Trade Talks on the table—But Tariffs First 02/05/2025

HOT stories for today

US market wrap:

• The major indexes climbed at the start of May, buoyed by momentum in the tech sector following strong earnings reports from Meta Platforms and Microsoft, which reignited investor enthusiasm around artificial intelligence. Both companies not only exceeded profit forecasts, but also announced increased investment in AI initiatives this year—marking a boom period for all things digital. The 30-member Dow Jones Industrial Average edged up 0.2%, while the S&P 500 gained 0.6%, with both benchmarks extending their winning streaks to eight sessions. The Nasdaq Composite surged 1.5%, fully recovering the losses it had accumulated since April 2, the day former President Donald Trump unveiled "reciprocal" tariffs.
• Data from FactSet shows that nearly two-thirds of S&P 500 companies have released earnings, with 76% reporting results that beat analyst predictions. Following earnings announcements from Apple and Amazon after the close, investors preferred online commerce over hardware, as both tech giants issued weak forward guidance and cautioned that imports could take a hit in the coming quarter.
   

Trade Talks on the Table—But Tariffs First
 

• China has acknowledged recent outreach from the Trump administration aimed at restarting stalled trade negotiations, signaling a cautious openness to dialogue. But Beijing made its conditions clear: before meaningful talks begin, the U.S. must roll back the sweeping tariffs it imposed on Chinese goods, some reaching as high as 145%. In a statement, China’s Commerce Ministry stressed that the U.S. unilaterally triggered the trade conflict, and thus, responsibility for easing tensions lies with Washington.
• Despite the firm stance, the announcement was interpreted by markets as a potential thaw in relations. U.S. stock futures surged, with the Dow jumping over 370 points, while the S&P 500 and Nasdaq futures also climbed. Asian markets echoed the optimism, with notable gains in Hong Kong and Taiwan. However, Beijing tempered expectations, warning China that it would not respond to pressure or coercion. Officials reiterated that negotiations must be built on mutual respect and tangible goodwill, not geopolitical leverage. As both sides test the waters, investors watch closely for signs of a breakthrough—or another breakdown.

Stocks on the move:

• Apple (AAPL) – Shares of the tech giant dipped 2% after its Services division underperformed expectations in the fiscal second quarter. The unit generated $26.65 billion in revenue, slightly below the $26.70 billion forecast by analysts polled by StreetAccount. Nonetheless, Apple exceeded overall earnings and revenue projections for the quarter.
• Airbnb (ABNB) – The vacation rental platform declined more than 4% as its second-quarter revenue outlook fell short of Wall Street forecasts. The company projected revenue between $2.99 billion and $3.05 billion, with the midpoint slightly below the $3.04 billion estimate. Management cited weaker year-over-year momentum in the U.S. market, driven by ongoing economic uncertainty.
• Amazon (AMZN) – Shares of the e-commerce behemoth dropped around 4% after its second-quarter operating income forecast was disappointing. Amazon anticipates operating profit between $13 billion and $17.5 billion, missing the $17.64 billion consensus estimate from StreetAccount. Despite the guidance miss, Amazon topped expectations for both revenue and earnings in the first quarter.
• Roku (ROKU)—The streaming platform slid 3% following its first-quarter report. According to LSEG, Roku posted a per-share loss of 19 cents on revenue of $1.02 billion, beating estimates of a 27-cent loss on $1.01 billion in revenue. However, the narrower loss and slight revenue beat weren't enough to buoy the stock.
• Reddit (RDDT) – Social media company's shares jumped approximately 18% after issuing upbeat guidance. Reddit expects second-quarter revenue between $410 million and $430 million, topping analysts’ forecasts of $396 million.

Today’s action
 

• Markets across the Asia-Pacific region advanced after China announced it is evaluating overtures from the United States to initiate trade negotiations, signaling a potential easing of geopolitical tensions. The regional rally also mirrored gains on Wall Street, where all three major U.S. indexes closed higher amid growing optimism that a global economic slowdown will not hinder the rapid progress in artificial intelligence development. Hong Kong’s Hang Seng Index led the region’s advance, while Japan’s Nikkei 225 climbed 0.87% and the broader Topix index gained 0.3%. In South Korea, the Kospi edged up 0.19%.
• U.S. equity futures moved higher Thursday evening following China's statement. Futures tied to the S&P 500 rose 0.68%, while Dow Jones Industrial Average futures added 0.82%, or 337 points. Nasdaq 100 futures were up 0.32%. Investor focus now shifts to Friday morning’s release of the April U.S. jobs report, which is expected to provide further insight into the health of the labor market. Economists surveyed by Dow Jones project that nonfarm payrolls increased by 133,000 last month, a significant slowdown from the 228,000 jobs added in March. The unemployment rate is anticipated to remain unchanged at 4.2%.

Watchlist: AMZN, AAPL, RDDT, TEAM, TWLO, SQ, ROKU, ABNB

Bitcoin

• Bitcoin traded in a narrow band between $95,977 and $96,169 in the past hour, maintaining a market capitalization of $1.90 trillion and a 24-hour trading volume of $29.88 billion. Intraday movement remained contained within a range of $93,333 to $96,244, reflecting both sustained upward momentum and measured consolidation. The broader trend remains firmly bullish across all major timeframes, supported by consistent buy signals from moving averages and strong momentum indicators on the daily chart.
• While some oscillators suggest the market may be slightly overextended, technical structure still favors further upside—particularly if Bitcoin can decisively break above the $96,500 level with supporting volume. As long as price action holds above critical support around $91,500, bullish control remains intact and the path toward $97,000 appears increasingly viable.
  Watchlist: Bitcoin: 74,000-100,000, Ethereum: 1,500- 2,800, Solana: 80-180

Forex

• The EUR/USD pair edged higher during Friday’s Asian session, climbing above the 1.1300 mark as traders repositioned ahead of pivotal macroeconomic releases. The move comes after the pair briefly touched a two-week low near 1.1265 on Thursday, ending a three-day slide. Attention now turns to the flash Eurozone PMI and the upcoming U.S. Non-Farm Payrolls (NFP) report, both of which could significantly influence near-term price action. A meaningful deviation from expectations on either front may inject fresh volatility into the pair.
• The Japanese Yen rebounded from a three-week low against the U.S. Dollar during Friday’s Asian session, as USD/JPY slipped approximately 75–80 pips from the 146.00 area. A modest retreat in the dollar contributed to the pullback, while the BoJ’s dovish stance and improving risk sentiment may continue to limit the Yen’s upside. Traders are expected to remain cautious ahead of the U.S. jobs data, which could provide further direction for the pair.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-144

Basic Materials

• Gold (XAU/USD) edged higher during Friday’s Asian session, attempting to recover from a two-week low set on Thursday. However, the precious metal remained capped below the key $3,260–$3,265 resistance zone, previously a support level. A subdued U.S. Dollar offered some support to gold ahead of the highly anticipated U.S. Non-Farm Payrolls (NFP) report, as market participants bet on the possibility of more aggressive Federal Reserve rate cuts. Still, broader risk-on sentiment—fueled by optimism surrounding renewed U.S.-China trade negotiations—continues to weigh on demand for safe-haven assets, limiting gold’s upside potential in the near term.
• West Texas Intermediate (WTI) crude prices advanced for a second straight session on Friday, trading near $59.40 per barrel during Asian hours. The rally was driven by growing optimism over a potential reduction in U.S.-China trade tensions, which could reinvigorate global demand. Additional support came from U.S. President Trump’s remarks signaling possible trade agreements with India, Japan, and South Korea, alongside his firm warning of secondary sanctions on countries continuing oil imports from Iran. These developments helped reinforce bullish sentiment in the energy market.
  Watchlist: GOLD 2600-3500, US Oil: 57.00-70.00

Key Economic Events Today:

EST time
08:30 am: USD Non-Farm Employment Change
08:30 am: USD Unemployment Rate
10:00 am: USD Factory Orders

Earnings

BMO (Before the US Market opens)
XOM                Exxon Mobil Corp.
CVX                 Chevron Corp.
SHEL               Shell Plc
CI                     The Cigna Group
IMO                  Imperial Oil
AMC (After the US Market closes): enjoy your weekend
 

The TEFS Analyst team wishes you a successful day!