Sticky Inflation ahead 30/05/2025

HOT stories for today

US market wrap:

• Markets seesawed on Thursday as investors reacted to mixed judicial developments concerning Trump’s tariff policies. On Wednesday night, the U.S. Court of International Trade determined that Trump had exceeded his legal authority in implementing his so-called "reciprocal" tariffs, ordering the contested duties to be annulled. Nonetheless, the Trump administration swiftly submitted a notice of appeal, prompting an appellate court to reinstate the tariffs by Thursday afternoon.
• Officials indicated that they might petition the Supreme Court as early as Friday to suspend the lower court’s initial ruling if deemed necessary. In parallel, trade negotiations between the U.S. and China appear to be “somewhat stalled,” according to Treasury Secretary Scott Bessent, who spoke in a Thursday interview with Fox News. Despite the legal uncertainty, the S&P 500 edged higher, buoyed by notable gains in semiconductor giant Nvidia. The index rose 0.4% to close, Nasdaq Composite increased 0.39%. The Dow Jones Industrial Average climbed 0.28%, to end the day.

Sticky Inflation Ahead

• Friday’s upcoming inflation report is expected to confirm that price pressures remain above the Federal Reserve’s 2% target, based on forecasts for the April personal consumption expenditures (PCE) index. Economists polled by Dow Jones anticipate a 0.1% rise in headline PCE on a monthly basis and a 2.2% increase year over year. The core PCE index—which excludes the more erratic costs of food and energy and is the Fed’s preferred inflation metric—is also projected to climb 0.1% for the month and 2.6% annually.
• Vanguard economist Josh Hirt noted that investors should watch for potential “upward revisions to January and March PCE figures,” tied to changes in the producer price index (PPI) for healthcare-related services such as hospitals, doctors, and insurance. Despite the anticipated moderation in inflation, Cetera Chief Investment Officer Gene Goldman told CNBC he doesn’t expect a significant market response. He pointed out that near-term inflation data remain volatile and are still being distorted by factors like companies front-loading imports earlier this year in anticipation of tariff changes.

Stock’s on the move:

• Dell Technologies (DELL) — Shares climbed over 5% after the tech firm posted first-quarter revenue that exceeded Wall Street forecasts. The company also lifted its full-year profit outlook.
• Costco (COST) — The wholesale giant delivered quarterly results that topped analyst projections, though the stock remained largely flat. Comparable store sales and gross margin figures both came in above expectations.
• Gap (GPS) — Shares of the clothing retailer plunged more than 16% as underwhelming guidance for second-quarter revenue outweighed a stronger-than-expected Q1 earnings report. The company forecast flat year-over-year revenue for Q2, while analysts had anticipated modest growth.
• Ulta Beauty (ULTA) — The beauty retailer surged over 8% following first-quarter results that beat analyst estimates. Ulta reported earnings of $6.70 per share on revenue of $2.84 billion, surpassing the consensus forecasts of $5.81 per share and $2.80 billion, according to LSEG.

                                       Watchlist: NVDA, DELL, GPS, ULTA, COST, PD, AEO, PATH



Today’s action
 

• Asia-Pacific markets retreated on Friday as concerns over a cooling U.S. economy, persistent inflation, and legal uncertainties surrounding former President Donald Trump’s “reciprocal” tariffs dampened investor confidence. Japan’s Nikkei 225 slid 1.37%, while the CSI 300 in mainland China edged down 0.33%. Hong Kong’s Hang Seng Index dropped 1.48%. 
• U.S. stock futures also ticked lower Thursday night amid continued volatility in the global trade environment. Dow Jones Industrial Average futures dipped 63 points, or 0.1%. S&P 500 futures declined 0.2%, and Nasdaq-100 futures lost 0.3%. Investors are also bracing for a key inflation update on Friday: the personal consumption expenditures (PCE) index, the Federal Reserve’s preferred measure of price pressures.

Bitcoin

• Cryptocurrencies saw broad declines on Friday as investor sentiment turned cautious ahead of key U.S. inflation data and ongoing regulatory developments. Bitcoin (BTC) slipped about 1.4% to $106,173, cooling off from recent highs near $112K. The pullback followed a wave of profit-taking and the forced liquidation of a large leveraged position. Still, institutional demand remains strong, with BlackRock’s Bitcoin ETF (IBIT) attracting $6.2 billion in inflows this month alone. 
• Ethereum (ETH) dropped nearly 5% to $2,637, reflecting broader market weakness, though investor interest remains supported by continued development activity and long-term bullish positioning. While short-term volatility continues, many analysts remain optimistic about crypto’s long-term trajectory, particularly with rising institutional involvement and developments like the proposed U.S. Strategic Bitcoin Reserve.
  Watchlist: Bitcoin: 100 000-112 000, Ethereum:1500-2800, Solana: 80-183

Forex

• EUR/USD edged lower on Friday, slipping 0.15% to the mid-1.1300s during the Asian session. The pair struggled to extend Thursday’s rebound from 1.1200 as improved global risk sentiment supported the USD. Traders await fresh direction from the U.S. PCE Price Index and next week’s ECB meeting.
• JPY strengthened for a second consecutive day, buoyed by safe-haven demand following the reinstatement of Trump-era tariffs and persistent trade tensions. Hawkish BoJ expectations were reinforced by robust Tokyo inflation data, adding to upward pressure on the Yen.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials

• WTI crude extended losses for a second session, slipping to $60.30 amid risk-off sentiment fueled by a U.S. court ruling allowing Trump-era tariffs to proceed. Traders also await Saturday’s OPEC+ meeting, where a potential July production hike is on the table. Meanwhile, EIA data showed a 2.8M-barrel draw, offering limited support.
• Gold (XAU/USD) retreated after failing to build on Thursday’s rebound, trading lower as the USD firmed on dip-buying ahead of the key PCE inflation report. Despite near-term pressure, ongoing trade tensions, geopolitical risks, and Fed rate cut expectations may help cap losses.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
  
   

Key Economic Events Today:

EST time
08:30 am: USD Core PCE Price Index
08:30 am: USD Goods Trade Balance
08:30 am: USD Prelim Wholesale Inventories
09:45 am: USD Chichago PMI
10:00 am: USD Consumer Sentiment
10:00 am: USD Inflation Expectations
12:20 pm: USD FOMC Member Bostic Speaks


Earnings

BMO (Before the US Market opens)
CHA          Chagee Holdings Limited
CGC          Canopy Growth Corp.
AMC (After the US Market closes): Enjoy your weekend!


The TEFS Analyst team wishes you a successful day!