Trade or Tariffs — Clock’s Ticking 19/05/2025

HOT stories for today

US market wrap:

• Wall Street closed the week on a strong note Friday, as all major indexes recorded robust gains following a major announcement from Washington and encouraging developments abroad. A surprise move by the U.S. to roll back certain tariffs on Chinese goods, coupled with promising headlines from the administration’s economic tour in the Middle East, fueled investor optimism and boosted confidence in global trade prospects. The tech-heavy Nasdaq Composite led the rally, soaring more than 7% for the week. The S&P 500 climbed over 5%, notching its fifth consecutive day of gains. Meanwhile, the Dow Jones Industrial Average advanced more than 3%, with Friday’s 300-point surge pushing the 30-stock index into positive territory for 2025.
• However, the celebratory mood was dampened late Friday when Moody’s Investors Service downgraded the United States' credit rating by one notch, from Aaa to Aa1. The decision brings Moody’s assessment in line with those of other major agencies and highlights growing concerns about the country’s fiscal outlook. The downgrade cited mounting challenges in financing the federal budget deficit and the increasing burden of refinancing existing debt amid elevated interest rates.
   

Trade or Tariffs — Clock’s Ticking

• U.S. Treasury Secretary Scott Bessent warned Sunday that suspended tariffs could return with force if trading partners don’t engage in “good faith” talks before a July deadline. The so-called “liberation day” tariffs, paused for 90 days, could revert to April’s higher levels — some well above 10% — if countries resist negotiation. “They’ll get a letter saying, ‘Here is the rate,’” Bessent told Meet the Press. President Trump has said new tariffs will soon be imposed unilaterally, telling nations “what they will be paying” to access U.S. markets. Bessent said the U.S. is currently focused on deals with 18 key partners but hinted at broader regional arrangements.
• On rising consumer costs, Bessent acknowledged some tariffs may be passed along. Walmart recently announced price hikes, prompting Trump to urge the company to “EAT THE TARIFFS.” Bessent said he spoke with CEO Doug McMillon but did not apply pressure. He also brushed off Moody’s downgrade of the U.S. credit rating from Aaa to Aa1, calling it a “lagging indicator” and blaming the previous administration’s deficit. “There are trillions flowing into the U.S.,” he told CNN. “Markets are confident.”

Stocks on the move:

• Coinbase (COIN) — Shares of the cryptocurrency exchange rebounded over 9%, recouping losses from the prior session. Analysts on Wall Street deemed the recent sell-off excessive, calling it a potential entry point for investors. The stock had slumped 7.2% Thursday after Coinbase confirmed the SEC is probing whether it misrepresented user metrics.
• Novo Nordisk (NVO) — The pharmaceutical giant slipped 3% following the announcement that CEO Lars Fruergaard Jørgensen will step down amid evolving market headwinds. Jørgensen, who has led the company for eight years, will stay on temporarily to help facilitate a seamless leadership transition as the firm searches for a replacement.
• Doximity (DOCS) — Shares of the digital health platform tumbled 11.8% after the company issued soft guidance. Doximity projects adjusted EBITDA for the upcoming quarter in the range of $71 million to $72 million, below investor expectations.
• Constellation Brands (STZ) — The beverage conglomerate gained 1.4% after Berkshire Hathaway revealed it had doubled its stake, now valuing its position at approximately $2.2 billion. The company is best known for importing brands such as Corona and Modelo.

Today’s action

• Markets across the Asia-Pacific region declined Monday as investors digested fresh economic data out of China and reacted to Moody’s decision to downgrade the U.S. credit rating. Hong Kong’s Hang Seng Index fell 0.73%, while China’s CSI 300 slid 0.48%. In Japan, the Nikkei 225 retreated 0.54%.
• The cautious sentiment extended into U.S. trading hours. Stock futures slipped Sunday evening following Moody’s cut to the U.S. sovereign credit rating. Dow Jones Industrial Average futures dropped 292 points, or 0.7%. Futures linked to the S&P 500 and Nasdaq 100 declined 0.7% and 0.8%, respectively. The downgrade could exert additional pressure on bond markets, potentially pushing yields higher at a time when investors are already contending with macroeconomic uncertainty and the implications of President Trump’s evolving tariff agenda. Investors are also closely watching for guidance from Federal Reserve officials throughout the day. Scheduled appearances include Atlanta Fed President Raphael Bostic, New York Fed President John Williams, and Dallas Fed President Lorie Logan. Key leading economic indicators are expected to be released Monday morning.

Watchlist: WMT, AAPL, AMZN, META, COIN, STZ, DOCS, ZIM

Bitcoin

• Bitcoin (BTC) is nearing uncharted territory once again, logging its highest-ever weekly close just shy of $106,500 — less than 3% below its all-time peak. According to TradingView data, the flagship cryptocurrency closed at this new record on May 18, marking its sixth consecutive week of gains.
• The previous record weekly close stood at $104,400, set in December before Bitcoin surged to its all-time high of $109,358 on Jan. 20. As of early Monday, Bitcoin was trading around $104,730, up roughly 2% in the past 24 hours.
  Watchlist: Bitcoin: 74 000-106 500, Ethereum:1500-2800, Solana: 80-180

Forex

• The euro opened the week with a slight upside bias, as EUR/USD climbed modestly amid a weaker U.S. dollar. The pair remains below the key 1.1200 level in early Asian trading and shows limited bullish conviction. While the soft dollar tone offers support, the overall technical outlook stays cautious. A decisive break above the 1.1300 threshold would be needed to challenge the current bearish narrative.
• USD/JPY began the week under pressure, falling to a one-week low near 144.80 during the Asian session. The pair is weighed down by a mix of bearish catalysts, including revived expectations of a Bank of Japan rate hike, a risk-off tone in global markets, and lingering fallout from the U.S. credit downgrade. Dovish Federal Reserve sentiment further undermines the greenback, reinforcing downside risks for the pair following last week’s highs.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials

• Gold (XAU/USD) retreated from an early Asian session uptick to the $3,250 zone, slipping toward the lower end of its daily range amid rising U.S. Treasury yields. The surge in yields followed a surprise downgrade of the U.S. credit rating, pressuring fixed-income markets and dampening demand for the non-yielding asset. Still, downside risk appears limited. Continued safe-haven interest, dovish Fed expectations, and a softer U.S. dollar provide underlying support. Optimism around a temporary U.S.-China trade truce and prospects for new U.S. trade agreements also temper gold's upside momentum for now.
• WTI crude oil (CL) started the week under modest pressure, down around 0.4% intraday and trading near $61.65. Despite early selling, the decline lacks strong conviction. Uncertainty surrounding U.S.-Iran nuclear negotiations and broader geopolitical tensions lend support to prices, while a softer dollar and mixed economic data from China offer additional cushioning for the commodity.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00

Key Economic Events Today:

EST time
08:30 am: USD FOMC Member Bostic Speaks
08:30 am: USD FOMC Member Williams Speaks
09:45 am: USD FOMC Member Jefferson Speaks
10:00 am: USD CB Leading Index
01:15 pm: USD FOMC Member Logan Speaks



Earnings

BMO (Before the US Market opens)
ICL                ICL Group
ZIM               ZIM Integrated Shipping
AMC (After the US Market closes): TCOM, AGYS, FSCO
 

The TEFS Analyst team wishes you a successful day!