China and U.S. back in conflict 02/06/2025

HOT stories for today

US market wrap:

• On Friday, the S&P 500 wrapped up May with a gain exceeding 6%, marking its strongest monthly return since November 2023. The Nasdaq Composite, dominated by technology stocks, soared over 9%, while the Dow Jones Industrial Average advanced approximately 4%. Despite the upbeat performance, Morgan Stanley’s Chris Toomey remains cautious about whether this upward trend will persist.
• “We’re likely still trading within a range,” the managing director told CNBC’s ‘Closing Bell’ on Friday. “Our concern is that while the worst-case scenario tied to the so-called ‘liberation day’ tariffs may now be behind us, the market seems to be pricing in an overly optimistic outlook at present.” Meanwhile, PCE inflation data released Friday came in just shy of the Federal Reserve’s target for stable prices. The core index increased 2.5% year-over-year, aligning with forecasts, and represented the smallest annual core inflation rise in four years—a potential signal that inflation pressures are gradually easing.

China and U.S. back in conflict
 

• China has rejected U.S. claims that it violated the Geneva trade agreement, instead accusing Washington of breaching deal terms. This comes after the Trump administration reimposed export restrictions on semiconductor materials and tightened visa policies for Chinese students, moves Beijing says “seriously undermine” prior agreements.
• Trade talks, once progressing after a Geneva truce between Treasury Secretary Scott Bessent and Vice Premier He Lifeng, have now stalled. President Trump publicly accused China of “totally violating” the deal, while China insists it has complied and even rolled back some tariffs. Meanwhile, tensions have spilled into defense. U.S. Defense Secretary Pete Hegseth warned at the Shangri-La Dialogue that China's military actions pose a “real and imminent” threat. China’s defense ministry fired back, accusing the U.S. of fueling Cold War fears.

Stock’s on the move:

• Costco Wholesale (COST) — Shares of the retail giant advanced over 3% after posting fiscal third-quarter results that exceeded Wall Street expectations. Revenue climbed 8% year-over-year, reflecting strong consumer demand and operational efficiency.
• Marvell Technology (MRVL) — The chipmaker’s stock slid 6% as its first-quarter earnings underwhelmed investors. The company reported adjusted earnings of $0.62 per share, narrowly topping the $0.61 forecast from analysts surveyed by LSEG.
• Regeneron Pharmaceuticals (REGN), Sanofi (SNY) — Both biotech firms saw sharp declines—Regeneron fell 18% and Sanofi dropped 5.6%—after late-stage clinical trials of their co-developed respiratory drug, itepekimab, delivered mixed outcomes.
• PagerDuty (PD) — The cloud services provider saw its stock tumble 11% following a weaker-than-expected second-quarter earnings outlook. The company projected adjusted EPS of $0.19–$0.20, below analysts’ consensus estimate of $0.23 from FactSet.

                                             Watchlist: PLTR, X, APPL, RGTI, AMD, TSLA, MSFT, UNH



Today’s action

• Asia-Pacific equities were mixed on Monday after President Donald Trump announced plans to double steel import tariffs to 50%, effective Wednesday. The move reignited trade concerns ahead of potential talks with Chinese President Xi Jinping, although no date has been confirmed. Japan’s Nikkei 225 declined 0.89%, while Hong Kong’s Hang Seng fell 1.66%.
• In the U.S., stock index futures edged lower in early trading to kick off June. S&P 500 futures slipped 0.3%, mirroring losses in Nasdaq-100 futures, while Dow futures dropped by 108 points, or 0.3%. Traders are now turning their focus to a heavy week of economic data, including the May nonfarm payrolls report on Friday, which may offer fresh clues on how tariffs and broader trade tensions are impacting the U.S. economy.

Bitcoin

• May brought strong bullish momentum to the crypto space, with Bitcoin (BTC) soaring to a new all-time high above $111,000 and Coinbase (COIN) being added to the S&P 500, boosting overall market sentiment. Despite the surge, BTC hovered around $104,861 over the weekend, struggling to break through the key $105,000 resistance level — a sign that sellers are still exerting pressure.
• In a note to Cointelegraph, CryptoQuant cautioned that some of Bitcoin’s demand metrics may be nearing a short-term peak, potentially signaling a pause in the rally. Analysts see strong support near the psychological $100,000 level, while a sustained move above $105,000 could trigger renewed momentum in ETH, HYPE, TAO, and QNT.
  Watchlist: Bitcoin: 100 000-112 000, Ethereum:1500-2800, Solana: 80-183

Forex

• The EUR/USD pair climbed to around 1.1370 during Monday’s Asian session, recovering from earlier losses. The euro advanced as the U.S. dollar weakened in response to President Trump’s announcement to double tariffs on steel and aluminum imports from 25% to 50%, aimed at protecting domestic industries. The European Commission warned it is ready to retaliate if the tariffs go into effect, intensifying trade tensions.
• The Japanese yen (JPY) extended its winning streak against the U.S. dollar for a third consecutive session on Monday, driven by a mix of safe-haven flows and policy divergence between the Bank of Japan and the Federal Reserve. Friday’s stronger-than-expected Tokyo core CPI data reinforced expectations of further BoJ rate hikes, while continued trade and geopolitical uncertainties supported demand for the yen. Optimism over a potential U.S.–Japan trade deal added further momentum to the JPY, pressuring the USD/JPY pair.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials

• Crude prices jumped on Monday, defying expectations after OPEC+ announced a fresh production increase of 411,000 barrels per day for July — the third consecutive monthly hike. The move, aimed at reining in overproduction from members like Iraq and Kazakhstan and helping Saudi Arabia regain market share from U.S. shale producers, was intended to ease prices. However, markets responded with higher prices, signaling that investors remain focused on supply-demand imbalances and geopolitical risks.
• Gold (XAU/USD) edged higher to near $3,310 in early Asian trading on Monday, supported by ongoing economic uncertainty and geopolitical tensions. Demand for the safe-haven metal picked up as markets reacted to renewed trade friction and global instability.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
  
   

Key Economic Events Today:

EST time
09:45 am: USD Final Manufacturing PMI
10:00 am: USD ISM Manufacturing Prices, PMI
10:15 am: USD FOMC Member Logan Speaks
12:45 pm: USD FOMC Member Goolsbee Speaks
01:00 pm: USD FED Chair Powell Speaks


Earnings

BMO (Before the US Market opens)
CPB          The Campbell’s Company
SAIC          Science Applications Inetrn.
AMC (After the US Market closes): WDS

 

The TEFS Analyst team wishes you a successful day!