Newsquawk European Market Wrap - 15th May 2025

• European bourses off worst levels and look to end the session mixed, fixed income lifted by PPI.


• US President Trump says the US is getting close to doing a deal with Iran.


• Russian Kremlin spokesperson Peskov says no chance that Russian President Putin will take part in Turkey talks.

EQUITIES

• 
  European Equities saw subdued sentiment for much of the morning, but gradually edged off worst levels to trade somewhat mixed heading into the European close. Newsflow for the bloc this session has been relatively light, but earnings have been busy, whilst current focus remains on geopolitical ongoings with US President Trump in the Middle East, consolatory language from Iran, and a likely no-show from Russian President Putin in Russia-Ukraine peace talks in Turkey.


• 
  Sectors opened mostly with a defensive bias and in line with the cautious mood across the markets, but later showed a mixed picture with continued underperformance in energy amid the recent rout in prices.


• 
  US equity futures were subdued with a couple of short-lived upticks seen on the sub-forecast PPI, whilst jobless claims printed in line and Retail Sales printed under expectations. No move was seen on Fed Chair Powell, who offered no comment on the outlook or monetary policy, but said April PCE likely around 2.2% Y/Y (vs 2.3% Y/Y in March).

FX

• 
  USD - DXY was subdued throughout the session and contained within Wednesday's confines amid a lack of fresh catalysts overnight, in a 100.58-101.05 range at the time of writing, within yesterday's 100.27-101.14 parameter. Modest weakness was seen at the 13:30 BST US data dump, although no notable move was seen on Fed Chair Powell, who offered no comment on the outlook or monetary policy, but said April PCE is likely around 2.2% Y/Y (vs 2.3% Y/Y in March).


• 
  EUR - EUR/USD eked mild gains and traded on either side of the 1.1200 level after recent fluctuations, and with ECB speakers offering nothing new. On the trade front, EU Trade Commissioner Sefcovic said the US and EU have agreed to intensify trade talks contacts. EUR/USD largely moved at the whim of the Buck and printed a range between 1.1172-1.1228.


• 
  GBP - Sterling was slightly firmer following better-than-expected UK GDP data. It was reported earlier that plans for a reset of UK-EU relations hit trouble due to fishing rights and youth mobility as EU member states demanded further concessions from the UK, according to the FT. GBP/USD resides within yesterday's 1.3250-1.3360 range.


• 
  JPY - USD/JPY retreated overnight as the underperformance in Japanese stocks spurred some haven flows into the yen. USD/JPY traded in a 145.49-146.75 range on Thursday.


• 
  Antipodeans - Antipodeans were subdued in-fitting with the broader cautious risk tone; mild support was seen in AUD/USD following the stronger-than-expected employment data from Australia.

FIXED

• 
  Ultimately, a session of gains for fixed benchmarks, driven higher by the April PPI release.


• 
  Before that, action was more contained as core fixed held just above the breakeven point on the day with specifics somewhat light in the countdown to data and Powell; the Fed Chair provided nothing fresh on policy.


• 
  Gilts began a touch firmer before slipping to lows and then re-bounding. Data this morning showed growth was better than expected for Q1, but the tariff impact is yet to be seen in the series.


• 
  Bunds caught a slight bid around the arrival of US players, no clear driver behind this aside from attention on Germany’s defence spending commitments and a Reuters report on it, an update which may have provided some mild bullish impetus.


• The main mover of the day was, as mentioned, PPI. A series that came in cooler-than-expected, lifting USTs to a test of 110-00 in the first instance before the move pared as participants digested the hawkish elements (i.e. revisions).


• Nonetheless, as the session progressed benchmarks returned to and surpassed kneejerk highs leaving USTs, Bunds and Gilts at highs of 1110-04+, 129.89 and 91.46 respectively; USTs bid by around 10 ticks and Bunds/Gilts around 40 at the time of writing.


• 
  UK sells (via tender) GBP 2.0bln 0.125% 2028 Gilt: b/c 3.52x, average yield 3.768% & tail 0.7bps

COMMODITIES

• 
  Crude - WTI and Brent suffered losses of USD 2/bbl, with commentary surrounding Iran applying steady pressure overnight and through the morning so far. US President Trump said the US is getting close to a deal with Iran, and they are in serious peace negotiations, adding that Iran has "sort of" agreed to the terms of a deal. This constructive commentary surrounding the nation pushed benchmarks to fresh session lows, adding to overnight losses. Losses overnight also stemmed from geopolitics, following a report that Iran is ready to sign an agreement with certain conditions in exchange for the lifting of sanctions and would commit to never making nuclear weapons and getting rid of its stockpiles of highly enriched uranium. That being said, prices found somewhat of a floor after a Senior Iranian Official, according to Reuters, said they have not received any fresh US proposal to resolve outstanding issues in the nuclear dispute.


• 
  Precious Metals – Spot gold extended on recent losses with demand subdued as it sits below the USD 3,200/oz mark, albeit testing the level to the upside. The trend seen for most of this week remains intact, with the metal continuing to be hit by higher yields, particularly on the short end.


• 
  Base Metals - Copper futures were lower, albeit off lows at the time of writing, mostly owing to a downbeat risk sentiment in APAC hours and a cautious tone during the European session. 3M LME copper printed a range between USD 9,467.00-9,596.80/t.


• 
  IEA lifts 2025 average oil demand growth forecast by 20k BPD to 740k BPD on upward revision to GDP growth forecast and lower oil prices; sees global oil demand growth dropping to 650k BPD for the remainder of 2025, from 990k BPD in Q1. “Increased trade uncertainty is expected to weigh on the world economy and, by extension, oil demand,”. IEA sees oil inventories rising by around 720k BPD in 2025 as global supply rises are expected to considerably outpace demand growth. IEA hikes 2025 global supply growth forecast to 1.6mln BPD, up by 380k BPD from the previous month's report on higher Saudi production outlook. IEA raises 2026 average oil demand growth forecast to 760k BPD (prev forecast 690k BPD).


• 
  Norwegian Energy Ministry says Oil and Gas production expected to be stable after 2025.


• 
  South African Gold Production YY (Mar) -11.1% (Prev. -7.6%).


• 
  US EPA sends proposed rule on biofuel blending volumes beginning in 2026 to the White House for review.

TRADE

• 
  EU Trade Commissioner Sefcovic says the US and EU have agreed to intensify trade talks contacts.


• 
  WTO chief warned that US bilateral tariff deals could put trade principles at risk and said global trade was in a crisis despite the recent de-escalation of the US-China tariff war, according to FT.


• 
  US Treasury Secretary Bessent says they can accomplish "a lot" over the next 90 days; will have a series of negotiations to prevent escalation with China again.


• 
  US President Trump says India has offered to drop all tariffs on the US.


• 
  French Finance Minister Lombard says after talks with Chinese Vice Premier Lifeng, they did not find a solution to cognac trade issue with China; the door remains open to talks.


• 
  India Trade Secretary says Indian team is slated to visit the US to take trade talks forward.

EUROPEAN DATA

• UK GDP Estimate MM (Mar) 0.2% vs. Exp. 0.0% (Prev. 0.5%); YY (Mar) 1.1% vs. Exp. 1.0% (Prev. 1.4%); 3M/3M (Mar) 0.7% vs. Exp. 0.6% (Prev. 0.6%)


• EU GDP Flash Estimate QQ (Q1) 0.3% vs. Exp. 0.4% (Prev. 0.4%)


• EU Industrial Production YY (Mar) 3.6% vs. Exp. 2.5% (Prev. 1.2%, Rev. 1.0%)


• EU Industrial Production MM (Mar) 2.6% vs. Exp. 1.8% (Prev. 1.1%)


• EU GDP Flash Estimate YY (Q1) 1.2% vs. Exp. 1.2% (Prev. 1.2%)


• French CPI (EU Norm) Final YY (Apr) 0.9% vs. Exp. 0.8% (Prev. 0.8%)


• French CPI (EU Norm) Final MM (Apr) 0.7% vs. Exp. 0.6% (Prev. 0.6%)


• German Wholesale Price Index YY (Apr) 0.8% (Prev. 1.3%)


• German Wholesale Price Index MM (Apr) -0.1% (Prev. -0.2%)


• Swiss Producer/Import Price YY (Apr) -0.5% (Prev. -0.1%)


• Swiss Producer/Import Price MM (Apr) 0.1% (Prev. 0.1%)


• Norwegian GDP Growth Mainland (Q1) 1.0% vs. Exp. 0.6% (Prev. -0.4%)

NOTABLE EUROPEAN NEWS

• 
  ECB's De Guindos says financial stability in the euro area has remained sound throughout the market turbulence and major uncertainty


• Plans for a reset of UK-EU relations hit trouble due to fishing rights and youth mobility as EU member states demanded further concessions from the UK, according to the FT.


• TikTok charged by EU tech regulators with breaching EU online content rules; TikTok does not provide necessary information about the content of advertisements, users targeted by ads, EU regulators say.


• German government source on NATO defence spending goal, says tt remains the case that they will decide on the defence spending level after the June NATO summit, according to Reuters.

CENTRAL BANKS

• 
  Fed Chair Powell does not comment on outlook or monetary policy; says April PCE likely around 2.2% Y/Y. Officials agree that strategic language around both shortfalls of employment and average inflation needs to be reconsidered. The Fed is undertaking a two-day review of revisions to its framework adopted in 2020. The framework needs to be robust to many circumstances, including a world where supply shocks may be more frequent and persistent. The idea of a moderate overshoot of inflation following weakness became irrelevant given the levels of inflation reached. Revisions to Fed communications are also being considered. Zero-lower bound is still a risk and should be addressed in the framework, though it is no longer a base case given the current level of policy rates. Certain aspects of the Fed's approach are permanent, such as the focus on inflation expectations.

GEOPOLITICS

MIDDLE EAST

• 
  US President Trump says the US is getting close to doing a deal with Iran; in serious negotiations to achieve peace; doesn't want to take a second step and threaten Iran.


• "Israeli Chief of Staff: We will use all means to reach the perpetrators of the attack in the West Bank yesterday", according to Sky News Arabia.


• Senior Iranian Official, according to Reuters, says they have not received any fresh US proposal to resolve outstanding issues in the nuclear dispute.

RUSSIA-UKRAINE

• 
  Russian Kremlin spokesperson Peskov says no chance Russian President Putin will take part in Turkey talks, according to Ria.


• 
  Russian President Putin was not on a list of negotiators the Kremlin published for talks with Ukraine in Istanbul on Thursday.


• 
  Russia sent a fighter jet to "check the situation" as Estonia was attempting to detain a Russian shadow fleet tanker, according to the Estonian Foreign Minister; the jet violated NATO territory for "around a minute".


• 
  US President Trump says he will go to the Russia-Ukraine talks "if appropriate".


• 
  US President Trump says nothing is going to happen until he gets together with Russian President Putin.

NOTABLE NORTH AMERICAN NEWS

• 
  US President Trump says they will upgrade the F-35 to an F-55; will do an F-22 super, an upgrade on the F-22.


• 
  US President Trump says Commerce Secretary Lutnick likes the idea of a Sovereign Wealth Fund.


• 
  US President Trump says the US military will be "bigger than ever before". Qatar defence purchases signed on Wednesday are worth around USD 42blnWill have to think about a "fourth" election cycle. Would never hesitate to "wield American power" if necessary to defend the US or its partners. Infrastructure for the "golden dome" will be made entirely within the US.

NORTH AMERICAN DATA

• US Initial Jobless Claims w/e 229.0k vs. Exp. 229.0k (Prev. 228.0k, Rev. 229k)


• US Continued Jobless Claims w/e 1.881M vs. Exp. 1.89M (Prev. 1.879M, Rev. 1.872M)


• US Jobless Claims 4-Wk Avg w/e 230.5k (Prev. 227.0k, Rev. 227.25k)


• US Philly Fed Business Indx (May) -4.0 vs. Exp. -11.0 (Prev. -26.4)


• US PPI exFood/Energy YY (Apr) 3.1% vs. Exp. 3.1% (Prev. 3.3%, Rev. 4.0%)


• US PPI Final Demand MM (Apr) -0.5% vs. Exp. 0.2% (Prev. -0.4%)


• US PPI Final Demand YY (Apr) 2.4% vs. Exp. 2.5% (Prev. 2.7%, Rev. 3.4%)


• US Retail Control (Apr) -0.2% vs. Exp. 0.3% (Prev. 0.4%, Rev. 0.5%)


• US NY Fed Manufacturing (May) -9.2 vs. Exp. -10.0 (Prev. -8.1)


• US Retail Sales Ex-Autos MM (Apr) 0.1% vs. Exp. 0.3% (Prev. 0.5%, Rev. 0.8%)


• US PPI exFood/Energy MM (Apr) -0.4% vs. Exp. 0.3% (Prev. -0.1%, Rev. 0.4%)


• US Retail Ex Gas/Autos (Apr) 0.2% (Prev. 0.8%, Rev. 1.1%)


• US PPI ex Food/Energy/Tr YY (Apr) 2.9% (Prev. 3.4%, Rev. 3.5%)


• US PPI ex Food/Energy/Tr MM (Apr) -0.1% (Prev. 0.1%, Rev. 0.2%)


• US Philly Fed Prices Paid (May) 59.8 (Prev. 51.0)


• US Philly Fed New Orders (May) 7.5 (Prev. -34.2)


• US Retail Sales MM (Apr) 0.1% (Prev. 1.4%, Rev. 1.7%)


• US Philly Fed Employment (May) 16.5 (Prev. 0.2)


• US Philly Fed Capex Index (May) 27.0 (Prev. 2.0)


• US Philly Fed 6M Index (May) 47.2 (Prev. 6.9)


• US Capacity Utilization SA (Apr) 77.7% vs. Exp. 77.8% (Prev. 77.8%)


• US Manuf Output MM (Apr) -0.4% vs. Exp. -0.2% (Prev. 0.3%, Rev. 0.4%)


• Canadian Wholesale Trade MM (Mar) 0.2% vs. Exp. -0.3% (Prev. 0.3%, Rev. 1.0%)


• Canadian Manufacturing Sales MM (Mar) -1.4% vs. Exp. -1.9% (Prev. 0.2%, Rev. -0.2%)

NOTABLE EARNINGS

• 
  Alibaba (BABA) Q4 (CNY): Revenue 236.5bln (exp. 237.9bln), EPS 12.52 (exp. 12.71), Adj. EBITDA 41.78bln (exp. 41.23bln); The company is confident in its business outlook.


• 
  Deere & Co (DE) Q2 (USD) EPS 6.64 (exp. 5.64), Revenue 12.76bln (exp. 10.79bln)


• 
  Walmart Inc (WMT) Q1 2025 (USD): Adj. EPS 0.61 (exp. 0.58), Revenue 165.61bln (exp. 165.93bln), US Comp sales +4.5% (exp. 4.0%).

15 May 2025 - 15:00- MetalsGeopolitical- Source: Newsquawk