Markets eye Trump’s Tax Plan 23/05/2025

HOT stories for today

US market wrap:

• Wall Street exhibited modest weakness on Thursday, with the S&P 500 and the Dow Jones Industrial Average both ending marginally lower, marking their third consecutive day of declines. In contrast, the tech-heavy Nasdaq Composite edged upward, gaining approximately 0.3% and diverging from the broader market trend. Investor sentiment was tempered by political developments, as the U.S. House of Representatives advanced President Donald Trump’s expansive tax overhaul.
• The yield on the 30-year Treasury bond climbed to 5.161%, its loftiest level since October 2023, while the 10-year note briefly topped 4.6%, before both retreated slightly by the session’s close.  Meanwhile, the solar sector suffered sharp losses after the passage of the GOP-led tax bill, which expedites the withdrawal of renewable energy subsidies.

Markets eye Trump’s Tax Plan

• The U.S. House of Representatives on Thursday approved President Donald Trump’s sweeping tax and spending package, moving it to the Senate for final consideration. The bill proposes broad tax cuts alongside a significant boost in defense spending, raising hopes for near-term economic acceleration. But the projected cost has raised bipartisan alarm.
• With reduced revenue and increased federal outlays, the legislation is expected to substantially expand the national deficit. “It’s simple math—less income, more spending,” said Jed Ellerbroek, portfolio manager at Argent Capital. Markets reacted with caution. Treasury yields, which had surged on deficit concerns, retreated slightly, while equity indexes hovered near the flatline as investors weighed economic stimulus against growing fiscal imbalance. With deficits poised to rise, will the short-term economic boost be worth the long-term burden?

Stocks on the move:

• Ross Stores (ROST) — Shares tumbled over 11% after the discount retailer rescinded its full-year guidance. Ross now anticipates second-quarter earnings between $1.40 and $1.55 per share, falling short of LSEG’s consensus estimate of $1.65. The company also warned that sustained high tariffs could further erode profit margins.
• AutoDesk (ADSK) — The design software provider saw its stock rise more than 2% after issuing a second-quarter forecast that exceeded Wall Street expectations.
• Intuit (INTU) — Shares surged approximately 8% as the tax software giant raised its full-year profit outlook. The company now projects adjusted earnings between $20.07 and $20.12 per share, up from prior guidance of $19.16 to $19.36, and above FactSet’s estimate of $19.40. Fiscal Q3 earnings also beat analyst forecasts.
• Workday (WDAY) — The HR tech firm dropped more than 6% after issuing second-quarter subscription revenue guidance of $2.16 billion—matching StreetAccount estimates but failing to excite investors. First-quarter revenue and earnings, however, surpassed expectations.

Today’s action

• Markets across Asia-Pacific mostly advanced on Friday, with Japan’s Nikkei 225 climbing 1.04% as investors evaluated a wave of regional economic data. Hong Kong’s Hang Seng Index and China’s CSI 300 opened largely unchanged, reflecting a cautious tone. Diplomatic developments added a layer of support, as Beijing and Washington agreed to keep communication channels open following a call between Chinese Vice Foreign Minister Ma Zhaoxu and U.S. Deputy Secretary Christopher Landau, according to a statement from China’s Foreign Ministry. In the U.S., equity futures held steady Thursday night.
• Dow Jones Industrial Average futures inched up 14 points (0.03%), while S&P 500 futures posted a similar gain. Nasdaq 100 futures dipped slightly. Market participants are closely watching the impact of elevated Treasury yields on economic momentum. Looking ahead, investors await key U.S. housing data on building permits and new home sales, due later Friday. Trading volumes may thin as Wall Street heads into a long weekend, with markets closed Monday in observance of Memorial Day.

Watchlist: NVDA, ROSS, ADSK, INTU, WDAY, RGTI, FSLR

Bitcoin

• Bitcoin (BTCUSD) surged to a new all-time high of $111,000 in overnight trading Thursday, extending its 2025 gains to over 18%. While still trailing gold’s 26% rise this year, the cryptocurrency’s performance has far outpaced the S&P 500 and reaffirmed its status as a maturing asset class. Its market capitalization has now surpassed $2 trillion. The rally’s momentum is being driven by a mix of institutional interest and retail enthusiasm.
• Though major players entered the space following the SEC’s approval of a spot Bitcoin ETF in January 2024, trading volumes remain largely retail-driven. This retail momentum has fueled a parabolic price trend, with May alone seeing a record $3.6 billion in inflows to bitcoin ETFs. While bitcoin evangelist Michael Saylor’s more extreme claims may not hold up to scrutiny, the cryptocurrency’s upward trajectory continues to capture investor attention and reshape asset allocation debates.
  Watchlist: Bitcoin: 74 000-111 500, Ethereum:1500-2800, Solana: 80-183

Forex

• The Japanese Yen (JPY) gained ground in Friday’s Asian session, pushing USD/JPY below the mid-143.00s, as stronger-than-expected inflation data bolstered expectations for further rate hikes by the Bank of Japan. The uptick in consumer prices reaffirmed a hawkish outlook for the BoJ, prompting fresh JPY buying amid broad U.S. Dollar weakness. Hopes for an early U.S.-Japan trade agreement and a retreating greenback added further downward pressure on the pair.
• Meanwhile, EUR/USD advanced to around 1.1310, clawing back losses from the previous session. The euro’s rebound was supported by a pullback in U.S. Treasury yields, with the 30-year yield easing after touching a 19-month high of 5.15% on Thursday. The Greenback also faced headwinds from renewed geopolitical friction, as former President Trump reportedly pressed the European Union to lower tariffs or face new duties.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials

• West Texas Intermediate (WTI) crude edged lower in early Asian trading Friday, hovering near $60.75 per barrel. The pullback follows a larger-than-expected U.S. crude inventory build of 1.328 million barrels for the week ending May 16, as reported by the EIA. Additional pressure comes from expectations of resumed U.S.-Iran nuclear talks on Friday, which could pave the way for increased Iranian oil exports. Market sentiment remains cautious amid worries that global supply may begin to outpace demand growth.
• Meanwhile, gold (XAU/USD) trades in a narrow range around $3,300, consolidating after pulling back from a two-week high. While the precious metal lacks a clear intraday trend, it remains supported by ongoing U.S. fiscal uncertainty, simmering U.S.-China trade tensions, and broader geopolitical risks. Persistent bets on a potential Fed rate cut and a weaker U.S. Dollar further bolster the safe-haven appeal of bullion.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
  
  
  Key Economic Events Today:
  
  EST time
  09:35 am: USD FOMC Member Musalem Speaks
  09:35 am: USD FOMC Member Schmid Speaks
  10:00 am: USD  New Home Sales
  12:00 pm: USD FOMC Member Cook Speaks
  
  
  Earnings
  
  BMO (Before the US Market opens)
  MNSO               Miniso Group
  FRO                  Frontline Plc.
  BKE                  Buckle Inc.
  AMC (After the US Market closes): enjoy your long weekend!

The TEFS Analyst team wishes you a successful day!