MARKET WRAPS

Watch For:

U.K. unemployment, Germany ZEW indicator of economic sentiment; no major trading updates expected

Opening Call:

European stock futures were lower, after Asia stocks were broadly mixed. The dollar was flat, U.S. Treasurys were lower, while gold rose and oil fell.

Equities:

European equities pointed lower as a surprise de-escalation between the U.S. and China drove stocks on Wall Street higher, with the Nasdaq Composite entering a new bull market.

Investors remained cautious, with some noting that tariffs remain at their highest levels in decades, far higher than expected at the start of Trump's term.

Others said the on-again, off-again trade restrictions had already disrupted business plans and supply chains, damaging the economy and corporate profits.

"No one had these low China tariff rates on their bingo cards," said Jeff Buchbinder, chief equity strategist at LPL Financial. "Risk remains that tariffs go back up from current levels as the pauses end, though taking worst-case scenarios off the table is reassuring."

Forex:

The U.S. dollar held steady amid risk-on sentiment. "Positive smoke signals emanating from U.S. officials on Sunday evening meant markets were already anticipating good news on tariffs in the run-up to the formal announcements," said NAB's Ray Attrill.

"The less pessimistic global growth implications of much reduced U.S.-China tariffs--were they to stick--has seen" commodity-linked and some other currencies outperform, the head of FX Research added.

Bonds:

Strong investor demand for U.S. bond funds returned last week, in sharp contrast to outflows seen over the past month as investors grappled with uncertainty surrounding President Donald Trump's April 2 tariffs.

"The positive turn unwinds some of the sharp outflows in early April," Barclays analysts said in a research note.

Exchange-traded funds and mutual funds that invest in fixed income attracted $10.7 billion of inflows over the five days through May 8, compared with the prior four-week average of $6.6 billion in outflows, the analysts said.

Energy:

Oil edged lower amid prospects of Russia-Ukraine peace talks that may result in an easing of sanctions on Russian oil products.

Ukrainian President Zelensky asked President Trump to join potential peace talks in Turkey this week as Zelensky continues his campaign to increase pressure on Russian leader Putin to agree to a cease-fire.

On Saturday, Putin rejected Ukraine's call for a 30-day cease-fire before any direct talks between the two countries could start--and instead proposed restarting peace talks.

Metals:

Gold edged higher on a possible technical recovery after front-month Comex gold futures settled 3.5% lower on Monday.

However, gold prices could face downward pressure in the short term if investors' optimism continues and expectations of a stable trade relationship between U.S. and China stay intact, said XS.com's Antonio Di Giacomo.

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Demand expectations for mineral and energy commodities have "justifiably increased" due to the U.S.-China tariff pause, said Commonwealth Bank of Australia analyst Vivek Dhar.

While considerable uncertainty remains as to the final state of U.S.--China tariffs, latest developments suggest "peak" tariffs have passed, Dhar said.

Metal prices have been mixed in response, although that's likely because of the impact of a strong U.S. dollar, Dhar added.

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Iron ore prices were higher, following strong data from last week that show the trade war has a limited impact on demand, ANZ said.

The market sentiment is improved and supports prices, added Baocheng Futures analysts in a note. The progress of U.S.-China trade talk supports investors' confidence, but is advised to closely monitor potentially weakening fundamentals in the near term, they said.

TODAY'S TOP HEADLINES

Trade Thaw Sparks Stock Rally, Leaves Wall Street Cautious

Stocks are surging, but Wall Street isn't ready to declare victory in the trade war just yet.

A surprise de-escalation between the U.S. and China drove the Dow Jones Industrial Average up more than 1,100 points and the Nasdaq Composite into a new bull market, a gain of more than 20% from its April low. Big tech stocks climbed, along with shares of shippers and multinational businesses. Amazon.com surged 8.1%. Nike climbed 7.3%.

Trump's Disruptive Trade Agenda Is Giving Way to Scaled-Back Deals

WASHINGTON-President Trump launched a global trade war meant to usher in a new American manufacturing renaissance. Just weeks after the tariff tussle started, Trump is backing down.

Faced with careening markets and unnerved allies, the president is softening his tough tariff talk as he and his top advisers search for trade deals with allies and adversaries alike.

These Investors Cashed In by Holding Firm When Markets Slumped

When the trade war tanked the market last month and left even seasoned Wall Street pros scrambling, Andrew Skillman kept his cool.

Skillman, a Santa Fe, N.M., resident whose portfolio is split between stocks and bonds, stood pat throughout the market gyrations of early 2025. "I never panicked," the 60-year-old investor said. "Timing the market is fruitless. No one has a crystal ball."

Trump Surprises and Sidelines Israel Ahead of Landmark Middle East Trip

TEL AVIV-As President Trump takes his first trip to the Middle East after getting re-elected, he's planning on skipping over America's closest ally in the region: Israel.

It follows a series of announcements by the Trump administration that either sidelined or surprised the Israelis, raising questions in Israel about whether the two sides are fully in sync on some of the biggest challenges in the region.

EU Welcomes Progress in U.S.-China Trade Deal

The European Union welcomes the decision of the U.S. and China to pare back their tariff war while the two countries negotiate a deal, a European Commission spokesperson said.

"We do welcome the fact that the U.S. and China have announced that to some extent at least, they will roll back the imposition of tariffs for 90 days," Olof Gill, a spokesperson for the Commission, said on Monday.

Amazon Seals New Partnership With FedEx for Delivering Large Packages

Amazon.com has added FedEx as a partner to deliver select large packages to homes for the online retailer, as the two companies find more ways to do business together after a previous split.

"We've reached an agreement with FedEx to serve as one of several third-party partners to deliver packages to our customers," Amazon spokesman Steve Kelly said Monday.

TPG's $13 Billion Buyout Fund Target Reflects Tough Market

Buyout firm TPG aims to collect less for its latest fund than the amount it set out to raise for a predecessor vehicle several years ago, a sign of the fundraising headwinds that have beset the industry since 2022, documents prepared for a public pension plan show.

The firm has set a $13 billion target for TPG Partners X, the private-equity strategy that plans to write checks of roughly $1 billion per deal to acquire businesses in the healthcare, information technology, services and consumer sectors, according to public documents presented to the Teachers' Retirement System of Louisiana, a regular backer of TPG funds. A report from advisory firm Hamilton Lane stated the target size.

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Expected Major Events for Tuesday

04:30/NED: Apr CPI

04:30/NOR: 2Q Consumer Confidence

05:00/FIN: Mar Balance of Payments

06:00/ROM: Apr CPI

06:00/UK: Apr UK monthly unemployment figures

07:00/CZE: Apr CPI

07:00/CZE: Mar Import & export price indices

07:00/TUR: Mar Balance of Payments

07:00/SVK: Mar Turnover in selected branches of economy, incl Industry & Construction

07:00/SVK: Mar Employment and average monthly wage in selected branches

08:00/BUL: Feb Trade with EU Member States - preliminary data

08:00/BUL: Mar Trade with third countries - preliminary data

09:05/GER: May ZEW Indicator of Economic Sentiment

10:00/POR: Apr CPI

16:59/GER: Mar Balance of Payments

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(END) Dow Jones Newswires

May 13, 2025 00:01 ET (04:01 GMT)

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