MARKET WRAPS

European stocks inched higher on Friday with investors on the hunt for further catalysts that could extend the stellar equity rally sparked by the U.S. and China agreeing to scale back tariffs.

The prospect of more trade deal announcements is keeping some investors bullish on further market advances.

"It's still too early to say the worst is behind us, but with potential deals about to be announced, my expectation is that the markets will continue to push higher," RGA Investments said.

On a quieter day for earnings, Richemont led the gains in Europe after reporting higher sales despite a demand slowdown in the luxury sector.

Economic Insight

U.S. interest rates remained significantly restrictive , MainSky Asset Management said, seeing risks of the Federal Reserve being behind the curve.

"The Federal Reserve should cut rates soon."

While tariffs could lead to higher inflation, it would be a one-off effect, it said.

U.S. Markets

Stock futures edged higher.

Walmart said it will raise prices in response to tariffs, a move that stands to ripple through the retail industry and the U.S. economy.

Walmart shares fell 0.5%.

The company didn't share a profit forecast for the current quarter, saying it might absorb some tariff costs to keep prices competitive.

Forex:

The dollar fell as recent evidence of easing price pressures boosted expectations for further interest rate cuts by the Federal Reserve.

A decline in oil prices also added to the sense that inflationary pressures are easing, Deutsche Bank said.

"With investors feeling less concerned about inflation, they then dialled up their expectations for Fed rate cuts in response."

Sterling is likely to weaken against the euro as ongoing uncertainty over U.S. tariffs weighs on risk appetite, Danske Bank said.

"An investment environment characterised by elevated uncertainty, widening credit spreads and a positive correlation to a dollar negative environment, in our view, favors a weaker sterling."

The U.K. runs a large current account deficit that makes sterling vulnerable when capital inflows fade.

The euro could extend its current gains against the dollar slightly as speculators continue to bet against the U.S. currency, ING said.

Markets and consensus forecasts seem to be aligning for two further interest-rate cuts by the European Central Bank this year.

However, the risks remain skewed towards a weaker dollar.

Bonds:

Treasury yields dropped, extending Thursday's trend.

The Treasury yield curve should steepen as investors price in rising term premium--additional yield investors seek to hold a long-dated bond rather than a short-dated one, Societe Generale said.

"Term premium expansion will likely continue, and the Fed will cut later this year," it said.

The 10-year Bund yield is expected to move higher on a six- to 12-month horizon, to be driven by rising state expenditures, DZ Bank said.

"The planned state investment programs as well as higher defense expenditures in Germany will probably lead to rising new debt."

The rising supply of government bonds as well as an economic pickup could lead to higher 10-year Bund yields, it said.

Eurozone government bond yields fell in early trade, tracking Treasury yields lower, according to Tradeweb data.

"Bunds and Treasuries are rallying alongside equities and the euro," Commerzbank said.

Energy:

Oil prices were headed for a modest weekly gain due to easing trade tensions between the U.S. and China, but concerns over OPEC+ supply and a potential Iran deal continue to weigh on sentiment.

A deal could unlock additional Iranian supply at a time when the market is already bracing for a surplus.

Meanwhile, demand concerns linger, with the IEA forecasting slower consumption growth and increasing supplies for the rest of the year.

Metals:

Gold prices were on track for a weekly loss of nearly 4% as trade tensions ease.

"Prices have come down from the fresh record high of $3,500 amid the rollback of the U.S. and China's recently announced tariffs," BMI said.

BMI forecasts prices in a range of between $3,000 and $3,400 a troy ounce in the second and third quarters, supported by U.S. policy uncertainty, geopolitical conflicts and inflation concerns.

Base metal prices fell in early trade.

Despite the dip, both contracts were poised to end the week in positive territory.

"The recent increase in copper prices is driven by supply shortage concerns amid front-loading activities in the U.S. as the prospect of U.S. copper tariffs looms, as well as diminishing stock levels in Mainland China," BMI said.

EMEA HEADLINES

Cartier Parent Richemont Posts Higher Sales Boosted by Core Jewelry Division

Swiss jeweler and watchmaker Richemont reported an increase in fourth-quarter sales driven by its core jewelry division, at a time when the luxury sector contends with persistently slowing demand and an unpredictable global trade spat.

The owner of high-end brands such as Cartier and Van Cleef & Arpels said Friday that it made sales of 5.17 billion euros ($5.78 billion) for the last three months of its fiscal year ended March 31. This was 7% higher than in the prior-year period at constant exchange rates. The result compares with analysts' expectations of 5.14 billion euros, according to a poll of estimates compiled by Visible Alpha.

Swiss Re Posts Profit Beat Despite Softer Revenue

Swiss Re reported a larger-than-expected increase in first-quarter net profit despite a softer topline as the group was able to absorb the impact of the wildfires that ravaged California in January.

The Zurich-based reinsurer on Friday posted a net profit of $1.275 billion for the three months ended March 31, representing a 16% on-year increase, which surpassed a $938 million estimate taken from a company-compiled consensus.

Bayer Seeks New Roundup Settlement While Exploring Monsanto Bankruptcy

Bayer is making another push to resolve lawsuits linking the popular weedkiller Roundup to cancer, while exploring a bankruptcy filing for its Monsanto agriculture business in case the settlement plan fails, according to people familiar with the matter.

Bayer is drawing up plans to try to resolve some of its mass lawsuits over Roundup through proceedings in Missouri state court, where a majority of them are pending, the people said. But given its past difficulties in ending the Roundup litigation in civil courts, the German drug and agriculture conglomerate is preparing as another option a bankruptcy filing covering the weedkiller's U.S. manufacturer, Monsanto, they said.

Trump Administration Targets Europe's Digital Laws as a Threat to Basic Rights and U.S. Business

WASHINGTON-The Trump administration is ramping up attacks on Europe's digital rules, opening a new front in Washington's pressure campaign on longtime allies that combines assertions of defending free speech with efforts to protect commercial interests.

Much of the initiative is led by the State Department, which last week sent a request to its offices around Europe seeking "examples of government efforts to limit freedom of speech," according to a copy reviewed by The Wall Street Journal.

GLOBAL NEWS

Japan's Economy Shrinks for First Time in a Year

TOKYO-Japan's economy shrank for the first time in a year and faces a bumpy road ahead owing to the impact of U.S. trade policy.

Japan's real gross domestic product declined 0.2% in the January-March period from the previous quarter, preliminary government data showed Friday, putting the risk of a technical recession in play.

America's Love Affair With Posh British Cars Is Under Threat Despite Trade Deal

Americans have long been drawn to posh British car brands such as Rolls-Royce and Bentley, which in turn have come to rely on U.S. buyers. Now that special relationship is coming under strain.

Last week's U.S.-U.K. trade pact spared the British auto industry from the worst of President Trump's sweeping tariffs while casting doubt over its prospects in a key growth market.

Shipping Rates Rise as U.S.-China Trade Truce Drives Import Surge

The cost to ship a container of Chinese-made goods to the U.S. is jumping as importers race to pull cargo across the Pacific during a three-month trade-war truce.

Freight rates from China to the U.S. West Coast have risen about 8% this week as bookings have boomed, shipping executives and brokers in Singapore and London say. Ocean carriers are jacking up that rate by as much as 50% in the coming 10 days or so, they added. This means shipping a container from Shanghai to Los Angeles in the coming weeks could cost over $3,000 per twenty-foot equivalent unit, or TEU, the standard industry gauge.

FEMA Head Admits in Internal Meetings He Doesn't Yet Have a Plan for Hurricane Season

WASHINGTON-The newly appointed head of the Federal Emergency Management Agency acknowledged in private meetings that with two weeks to go until hurricane season, the agency doesn't yet have a fully formed disaster-response plan.

David Richardson, who previously served as a senior official at the Department of Homeland Security and doesn't have a background in emergency management, told staff he would share a hurricane plan with Homeland Security Secretary Kristi Noem after he completes it late next week. He said Thursday he's 80% to 85% done with the plan. The agency is already months behind schedule in its preparations for the hurricane season starting June 1, which is expected to have above-normal activity, according to FEMA employees.

DHS Is Considering Reality Show Where Immigrants Compete for Citizenship

The Department of Homeland Security is considering being part of a television show in which immigrants would compete for potential U.S. citizenship, an idea the producer pitched as far back as the Obama administration.

Department spokeswoman Tricia McLaughlin said she had spoken to the producer of the proposed television reality show and that consideration of the idea was ongoing.

Trump Says U.S., Iran Close to Nuclear Deal

American negotiators for the first time pitched a nuclear proposal to their Iranian counterparts, according to people briefed on the matter, days before President Trump said the U.S. was close to an agreement on the matter on Thursday.

The U.S. issued its proposal last weekend during the fourth round of nuclear negotiations between the U.S. and Iran since April 12. After those talks, the U.S. said it was encouraged by Iran's openness to Washington's approach. The Iranians said the talks were "difficult but useful" in clarifying the differences.

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May 16, 2025 05:01 ET (09:01 GMT)

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