saudi Arabia and Qatar support long-term USD sentiment, but near-term data remains critical.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 16th May 2025.

NASDAQ - Producer Inflation Down But Fed Will Not Budge!

Trading Leveraged products is Risky

The NASDAQ increased in value for a third consecutive day and has now fully recovered all previous losses in 2025. The NASDAQ is now trading 1.70% higher in 2025 and is in the positive zone for the first time since February 27th. The upward price movement continues due to investor confidence rising, particularly after yesterday’s lower producer inflation.

NASDAQ - US Inflation and Economic Data

The NASDAQ during the Asian and European sessions fell lower, witnessing only the second dip of the week. However, the price action quickly changed after the US released its producer inflation and retail sales. The positive developments from the US-China trade negotiations will now start to fade, meaning investors will need further price drivers. As the price fell during the first two sessions of the day, this price driver can be derived from the latest US data.

The US producer inflation (Producer Price Index) read 0.5%, which is 0.7% lower than the previous expectations. The Core Producer Price Index read 0.4%, again significantly lower than what the market was expecting. As a result, the producer inflation over a period of 12 months fell from 2.7% to 2.4%. The lower inflation figures continue to support the stock market as it is known to boost consumer demand while pressuring the Federal Reserve to lower interest rates.

The inflation data from Tuesday (consumer inflation) and yesterday (producer inflation) was one of the main price drivers. However, the NASDAQ also reacted positively to the Retail Sales, which rose above expectations. The weekly US unemployment claims came in at 1.881 million, lower than expected.

However, a negative development came from Applied Materials’ quarterly earnings report, which was that the company’s revenue failed to meet expectations. As a result, the stock fell 5.50% after the market close. Applied Material is the 26th most influential company within the NASDAQ, holding a weight of 0.89%.

Even though the NASDAQ managed to increase after the inflation announcement, investors were concerned that only 51% of the most influential stocks rose in value. The upward price movement was largely due to the strong performance by Cisco Systems (+4.85%), Netflix (+2.34%) and PepsiCo (+2.37).

NASDAQ Companies Performance

The NASDAQ - The Federal Reserve

One of the main risks for the NASDAQ is connected to the trade policy with Europe, which remains one of the only trade partners to not sign a trade policy. In addition to this, a possible external risk remains the Federal Reserve, which is yet to indicate any concrete rate cuts.

The Federal Reserve Chairman Jerome Powell highlighted the agency’s cautious stance. He stated that borrowing costs are likely to remain elevated over the long term due to structural economic shifts and ongoing uncertainty in government policy. We can see here that the Federal Reserve is reluctant to give an indication of any rate cuts despite the lower inflation figures. However, the next inflation announcement in June will be the first release after the US tariffs on China and Europe. This is likely to be the most important inflation reading of 2025.

Currently, based on the Chicago Exchange, there is an 8% chance of a rate cut in June, a 38% chance in July and a 75% chance in September. The report indicates that by the end of 2025, the most likely scenario is the Fed lowering rates to 3.75%–4.00%.

NASDAQ - Technical Analysis

For the NASDAQ, technical analysis indicates a neutral signal for the short-term with a bullish bias in the long-term. In the short term, the price is forming a symmetrical price pattern, which indicates range-bound trading conditions. The price is also at a key psychological level as the index rises to the previous highs. Due to this, investors are now contemplating what the asset’s intrinsic value is.

However, in the long term the price is obtaining bullish signals as the price trades above the trend-lines, moving averages and above the 50.00 level on the RSI.

NASDAQ 15-Minute Chart

Key Takeaway Points:

* The NASDAQ has risen for three straight days, now up 1.70% YTD and in positive territory for the first time since February.
* Lower-than-expected producer and consumer inflation boosted investor sentiment, reinforcing hopes for rate cuts and supporting retail sales growth.
* Despite index gains, only 51% of the top NASDAQ stocks rose. Applied Materials missed earnings, dropping 5.5%, while Cisco, Netflix, and PepsiCo outperformed.
* Powell signalled no immediate rate cuts despite cooling inflation. Markets expect a 75% chance of a cut by September, with rates likely to fall to 3.75%–4.00% by year-end.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 19th May 2025.

Global Markets Slide After US Credit Rating Downgrade, Weak Chinese Data Add to Investor Jitters.

Trading Leveraged products is Risky

Asian markets fell today while US futures and the dollar weakened, as global investors digested Moody’s downgrade of the US sovereign credit rating. The move came in response to the US government's persistent struggle to control rising debt, currently sitting at $36 trillion.

US Credit Rating Downgrade Sends Ripples Through Global Markets

Moody’s cut the US sovereign credit score from its long-held AAA rating to Aa1 — the first downgrade since 1917. The rating agency cited worsening fiscal conditions, a widening deficit, and increasing concerns over the government's capacity to manage its debt obligations. It follows earlier warnings in 2023 and echoes similar concerns raised by Fitch and S&P in previous years.

The downgrade hit global sentiment hard. The futures for the S&P 500 slid 0.9%, while those for the Dow Jones Industrial Average declined 0.6%. The US dollar weakened, dipping to 145.14 yen from 145.65 yen, while the euro remained flat at $1.1183.

Asian Markets Under Pressure Amid Weak China Data

Chinese equities slipped after fresh data revealed slower-than-expected economic growth. April retail sales in China rose just 5.1% year-on-year, missing forecasts, while industrial output growth eased to 6.1% from 7.7% in March. The slowdown raises concerns over excess inventories and reduced domestic demand, particularly in the wake of the ongoing US-China trade tensions.

The Hang Seng in Hong Kong fell 0.7% to 23,184.74, and Shanghai’s Composite Index edged down 0.2% to 3,361.72. Japan’s Nikkei 225 dropped 0.4%, Korea’s Kospi lost 1%, and Taiwan’s Taiex shed 0.8%. Australia’s ASX 200 declined 0.1%.

Adding to the pessimism, China’s property market showed no signs of recovery, with new home prices unchanged in April, marking nearly two years of stagnant growth despite government support efforts.

Trade War Uncertainty Looms Over Markets

Tensions between the US and its trading partners continue to add volatility. Treasury Secretary Scott Bessent warned that President Donald Trump would impose tariffs on countries not negotiating in ‘good faith.’ Although Bessent did not clarify what qualifies as ‘good faith,’ he stated that letters outlining tariff rates would be sent to non-compliant nations.

Trump has already shifted tariff rates multiple times this year. In April, he reduced most tariffs to 10% for 90 days to encourage negotiations, while tariffs on Chinese imports were adjusted to 30%.

Despite last week’s 90-day standstill agreement between the US and China, investor sentiment remains fragile amid concerns over Trump’s unpredictable trade policies.

Wall Street Rallies but Risks Remain

Despite the looming economic headwinds, Wall Street closed higher last week. The S&P 500 gained 0.7% to 5,958.38, bringing it within 3% of its February all-time high. The Dow climbed 0.8% to 42,654.74, while the Nasdaq rose 0.5% to 19,211.10. Optimism over potential tariff rollbacks helped fuel the rally, but fears of a recession and stubborn inflation still weigh heavily.

Moody’s downgrade also underscores long-term structural challenges for the US economy, as successive administrations have failed to rein in government spending.

Consumer Sentiment, Inflation Expectations Worsen

The University of Michigan’s latest consumer sentiment index showed another decline in May, though the pace of deterioration slowed. More troubling, Americans now expect inflation to reach 7.3% over the next year, up from 6.5% the month before, further complicating the Federal Reserve’s path toward rate cuts.

Hope remains that softer inflation readings and slowing economic activity could eventually prompt the Fed to ease monetary policy,a key support for markets facing trade shocks and fiscal uncertainty.

Gold Gains on Safe-Haven Demand

Gold prices edged higher as investors turned to safe-haven assets amid mounting US fiscal concerns. Spot gold rose 0.5% to $3,218.30 an ounce in Singapore after briefly surging as much as 1.4% earlier in the session. The Bloomberg Dollar Spot Index slipped 0.2%.

Moody’s downgrade of the US credit rating supported gold’s appeal. The precious metal, which hit record highs above $3,500 an ounce last month, remains up over 20% this year despite recent pullbacks driven by easing geopolitical tensions.

Oil Prices Dip on Weak Data and Credit Worries

Oil prices fell Monday following the US credit rating downgrade and underwhelming Chinese economic data. Brent crude slipped 0.5% to $65.06 a barrel, while US West Texas Intermediate (WTI) dropped 0.4% to $62.23. The more actively traded July WTI contract also fell 0.5% to $61.66.

While the recent truce between the US and China initially lifted crude prices, concerns over the durability of the agreement and China’s faltering recovery have kept investors cautious.

Oil Prices Dip on Weak Data and Credit Worries

In corporate news, Charter Communications rose 1.8% after announcing a merger with Cox Communications. The combined entity will retain the Cox name and be headquartered in Stamford, Connecticut.

Nvidia-backed CoreWeave jumped 22.1% after the tech giant increased its stake in the AI cloud computing firm from just under 6% to 7%.

Meanwhile, US-listed shares of Novo Nordisk fell 2.7% after the company announced CEO Lars Fruergaard Jørgensen will step down amid recent market challenges, despite the popularity of its Wegovy weight-loss drug.

Outlook: Uncertainty Ahead

With the US credit rating downgrade, wavering trade relationships, and mixed economic signals from China, financial markets are likely to remain volatile. While some positive inflation data could support a dovish Fed pivot later in the year, uncertainty over global trade policies and fiscal stability will continue to dominate investor sentiment.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 21st May 2025.

Dollar Weakens Ahead of G-7 as Traders Watch for US Policy Shifts.

Trading Leveraged products is Risky

The US dollar slipped to its lowest level in two weeks on Wednesday, as market participants turned their attention to the upcoming Group-of-Seven summit for clues on whether the Trump administration is favouring a weaker greenback. The Bloomberg Dollar Spot Index fell for a third straight session, losing 0.4% on the day.

Speculation has grown after Japan’s Finance Minister, Katsunobu Kato, expressed his intent to hold currency discussions with US Treasury Secretary Scott Bessent during the G-7 meeting. South Korean officials have already confirmed that exchange rates were addressed during recent bilateral talks with the US, fueling expectations of a coordinated policy shift.

Fiscal concerns are adding to the dollar’s woes. Lawmakers in Washington are working on a proposed tax cut plan that aims to keep the revenue impact within $4.5 trillion over a decade, currently estimated at $3.8 trillion. This comes on the heels of a credit downgrade by Moody’s, which cited persistent and unaddressed budget deficits as a key reason for lowering the US government's credit rating.

‘The dollar is declining in tandem with rising long-term US yields, as investors grow uneasy about financing America's twin deficits,’ said Moh Siong Sim, FX strategist at Bank of Singapore. ‘We’re likely witnessing the early stages of a broader reallocation away from overweight US positions by global investors.’

Geopolitical Tensions Lift Oil, Equities Mixed in Asia

Oil prices spiked following a CNN report that suggested Israel may be preparing for a military strike on Iran’s nuclear facilities. US benchmark West Texas Intermediate crude rose $1.21 to $63.24 per barrel, while Brent crude added $1.20 to reach $66.58. The report, citing unnamed intelligence sources, said no final decision had been made by Israeli leaders, but any strike could derail ongoing nuclear negotiations and heighten instability in the Middle East—a region responsible for roughly a third of global oil supply.

Asian equity markets were mixed. The Hang Seng gained 0.4%, Shanghai’s Composite edged up 0.2%, and Australia’s ASX 200 advanced 0.8%. South Korea’s Kospi rose by the same margin, and Taiwan’s Taiex climbed 0.6%. Tokyo’s Nikkei 225, however, dipped 0.1% amid ongoing trade tensions with the US

Japan reported weaker trade data, with April exports to the US falling nearly 2% year-on-year. Total global export growth slowed to 2% from 4% in March, while imports from the US plunged over 11%. The country recorded a trade deficit of 115.8 billion yen ($804 million), and the yen's recent strength has further dampened export competitiveness. Vehicle exports, a core component of Japan’s trade, dropped nearly 6%.

The Japanese government continues to urge Washington to remove the tariffs introduced under President Trump, particularly the 25% levy on autos and duties on steel and aluminium. Economic Revitalisation Minister Ryosei Akazawa is expected to meet with US officials this weekend in a third round of negotiations.

Adding to domestic political pressures, Agriculture Minister Taku Eto resigned following controversial remarks about receiving free rice, triggering public backlash amid rising staple food prices.

Wall Street Dips as Travel Stocks Lag; Quantum Firm Soars

US stocks ended lower on Tuesday. The S&P 500 fell 0.4% to 5,940.46, its first decline in seven sessions. The Dow dropped 0.3%, and the Nasdaq lost 0.4%. Travel-related shares dragged the market lower, with Norwegian Cruise Line falling 3.9%, United Airlines off 2.9%, and Airbnb down 3.3%. Viking Holdings, despite better-than-expected earnings, slumped 5%.

Home Depot shares slid 0.6% after quarterly earnings missed estimates, though revenue came in ahead. The company maintained its full-year guidance, contrasting with other corporations that have cited tariff uncertainty and economic headwinds as reasons to withhold forecasts.

In contrast, D-Wave Quantum surged nearly 26% after launching a next-generation quantum computing platform, claiming it can tackle problems traditional computers cannot handle.

Investors are watching for earnings from Lowe’s and Target today.

Bonds and Currency Moves

This morning UK inflation jumped to 3.5% y/y in the headline rate, from 2.6% y/y in the previous month, with prices rising a whopping 1.2% m/m. The later timing of Easter and the start of the new fiscal year clearly impacted the higher-than-expected number. Core inflation accelerated to 3.8% y/y from 3.4% y/y, with services price inflation hitting 5.4% y/y, up 0.7% points over the month. The wider CPIH rate accelerated to 4.1% y/y from 3.4% y/y. The higher-than-expected number backs warnings from Chief Economist Pill that inflation risks have not disappeared and is prompting traders to trim rate cut bets.

Also, Canada’s April inflation data delivered a mixed picture. Headline CPI slowed to 1.7% year-over-year, the weakest since September, due to lower energy prices and the carbon tax repeal. However, core inflation surprised to the upside: the median rate climbed to 3.2% (from 2.9%), the trim rose to 3.1%, and the average core measure accelerated to 3.15%. The three-month moving average of core inflation jumped to 3.4% from 2.9%.

These stronger core figures complicate the Bank of Canada’s upcoming rate decision on June 4. The central bank held rates steady at its April 16 meeting but may now face pressure to act amid persistent underlying inflation.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 22nd May 2025.

Bitcoin Surges Above $111K for the First Time as Institutional Demand and Regulatory Optimism Fuel Rally.

Trading Leveraged products is Risky

Crypto markets outperform as equities stumble under bond market pressure and rising US debt concerns.

Bitcoin hit a new record high on Thursday, crossing the $111,000 threshold for the first time amid growing institutional interest and hopes for improved regulatory clarity in the US. The digital asset rose as much as 3.3% to reach $111,878, according to Bloomberg. Ethereum, the second-largest cryptocurrency, also saw notable gains, climbing up to 5.5% intraday.

Sentiment was lifted by progress in the US Senate on a key stablecoin bill, which investors interpret as a sign of potential pro-crypto regulation under President Donald Trump. This comes alongside mounting demand from major institutional players, including Michael Saylor’s Strategy, which now holds over $50 billion in Bitcoin.

There’s no shortage of demand for BTC from SPAC and PIPE deals, which is manifesting in the premium on Coinbase spot prices.

Several newly formed or obscure public companies are driving fresh demand, funding their Bitcoin purchases through convertible debt, preferred equity, and other instruments. One example is Twenty One Capital Inc., a new firm modelled after Strategy and launched by an affiliate of Cantor Fitzgerald LP in partnership with Tether Holdings SA and SoftBank Group. Meanwhile, a merger between a subsidiary of Strive Enterprises Inc., co-founded by Vivek Ramaswamy, and Nasdaq-listed Asset Entities Inc. will create a Bitcoin treasury company.

‘This rally is not just momentum-driven’, said Julia Zhou, COO of Caladan, a crypto market maker. ‘It’s supported by tangible, sustained demand and supply dislocations’

Bitcoin’s dominance is growing, as alternative cryptocurrencies struggle. An index tracking smaller altcoins has declined about 40% in 2025, while Bitcoin is up 17% year-to-date.

In the ETF space, 12 US Bitcoin exchange-traded funds have attracted around $4.2 billion in inflows this month. On Deribit, the largest crypto options exchange, open interest is heavily concentrated around June 27 expiry calls at $110,000, $120,000, and even $300,000.

The latest breakout confirms the broader bullish trend. The sharp pullback from January’s highs to below $75,000 in April now looks like a correction within a bull market. A firm break above $110,000 could set the stage for a move toward $125,000.

The latest rally coincides with a private dinner on Thursday between Trump and top holders of his memecoin at his golf club near Washington. Ethics experts warn that such events raise concerns about potential conflicts of interest and access through financial contributions. However, analysts say the meeting has had minimal direct market impact.

Asian Markets Retreat on Bond Market Worries and US Debt Concerns

Asian equity markets fell sharply on Thursday as pressure from rising US Treasury yields and concerns over surging American debt rattled investor confidence.

Japan’s Nikkei 225 dropped 1.0% to 36,944.55, while Hong Kong’s Hang Seng Index fell 0.9% to 23,615.21. Mainland China’s Shanghai Composite edged 0.1% lower to 3,383.10. Australia’s ASX 200 slid 0.5% to 8,342.80, and South Korea’s Kospi lost 1.1% to settle at 2,595.69.

The US still has the biggest markets and deepest liquidity, but not even dollar inertia can outrun compound interest and structural deficits forever. The weaker US dollar also weighed on regional markets. A depreciating dollar undermines the value of Asian nations’ dollar-denominated assets and negatively impacts exporters like Japan’s automakers, whose overseas profits diminish when converted to local currency.

In currency markets, the greenback slipped to 143.27 Japanese yen from 143.68 yen. The euro strengthened slightly to $1.1335 from $1.1330. A year ago, the dollar was trading near 150 yen.

Investors are also increasingly wary of President Trump’s policy decisions, particularly on tariffs that affect Asian firms and ongoing negotiations in Congress over a major funding bill.

Wall Street Flat Ahead of Tax Vote

US stock futures were little changed early Thursday as markets awaited the outcome of a vote on President Trump’s proposed tax reform bill. Dow futures dipped 0.1%, while S&P 500 and Nasdaq 100 futures traded flat.

Despite internal GOP disagreements, House Speaker Mike Johnson said a floor vote could happen as early as Thursday night. The latest version of the bill includes more generous deductions for state and local taxes (SALT), aimed at appeasing Republican holdouts.

However, unresolved issues surrounding Medicaid funding and green energy tax credits have investors concerned. Moody’s recently downgraded the US credit outlook, citing the bill’s potentially massive deficit implications as a contributing factor.

Markets reacted on Wednesday with broad declines and a jump in bond yields. The 30-year Treasury yield briefly breached 5%, its highest in months, amid renewed concerns over the US’s growing debt burden.

Beyond politics, investors on Thursday will also digest key economic data, including weekly jobless claims, existing home sales, and the ISM’s Purchasing Managers’ Index (PMI).

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 23rd May 2025.

Dollar Drops as Fiscal Concerns Shake Markets, Euro and Yen Rebound.

Trading Leveraged products is Risky

The US dollar softened on Friday, poised for its first weekly decline in five weeks against both the euro and the yen. The shift comes as mounting concerns over the US's deteriorating fiscal position have led investors to seek out safer assets.

Following Moody’s recent downgrade of US debt, market attention turned sharply toward America’s staggering $36 trillion debt load. The renewed focus has been amplified by President Donald Trump’s proposed tax legislation, which is expected to significantly expand the deficit if passed.

Labelled by Trump as a ‘big, beautiful bill,’ the tax package narrowly cleared the Republican-majority House of Representatives. It now heads to the Senate, where extended debate is expected—further contributing to near-term investor caution.

The euro climbed 0.36% to $1.132 on Friday, on track to close the week with a 1.2% gain after four weeks of losses. Earlier dollar strength had been supported by a pause in tariff escalations, but sentiment has since shifted. Year-to-date, the euro has appreciated 9% amid ongoing turbulence sparked by tariff policy and a retreat from the dollar.

‘This week, the focus moved away from trade tensions to fiscal stability. That change has rattled markets,’ said Moh Siong Sim, currency strategist at Bank of Singapore. ‘The U.S. fiscal path now looks so concerning that investors are questioning its sustainability.’

The dollar index, which gauges the greenback against six major peers, was down 0.3% at 99.614 on Friday and is set for a 1.35% weekly loss. This drop comes despite a selloff in U.S. Treasuries, with 30-year yields hovering above 5% in Asian trading, close to their October 2023 peak of 5.179%—levels not seen since 2007.

The rising yields have failed to support the dollar, as a wave of risk aversion fuels what some analysts have dubbed a “Sell America” movement, echoing trends seen last month.

‘What’s striking is how markets are reacting to the surge in long-term U.S. yields,’ said Chris Weston, head of research at Pepperstone. ‘These yields aren’t being driven by optimism about growth, but by deepening fears of fiscal irresponsibility and ballooning interest costs.’

He added that the combination of rising inflation expectations and waning foreign interest in U.S. debt has led to a notable spike in the term premium.

The yen firmed to 143.47 per dollar, set for a 1.5% weekly rise after Japanese core inflation in April surged at its fastest pace in over two years. This could prompt the Bank of Japan to consider raising interest rates before year-end.

Despite a fragile economy burdened by tariffs, super-long Japanese bonds reached record highs this week, though prices steadied on Friday.

The Swiss franc gained slightly to 0.8264 per dollar and is up 1.2% this week, snapping a two-week losing streak.

The Australian dollar strengthened 0.39% to $0.6434 after the Reserve Bank of Australia cut its cash rate to a two-year low of 3.85%, citing weaker global prospects and easing domestic inflation.

Meanwhile, the New Zealand dollar rose 0.3% to $0.5916, on track for a 0.6% weekly increase.

Asian Equities Rebound as Yields Retreat

Asian stocks advanced early Friday as U.S. Treasury yields retreated after a volatile week driven by debt-related fears. The 10-year yield slipped to 4.52%, while the more Fed-sensitive two-year yield dropped to 3.98%.

Oil prices declined amid speculation that OPEC+ may raise production at its next meeting. U.S. crude fell 51 cents to $60.69 per barrel, while Brent slid to $63.93.

In Asia, Japan’s Nikkei 225 rose 0.8% to 37,289.60 after the government reported April core inflation at 3.5%, its highest since early 2023. Analysts now expect the BOJ to cautiously consider tightening policy.

Still, ING’s Min Joo Kang noted that U.S. tariff pressures could limit the BOJ’s room to maneuver, especially with Japan’s export sector under threat.

Hong Kong’s Hang Seng rose 0.4% to 23,627.99, Shanghai’s Composite Index gained 1% to 3,382.12, Seoul’s Kospi edged up 0.2% to 2,597.49, and Australia’s S&P/ASX 200 added 0.4% to 8,379.10.

Wall Street Mixed as Policy Fears Linger

U.S. stocks closed mixed on Thursday, with the S&P 500 down slightly to 5,842.01. The Dow ticked lower by 1.35 points to 41,859.09, while the Nasdaq rose 0.3% to 18,925.73, led by tech gains. Alphabet climbed 1.4% and Nvidia added 0.8%.

Treasury markets steadied following the House’s passage of a tax bill expected to deepen the federal deficit. The package would extend $4.5 trillion in tax breaks and introduce new ones, while accelerating the phase-out of clean energy credits—sending solar stocks tumbling. Sunrun lost 37.1%, Enphase dropped 19.6%, and First Solar slid 4.3%.

Healthcare stocks also fell after a federal agency announced broader audits of Medicare Advantage plans. UnitedHealth lost 2.1% and Humana plunged 7.6%.

In the latest economic data, jobless claims edged slightly lower, signalling continued labour market resilience. Still, businesses remain cautious amid an ongoing trade war.

A strong S&P Global report on U.S. manufacturing and services showed a rebound in May, though it also highlighted supply chain disruptions and cost pressures tied to looming tariffs.

The jump in prices for goods and services marked the sharpest since August 2022.

Currencies Update

In early Friday trade, the dollar eased to 143.45 yen from 144.01. The euro rose to $1.1319 from $1.1279, reflecting continued pressure on the greenback.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 28th May 2025.

Economic Data Boosts The US Dollar And US Indices!

Trading Leveraged products is Risky

All indices rose in value on Tuesday as investors positively react to the latest economic data beating expectations. The positive economic data also triggered an upward trend for the US Dollar Index. The FOMC Meeting Minutes due this evening will influence both the stock market and the US Dollar. However, shareholders will largely fix their attention on NVIDIA’s quarterly earnings report due in the upcoming hours.

SNP500 (USA500) - NVIDIA Report Key For Stock Market Performance

NVIDIA’s quarterly earnings report is unique due to its exposure to indices and ETFs. NVIDIA’s stocks are one of the few stocks which are included in the SNP500, NASDAQ and even the Dow Jones. For the SNP500 and the NASDAQ the stock is the 2nd most influential company and the 23rd most influential for the Dow Jones.

However, investors should note that due to its weight, the earnings report will not only impact the SNP500. It will also influence sentiment towards the stock market and the technology sector. Currently, the sentiment within the market continues to improve as economic data signals lower recession risk.

NVIDIA stocks rose 3.21% on Tuesday and so far during this morning’s Asian session are maintaining the gains. This indicates investors are not expecting poor earnings from this evening’s report. If we monitor the stocks within the SNP500 which hold a weight of at least 0.50% and above, all stocks rose in value on Tuesday. This indicates the strength of the current momentum. If NVIDIA comfortably beats earnings and revenue expectations, NVIDIA stocks and most indices are likely to continue increasing in value for the week.

USACAD 30-Minute

As mentioned in yesterday’s analysis, another development which is having a positive influence on the SNP500 and NASDAQ are Meta stocks. Meta’s Mark Zuckerberg is reportedly adopting a pro-Trump stance to reduce regulations on Facebook and Instagram and for the administration to apply pressure on countries charging additional taxes on the platform.

USDCAD - Economic Data Boosts The US Dollar!

On Tuesday the US released 3 economic data. Durable Goods Orders for April fell by 6.3% which was a significantly lower decline than projections. The Core Durable Goods Orders rose by 0.2% whereas analysts were expecting the core orders to decline. Lastly, the US CB Consumer Confidence rose from 85.7 to 98.00, the highest in 3 months and also reaching the 100.00 level.

In the previous week, the USDCAD struggled to hold its value and the trend clearly moved in favor of the Canadian Dollar. However, price action at the moment signals a correction and the US Dollar increases in value across most currencies. Currently, the main influence is likely to be the Federal Reserve Meeting Minutes. Currently the Fed maintains its hawkish stance, but the Meeting Minutes may provide insights into how hawkish they are. If the view of the Fed remains hawkish, the Dollar may find support.

Minneapolis Fed President Neel Kashkari on Tuesday said interest rates should stay unchanged until the effects of high trade tariffs on consumer prices are clearer. He highlighted the challenge the Fed faces. This includes balancing inflation and the need to support economic growth amid policy uncertainty from the Trump administration.

On a different subject, the US Dollar may also find support from progress in the US-India trade talks. The Indian Finance Ministry suggests that a successful trade agreement with the US could transform current economic headwinds into tailwinds, boosting exports and market access.

Currently, the USDCAD is retracing lower since the opening of the European Session. However, the price of the exchange continues to maintain a price above most Moving Averages. If the price regains momentum and increases above 1.38305, buy signals will strengthen.

Key Takeaway Points:

*All major indices and the US Dollar Index climbed on Tuesday, supported by stronger-than-expected US economic data. This includes Durable Goods Orders and Confidence Indexes.
*NVIDIA's report, key due to its significant weighting in the SNP500, NASDAQ, and Dow Jones, is set to impact market sentiment, particularly in the tech sector.
*Meta’s pro-Trump pivot, aimed at reducing regulations and addressing tax challenges abroad, is contributing to positive sentiment in the SNP500 and NASDAQ.
*The USDCAD saw a correction after weak prior performance, supported by solid US data and the upcoming FOMC meeting. A hawkish Fed commentary would offer potential support for the Dollar.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 29th May 2025.

NVIDIA Beat Earnings Expectations and The CIT Blocks US Tariffs.

Trading Leveraged products is Risky

The NASDAQ rose to its highest price since February 21st as investors positively reacted to US courts ordering Trump to remove tariffs. In addition to this, NVIDIA stocks rise 5.00% after releasing their latest quarterly earnings report. Let’s take a look at the latest developments impacting the markets.

US Courts Say No To Trump Tariffs

Surprisingly, the Court of International Trade in New York made the decision that the US administration has overstepped its mandate. The court stated that the President must set tariffs through Congress. Although most of these tariffs are currently suspended, it gave the White House 10 days to remove them, except for those on aluminum and steel.

The court order puts doubt on whether tariffs are possible and if they will be part of the current administration. So far, the White House said, ‘It is not for unelected judges to decide how to properly address a national emergency,’ as it launched an appeal against the court. The ruling by the court does have a positive impact in the short-medium term. However, the courts also add uncertainty to the upcoming weeks.

NVIDIA Beat Earnings Expectations

NVIDIA shares climbed after the market closed as investors held onto their positions, buoyed by strong earnings results. The company reported revenue of $44.1 billion, marking a 12% increase from Q4 and a 69% rise year-over-year. Both earnings per share and revenue exceeded prior projections. If momentum is maintained, the stocks may become the most influential stocks for the NASDAQ, and SNP500 again.

Currently, for the NASDAQ, the stocks hold a weight of 11% and 6% for the SNP500. All 3 US indices are currently increasing in value, mainly due to NVIDIA’s earnings report and the court order.

NASDAQ 15-Minute Chart

Federal Reserve Meeting Minutes

The Federal Reserve's meeting minutes from earlier in the month were more negative than expected. According to experts, the market may have had a bearish reaction to the meeting minutes. Though this was avoided due to support from NVIDIA and the latest court order. The meeting minutes reveal heightened concerns over the economic impact of President Trump's trade policies. They particularly highlight the potential loss of the US safe-haven status due to market volatility following tariff announcements.

Officials noted that declines in US government debt prices, equities, and the US Dollar could signal a shift in investor confidence, potentially leading to long-term economic repercussions. Therefore, the report confirms that a recession is still a real concern for the Federal Reserve. However, the Meeting Minutes also stated that upward pressure on inflation may be difficult to control while simultaneously trying to stop the employment sector from weakening.

However, the report is generally known as a lagging indicator. Since the report was drawn up the US administration has become very close to a trade agreement with India and the EU. Due to this, and the court order, the market may pay less attention to the Meeting Minutes.

A key factor for most tradeable assets will be tomorrow’s Core PCE Price Index. The index measures the change in pricing of the most bought goods and services. In addition to the Core PCE Price Index, investors will also closely monitor today’s US Gross Domestic Product and Weekly Unemployment Claims.

*NASDAQ +1.16%
*Dow Jones +1.23%
*US Dollar Index +0.24%
*Gold -0.48%

Key Takeaway Points:

*NASDAQ Rises: Court blocks most Trump tariffs, boosting stocks and the US Dollar. However, the US Dollar quickly gave up the recent gains.
*NVIDIA Shines: Earnings exceed expectations, pushing the stock up 5%. The earnings report supports the stock market as a whole.
*Fed Warnings: Meeting Minutes raise recession concerns from trade policies. The Fed struggles to make decisions due to uncertainties.
*Markets focus their attention on the Core PCE Price Index, GDP, and Weekly Unemployment Claims.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 30th May 2025.

ECB Rate Cut Expectations: Will June Deliver Another 25 bp Cut?

Trading Leveraged products is Risky

The European Central Bank (ECB) is widely expected to announce another 25 basis point (bp) interest rate cut at its upcoming June policy meeting. Despite dovish expectations, recent statements from hawkish members and rising geopolitical uncertainties suggest that the path toward additional monetary policy easing may not be as straightforward as before.

Mixed Signals: Schnabel’s Call for Caution vs Dovish Momentum

While Executive Board member Isabel Schnabel voiced support for keeping rates unchanged, noting that now is the time for a ‘steady hand,’ the overall tone within the ECB Governing Council has recently leaned dovish. Preliminary Eurozone inflation data and updated projections could strengthen the case made by members like François Villeroy de Galhau for another cut.

June Outlook: Pause vs 25 bp Cut

At the last meeting, the ECB delivered a widely anticipated 25 bp cut. However, the April meeting minutes revealed a split into three camps:

* One group initially preferred to pause but agreed to front-load a June cut due to rising trade tensions from Trump’s ‘Liberation Day’ tariff threats.
* Another faction argued for a larger 50 bp cut, indicating deeper concern over growth risks.
* A third group favoured more cautious, data-dependent easing.

Heading into the June ECB decision, the debate has narrowed to two options:

* A pause to assess incoming data
* A 25 bp rate cut to sustain momentum

Schnabel and Austrian central bank chief Robert Holzmann have spoken in favour of pausing, arguing that further cuts may be ineffective or even risky for the Eurozone economy.

Data & Tariff Tensions: A New Source of Risk

Since Schnabel’s remarks, Trump has escalated threats of a 50 bp tariff on EU imports. Though temporarily suspended for talks, the uncertainty weighs on sentiment. Unlike the market volatility after the ‘Liberation Day’ headlines, current reactions have been more subdued, making a preemptive rate cut less justifiable.

Even ECB Chief Economist Philip Lane, typically dovish, warned against both over-tightening and over-easing. He emphasized the need for data-driven decisions, saying that further cuts are possible if inflation softens, but ‘no one is talking about dramatic rate cuts.’

Preliminary May inflation data, especially in services, is expected to show deceleration—but this may reflect seasonal adjustments. Meanwhile, import prices continue to fall, though disinflation from a stronger euro (EUR) may have peaked.

Trump’s recent trade threats dampen hopes for a negotiated deal. EU retaliation, if pursued, could raise imported goods prices and offset currency-related disinflation, adding complexity to the ECB’s policy decisions.

The ECB’s inflation expectations survey showed a rise in 1-year inflation expectations, though long-term views remain stable. Business confidence data has been mixed, with front-loaded exports earlier this year potentially leading to weaker activity in Q2.

Germany’s new Chancellor's investment push in infrastructure and defence—what Holzmann called a ‘fiscal shock’—could provide economic support in the medium term. While such measures take time to impact GDP, they add another layer to the ECB’s policy calculus.

Is the ECB Running Out of Room to Cut?

With rising internal opposition and geopolitical headwinds, the ECB's path to additional interest rate cuts appears increasingly narrow. If a cut is delivered next week, the central bank may pause in July unless further economic shocks emerge. Alternatively, a June pause could leave the door open for easing in July. As Lane stated, the ECB must remain flexible, but the hurdles to further rate cuts are clearly rising.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 2nd June 2025.

Market Recap: Volatility, Tariffs, and Trade Uncertainty Define May's End and June's Start.

Trading Leveraged products is Risky

May Ends with Mixed Markets and Renewed Trade Tensions

Financial markets ended May on a choppy note, reflecting a volatile month filled with geopolitical tensions, shifting inflation expectations, and mounting speculation around central bank policy moves. As the dust settles, investors are turning their focus to June with caution, especially as trade disputes between the US and China intensify once again.

Tariff-related anxieties were reignited following President Donald Trump’s online remarks accusing China of ‘totally violating’ a recent trade agreement. Although the full details remain unclear, the statement prompted a wave of market jitters. While the immediate market panic seen earlier in May, following the so-called ‘Liberation Day’ levies has subsided somewhat, economic uncertainty remains high. The US administration’s unpredictable trade stance — punctuated by calls to double steel tariffs and reimpose levies on Chinese imports — continues to weigh on investor sentiment.

Trump’s Tariff Policy Back in Focus

Despite the tense geopolitical backdrop, US Treasury yields edged lower, bolstered by a cooling in core inflation expectations and signs of slowing consumer spending. The 2-year yield dropped by 4 basis points to 3.897%, while the 10-year yield slipped by 1.8 basis points to 4.400%. Both yields are approximately 25 basis points higher compared to the start of the month, reflecting the complex interplay between haven demand and shifting monetary policy expectations. The softer inflation data renewed speculation that the Federal Reserve may consider rate cuts later in the year, a narrative that has provided a partial tailwind for bond markets.

Wall Street closed the month with a strong performance overall, despite Friday’s subdued finish. The Dow Jones Industrial Average posted a modest gain of 0.13%, the S&P 500 dipped slightly, and the tech-heavy Nasdaq fell by 0.32%. However, on a monthly basis, equity markets recorded impressive gains. The Nasdaq rallied 9.56%, marking its best month since November 2023, driven largely by strength in technology and artificial intelligence-related stocks. The S&P 500 rose 6.15%, its best May performance since 1990, while the Dow added 3.94%.

As June began, US stock futures pointed to a weaker open, with the S&P 500, Dow, and Nasdaq 100 futures all trading lower in early action. Investor caution is apparent, with market participants closely monitoring the evolving trade narrative and bracing for a new wave of economic data. The highlight of the week is the upcoming nonfarm payrolls report, expected to offer critical insights into labour market strength and the broader health of the US economy.

Global Market Reaction: Asia Hit by Geopolitical Risks

Global markets also responded to the trade drama and geopolitical risks. In Asia, major indices fell sharply. Hong Kong’s Hang Seng Index plunged more than 2%, Tokyo’s Nikkei 225 lost 1.6%, and South Korea’s Kospi declined by 0.4%. The renewed escalation between Beijing and Washington, coupled with concerns over China's manufacturing activity and the Russia-Ukraine conflict, amplified investor nervousness.

Commodity Markets React: Gold, Oil, and the Dollar

The foreign exchange market reflected the tension, with the US dollar experiencing fluctuations tied to trade developments. The dollar index (DXY) ended the month marginally higher at 99.441 but slipped early Monday as investors assessed the potential economic fallout from escalating tariff threats. The greenback weakened to 142.90 yen, while the euro edged up to $1.1420. Sterling and commodity-linked currencies like the Australian and New Zealand dollars also gained modestly.

Oil prices initially declined to $60.78 per barrel but later reversed course, rallying after OPEC+ announced a modest output increase starting in July. US crude rose to $62.39, and Brent climbed to $64.19.

Gold prices spiked to $3350 per ounce as some risk aversion returned, fiscal concerns and a weakening dollar continue to underpin the precious metal in the longer term. Analysts have noted that if tariff revenue falls short of expectations, the US may seek alternative fiscal measures, adding further pressure on the dollar and stoking demand for safe havens.

The political landscape also added to the market complexity. President Trump’s sweeping tariff and tax proposals, including the controversial Section 899, are under congressional review. If passed, the bill could significantly reshape the US fiscal framework and investor strategy, especially as it proposes taxing investors from countries with so-called ‘unfair foreign taxes.’ Some senators have already voiced concerns over the projected $3.8 trillion increase in federal debt, and revisions to the bill appear likely.

Meanwhile, company-specific developments also played a role in shaping market movements. Shares of Gap tumbled 20.2% after the retailer warned that new tariffs could cost up to $300 million annually. Nvidia, a key tech heavyweight, also fell 2.9% despite strong earnings, dragging the broader sector lower. On the positive side, Ulta Beauty surged 11.8% after beating expectations and raising guidance, while Costco climbed 3.1% on the back of solid quarterly results.

Looking Ahead: Jobs Report and June Uncertainty

In summary, May was a month of sharp swings and mixed signals across global financial markets. While equity indices posted strong gains, the broader outlook remains clouded by trade tensions, political risk, and questions about future Fed policy. As June began all eyes turned to key economic indicators and potential developments in US-China relations, which are likely to shape market sentiment in the weeks ahead.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 3rd June 2025.

Global Markets Under Pressure: Japanese Outflows, China’s Slump, and Trade War Fallout Shake Sentiment.

Trading Leveraged products is Risky

Global markets are facing renewed uncertainty as a combination of trade tensions, weak economic data, and policy recalibrations fuel volatility across equities, currencies, and bonds.

Japan: Historic Fund Outflows and Rebalancing Pressures

Japanese equity funds witnessed their largest weekly outflows in nearly 18 years, with $7.49 billion pulled in the week to May 28, according to LSEG Lipper data. This marked the heaviest withdrawal since July 2007.

Analysts attribute the exodus to profit-taking after April’s market dip and May’s rebound, along with cautious sentiment around forward earnings. Domestic investors were the primary drivers, accounting for $7.55 billion of the outflows, while foreign funds saw a modest $59 million in inflows.

Daisuke Motori of Morningstar Japan noted this pattern of ‘buying the dip and selling the rally’ has repeated in recent months. Rebalancing by large institutional investors such as pension funds and life insurers likely added to the sell-off.

A strengthening yen—up 10% against the dollar year-to-date—is also clouding Japan’s export outlook. LSEG data shows analysts have downgraded forward 12-month earnings forecasts by 1.8% in the past 30 days.

Meanwhile, Bank of Japan Governor Kazuo Ueda reaffirmed the central bank’s commitment to tapering its bond-buying and cautiously normalizing policy, even as uncertainty looms large. While inflation reached 4.6% in April, underlying inflation remains below the BOJ’s 2% target. The next rate-setting meeting on June 16–17 is expected to review the bond tapering plan extending into fiscal 2026.

Ueda also flagged concerns about US tariffs and their impact on Japan’s economy, warning of potential hits to exports, corporate profits, and wage negotiations heading into winter.

Australia: Tariff Warnings and Rate Cuts

The Reserve Bank of Australia (RBA) is also on high alert. Assistant Governor Sarah Hunter warned that higher US tariffs could depress global trade, investment, and employment.

While the precise effects remain unclear due to policy unpredictability, Hunter confirmed that these downside risks were a key factor in the RBA’s recent rate cut to a two-year low of 3.85%. The central bank remains open to further easing, particularly if global trade deteriorates.

Interestingly, the RBA sees the tariff pressure as disinflationary for Australia, given cheaper imported goods as Chinese suppliers redirect exports. Headline inflation remained at 2.4% in Q1, with core inflation easing back into the target band for the first time since 2021.

China: Manufacturing Slumps Despite Tariff Truce

In China, the manufacturing sector endured its steepest decline since September 2022, according to the Caixin/S&P Global PMI, which fell to 48.3 in May, well below the 50 threshold signalling contraction.

The reading sharply diverged from the official PMI and surprised analysts, suggesting that smaller and medium-sized exporters, particularly in the private sector, are suffering disproportionately despite the recent US-China tariff truce.

Economists attributed the discrepancy to timing differences in data collection and methodology. Nonetheless, the Caixin results point to intensifying economic pressure, with falling export orders and production weighing on sentiment.

The trade war’s ripple effect extended to other Asian economies, with Vietnam, Indonesia, Taiwan, Japan, and South Korea all reporting declines in manufacturing output.

Currency Markets: Dollar Sinks on Trade War Woes

Currency markets reflected investor unease as the US dollar hit a six-week low on Tuesday amid signs of fragility in the US economy. The dollar index dropped to 98.58—its lowest level since late April—before partially rebounding.

Rodrigo Catril, senior FX strategist at National Australia Bank, said, 'Trade tensions are not really improving… we’ve seen the dollar getting hammered widely.’ The Aussie and Kiwi outperformed, with New Zealand’s dollar hitting a year-to-date high of $0.6054 before retreating.

The greenback weakened following a third straight month of US manufacturing contraction, while upcoming factory orders and jobs data may shed further light on the economic toll of ongoing tariff battles.

The euro briefly touched a six-week high of $1.1454 before retreating, while investors also await this week’s European Central Bank policy decision.

Adding further pressure, US tariffs on steel and aluminium are set to double to 50% this week, even as the Trump administration pushes for tougher trade negotiations globally.

The global economy is showing renewed signs of strain under the weight of trade uncertainty, export weakness, and policy recalibrations. While central banks across Japan, Australia, and China remain cautious, markets are increasingly sensitive to any signs of economic softness or policy missteps.

As the BOJ, ECB, and US data dominate the agenda in the coming days, traders will be watching closely for signs of stabilization—or deeper fragmentation—in an already fragile global landscape.

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Please note that times displayed based on local time zone and are from time of writing this report.

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Andria Pichidi
HFMarkets

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