Daily US Equity Opening News - US/China agree to lower tariffs for 90-days; Trump pledges to slash drug prices; NVDA price hikes

TODAY'S AGENDA:

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  US INDEX FUTURES: ES +3.1%, NQ +4.0%, YM +2.70%, RTY +4.60%.


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  DAY AHEAD: US President Trump is to sign an executive order on lowering pharmaceutical prices. Later, he's is to give a post-EO press conference with HHS Secretary RFK. Jr in the US evening, Trump is to depart for his trip to the Middle East. Elsewhere, there is not a lot by way of scheduled data releases on today's docket, aside from the US Federal Budget. On the speakers' front, remarks are due from Fed's Kugler (voter), BoE's Mann and Taylor. For the crypto watchers, SEC Chair Atkins will give a keynote address at the SEC crypto roundtable discussing tokenisation.


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  WEEK AHEAD: Highlights include US & China CPI; US retail sales; UK & Aus jobs data, Japan & UK GDP; Banxico policy announcement. Earnings season winds down, but this week's highlights include CSCO, DE, WMT, AMAT, and BABA.


• Click here for Newsquawk's Week Ahead preview.


• Click here for Newsquawk's Weekly US Earnings Estimates.


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  BROKER MOVES: HLT upgraded at Jefferies; WMG downgraded at Goldman Sachs. To see the full list, please click here.
  


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  DAILY US CONFERENCE CALENDAR: To see the full calendar, click here.
  

EQUITY NEWS

INDEX CHANGES

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  Shopify (SHOP), MongoDB (MDB) - Shopify will join the Nasdaq-100 Index and Nasdaq-100 Equal Weighted Index on May 19th, replacing MongoDB (MDB). Shopify will also replace MongoDB in several Nasdaq-100 Tech Sector indices, while MongoDB will be removed from those indices.

MACRO

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  US-China - The US and China ended trade talks in Geneva with a positive outcome, agreeing on a new consultation platform and significant progress. The US and China have agreed to a 90-day reduction in tariffs on each other’s goods, according to a joint statement issued in Geneva. The US and China are to reduce reciprocal tariffs by 115%, leaving the US tariff on Chinese goods at 30% (prev. 145%) and China's tariff on US goods at 10% (prev. 125%) for 90 days. On fentanyl tariffs, the 20% imposed by the US remains with USTR Greer noting the fentanyl issue remains unchanged while US Treasury Secretary Bessent believes China is now serious about halting fentanyl flows into the US. Meanwhile, via Reuters citing sources, the US-China trade deal does not cover "de minimis" exemptions for e-commerce firms. Going forward, Bessent said the new tariff level "obviously a floor", while saying the 34% April 2nd level, "is a ceiling". Bessent added, that he's not saying tariffs will go up, but it's implausible that the tariff level will go below 10%, and can always go back to April 2nd level for China tariffs. The agreement is intended to ease trade tensions and allow more time for negotiations between the two countries. US futures rallied, and Chinese stocks have now reversed losses from US President Trump’s "Liberation Day" tariff announcement, with the CSI 300 Index rising by 1.2% and Hong Kong’s Hang Seng Index climbing 1.6%, reflecting signs of improving trade relations between the US and China. To see the full Newsquawk analysis piece, please click here.


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  US/EU - US Treasury Secretary Bessent said the UK and Switzerland have moved to the front of the queue; EU is much slower.


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  US/Middle East - US President Trump is reportedly seeking USD 1tln in deals during his Gulf trip, according to Axios. The Qataris are also expected to announce USD 200-300bln in deals and investments, including a "huge" commercial aircraft deal with Boeing (BA) and a USD 2bln deal to purchase MQ-9 Reaper drones, according to a source.


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  US-Japan - Japan's Prime Minister Shigeru Ishiba stated that Japan will not agree to any initial trade deal with the US that does not include an accord on automotive tariffs.


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  US-Canada - US Ambassador to Canada, Peter Hoekstra, indicated that some US tariffs on Canadian imports may remain in place, despite improving bilateral relations between the two countries.


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  US-Iran - The US and Iran agreed to continue talks on Iran's nuclear programme, following a round of talks on Sunday. US officials described the talks as encouraging, while Iran's Foreign Minister noted that despite challenges, the discussions were useful, leading to a deeper understanding and narrowing of positions. A follow-up meeting is expected within a week.


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  Russia-Ukraine - President Trump urged Ukraine to meet with Russia to discuss ending the ongoing war, despite Russia's reluctance to agree to a ceasefire, which has been advocated by the US, Europe, and Ukraine. Ukrainian President Zelenskiy agreed to meet Russian President Putin in Istanbul for peace talks; Zelensky is set to await Putin's arrival on Thursday.

HEALTHCARE

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  Drug Prices - US President Trump pledged to slash US drug prices by 30-80%, introducing a "most favoured nation" policy to match the world’s lowest prices. He vowed to defy pharmaceutical industry resistance, despite prior failed attempts and lawsuits. Industry group PhRMA warned such price setting would harm patients and innovation.


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  Eli Lilly (LLY) - Eli Lilly's SURMOUNT-5 trial for Zepbound showed superior results versus Novo Nordisk's (NVO) Wegovy at 72 weeks. Zepbound achieved a 20.2% weight reduction (50.3 lbs lost) vs. Wegovy's 13.7% (33.1 lbs). Zepbound also led in secondary endpoints, with greater weight loss and waist circumference reduction.


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  Novo Nordisk (NVO) - Announced positive results from its REAL8 Phase 3 study, showing that once-weekly Sogroya is an effective and well-tolerated long-acting growth hormone for children with growth disorders.


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  Bristol-Myers Squibb (BMY)- Hawaii said on Friday it entered a USD 700mln settlement with Bristol-Myers and units of Sanofi in a case about warning labels related to health risks from blood thinner Plavix.


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  Medicaid - House Republicans are releasing their plan to cut Medicaid spending, with defenders of the program appearing to win the intraparty clash over how aggressively to change the system, WSJ reports. The bill does not lower the minimum share the federal government contributes to Medicaid in each state but will include work requirements and more frequent eligibility checks.


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  Novartis (NVS) - Will continue making medicines for malaria and leprosy, even if it does not get orders as normal amid the global health funding cuts, Lutz Hegemann, its president of global health, Reuters reports.

TECH

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  Nvidia (NVDA) - Facing a challenging period, with product price hikes due to increased costs and regulatory challenges, DigiTimes reports. The company has raised prices across nearly all its products, including prices of GPU modules and servers such as H200/B200. Despite setbacks from the US-China AI chip export ban, demand for AI chips remains strong, and Nvidia's upcoming financial results are expected to be positive, the report adds. The company is also investing heavily in AI server manufacturing in the US.


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  Apple (AAPL) - Said to be weighing price increases for its autumn iPhone line-up, according to WSJ citing sources; will not attribute price increase to tariffs, it has not been determined what new feature(s) will be offered to explain the price increase. The desire to avoid blaming higher prices on US tariffs came after the fallout Amazon (AMZN) experienced on reports that it would show a tariff-related price breakdown. Additionally, India is not ready to produce high-end phones at the same scale as China.


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  Phones - Shipments of phones within China rose by 6.5% to 22.77mln handsets in March, according to CAICT (vs Feb 2025 +37.9% at 19.7mln handsets); foreign-branded phones including Apple's (AAPL) iPhone fell by 49.6% to 1.89mln (vs +9.2% to 2.638mln in Feb).


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  OpenAI, Microsoft (MSFT) - OpenAI is renegotiating its partnership with Microsoft to secure a future IPO, revising terms on equity exchange for Microsoft's USD 13bln investment. The restructuring aims for a public benefit corporation model, balancing mission-driven goals with profit, amid rising competition and investor demands for equity, FT reports.


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  Microchip Technology (MCHP) - Filed to sell 474K shares on behalf of existing holders.


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  Uber (UBER) - UK tax authorities have stopped collecting tens of millions of pounds in disputed VAT payments from Uber following a setback in a legal battle with European rival Bolt, FT reports.

COMMUNICATIONS

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  Alphabet (GOOG) - Google will pay Texas USD 1.375bln to settle claims of unlawfully tracking users' private data, including geolocation, incognito searches, and biometric information. The settlement amount significantly exceeds other similar state settlements.


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  Fox Corporation (FOXA) Q3 2025 (USD): Adj. EPS 1.10 (exp. 0.90), Revenue 4.37bln (exp. 4.17bln).


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  Trump Media (DJT) Q1 2025 (USD): Revenue 8.8mln; ended Q1 with 759mln in cash. CEO highlighted plans to expand into financial products and premium content via Truth+, positioning for growth in the "America-First economy."


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  SoftBank Group (SFTBY) - SoftBank's USD 100bln venture with OpenAI has hit a funding snag due to economic risks from Washington's tariffs holding up financing talks, according to Bloomberg.

CONSUMER DISCREITONARY

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  Toyota (TM) - Projected to face the largest losses among automakers due to US President Trump's trade war. As the world’s biggest carmaker, Toyota is significantly impacted by the tariffs imposed during the trade dispute, leading to the heaviest financial toll in the industry, Bloomberg notes.


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  Marriott International (MAR) - Raised its quarterly dividend to 0.67/shr (prev. 0.63/shr), citing earnings growth and strong cash generation.


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  Ford (F) - Workers at Ford's plants in the western German city of Cologne are set to go on strike for the first time ever on Wednesday to protest against planned job cuts, the IG Metall union said.


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  Nissan (NSANY) - To cut more than 10k jobs additionally; cuts to total 20k, via NHK.

CONSUMER STAPLES

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  Brown-Forman (BF.B) - Brown-Forman and Korbel Champagne Cellars will end their decades-long sales, marketing, and distribution partnership effective June 30th, with both firms citing mutual respect and commitment to a smooth transition as they pursue independent growth plans.


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  Nestle SA (NSRGY) - To raise prices on certain chocolate products, including Toll House morsels, baking cocoa, and fudge kits, starting June 23rd, due to rising commodity costs.


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  Danone SA (DANOY) - To acquire a majority stake in Kate Farms, a California-based producer of plant-based nutritional formulas, WSJ reports. The deal is aimed at strengthening Danone's portfolio in specialised nutrition. Financial terms were not disclosed.

INDUSTRIALS

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  Caterpillar (CAT) - Filed to sell 10-year and 30-year debt.


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  Airlines - The FAA is considering further voluntary flight reductions at Newark airport following radar system outages, Bloomberg reports, with the Department of Transportation expected to hold talks with airline leaders in the coming weeks.


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  Boeing (BA) - The Trump administration is in discussions with Qatar to accept a luxury plane for use as Air Force One during Trump's presidency. The aircraft, owned by the Qatari royal family, would be retrofitted by a US contractor. It could later be gifted to Trump's presidential library for his use post-office.


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  CSX (CSX) - Reached a tentative 5yr agreement with the Brotherhood of Locomotive Engineers and Trainmen covering 3,400 engineers, aligning with prior union deals on wages and benefits; if ratified, nearly 75% of its unionised workforce will be under new agreements, with only SMART-TD conductors still in negotiations.


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  Lockheed Martin (LMT) - Awarded a USD 742.18mln Army contract for High Mobility Artillery Rocket Systems, with completion expected by May 2027. It was also awarded a USD 114.61mln Army contract for prototype RIG-360 units and components, with completion expected by September 2027.


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  CATL (300750 CH/3750 HK) - The Chinese battery maker has begun taking orders for its Hong Kong listing, aiming to raise up to HKD 41bln if the deal is upsized and the greenshoe option is exercised, potentially becoming the largest global listing of 2025, Bloomberg reports. CATL is planning to restrict US investors from participating in its Hong Kong IPO; it will conduct a Reg S offering, excluding US onshore investors, amid escalating US-China tensions, exempting CATL from certain US regulatory filing requirements.

ENERGY

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  Crude Prices - Goldman Sachs maintained its forecast for Brent/WTI to average USD 60 and 56 per barrel, respectively, for the rest of 2025, and USD 56/52 in 2026, citing expectations of solid non-US shale supply growth weighing on prices.


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  Saudi Aramco - Q1 profit declined 4.6% to 97.5bln Riyals, pressured by lower crude prices. Free cash flow failed to cover dividends, despite a lower payout. Operating profit fell 5.3%, but exceeded analyst expectations.


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  Phillips 66 (PSX) - Glass Lewis recommended that Phillips 66 shareholders support Elliott's push for board changes, citing governance issues, including a combined Chairman and CEO role, classified board, and over-tenured directors, contributing to the company's underperformance. Elliott seeks the election of its nominees Brian Coffman, Sigmund Cornelius, and Michael Heim.

MATERIALS

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  China Copper - China's copper concentrate imports reached a record 3mln tonnes last month, helping to alleviate price pressures and provide relief to smelters amid a global ore shortage, BBG reports. Despite capacity expansion, smelters are struggling with negative spot treatment charges due to the scarcity of feedstock, the report adds.


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  Rio Tinto (RIO) - A US judge temporarily blocked the land transfer for Rio Tinto's Resolution Copper mine, citing Apache Stronghold’s likely success in its Supreme Court appeal. The project, opposed on religious grounds by Native Americans, would impact sacred land but is deemed vital for the energy transition, Reuters reports.


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  Evonik (EVKIY) Q1 2025 (EUR): Adj. EBITDA 560mln (exp. 543mln), driven by cost discipline and strong Nutrition & Care performance; CEO warned of risks from escalating US tariffs and a possible economic slowdown, and maintained its FY25 outlook.


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  MAG Silver (MAG), Pan American Silver (PAASF) - Pan American Silver agreed to acquire MAG Silver for USD 2.1bln, providing access to a key mine in Mexico. MAG shareholders will receive USD 500mln in cash and 0.755 Pan American shares per MAG share, valuing the stock at USD 20.54, a 21% premium based on May 9th's closing price.

FINANCIALS

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  UniCredit (UNCRY) Q1 2025 (EUR): Net Profit 2.77bln (Co. consensus 2.34bln), Total Revenue 6.55bln (Co. consensus 6.05bln); sees 2025 Net Profit above EUR 9.3bln; confirmed FY25 ROTE above FY24.


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  Banco Sabadell (BNDSY), BBVA (BBVA) - Spain's government is open to a Banco Sabadell tie-up with another local bank as an alternative to an unsolicited BBVA bid, Bloomberg reports. The government would support a deal with a Spanish rival, though any agreement is unlikely to occur soon, according to sources cited.


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  Man Group Plc (MNGPF) - In talks to acquire credit firm Bardin Hill Investment Partners, with a potential deal expected to be signed as soon as this month. Both companies declined to comment on the discussions.

UTILITIES

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  NRG Energy (NRG) Q1 2025 (USD): Adj. EPS 2.68 (exp. 1.67), Revenue 8.59bln (exp. 8.28bln); reaffirmed FY25 adj. EPS of 6.75-7.75 (exp. 7.47).

RECAP

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  RECAP - CHINA INFLATION: China CPI rose +0.1% M/M in April (prev. -0.4%), with the annual rate remaining at -0.1% Y/Y (exp. -0.1%, prev. -0.1%), as consumer deflation continued into April, for a third consecutive month, with weak domestic demand and US-imposed tariffs contributing to the price pressures. Factory deflation also persisted for the 31st month, with the producer price index declining by 2.7% -2.7% Y/Y from -2.5% (exp. -2.8%).

12 May 2025 - 13:53- Research Sheet- Source: Newsquawk