The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.
1017 GMT - China and the U.S. rolling back tariffs should inject positive sentiment into Hong Kong and Chinese equities, Citi Research analysts say. While the reductions will last for 90 days, bilateral discussions will continue, Pierre Lau and others write in a note. Citi flags communications infrastructure, tech hardware, solar equipment, and semiconductors as the sectors that are most sensitive to tariffs. Among the firms with the largest profit mix generated from the U.S. are: Innolight, Eoptolink, TFC Optical, Tongfu, JCET, Jinko and JA Solar. Citi prefer H- to A-shares on a 12-month basis, assuming more rate cuts in the U.S.--benefitting HKD-- than in China. It is overweight on internet, tech and consumer sectors, with top picks including Tencent, Huaneng Power, Trip.com, BYD, AIA, Atour and Anta.(fabiana.negrinochoa@wsj.com)
1000 GMT - Delivery Hero's South Korean unit is unlikely to return to growth before the fourth quarter of the year, UBS analysts write in a note. "While stabilization of market share is a clear focus, it is ultimately not entirely in Delivery Hero's control. A return to absolute growth should be the key focus," they say. The German food-delivery group's further market share losses aren't surprising at this point due to the competitive market, they add. However, this shows that there is still work to do, the analysts say. Shares are up 2.6% at 26.59 euros. (najat.kantouar@wsj.com)
0918 GMT - Cotton prices gain as the U.S. and China mutually agree to lower tariffs for a 90-day period, pending further negotiations. Cotton futures rise 3% to $0.69 a pound, and are now broadly flat year to date. Cotton had been one of the commodities most sensitive to the escalation in the U.S.-China trade conflict, BMI analysts write. Cotton prices fell to five-year lows in the aftermath of President Donald Trump's sweeping tariff announcements in early April, though they recovered some ground over the following weeks. The U.S.' role as both a large exporter of cotton and importer of cotton-based products explains the vulnerability of cotton prices to U.S. trade developments, BMI says. Prior to the U.S.-China agreement, the market had priced in effectively no cotton trade between both countries, BMI adds. (joseph.hoppe@wsj.com)
0915 GMT - Telefonica's potential sale of its Chilean business would fit the company's strategy, ING analyst Jan Frederik Slijkerman writes in a note, referring to a report in Spanish newspaper El Confidencial. The Spanish telecommunications company has been looking to gradually reduce its exposure to Latin America and has sold its Argentinean unit and its Columbian business. "A sale would bring further strategic focus to Telefonica and reduce the exposure to emerging markets currencies," he adds. Shares are down 1.5% at 4.41 euros. (najat.kantouar@wsj.com)
0859 GMT - Shares in major European defense groups are in decline after Ukrainian President Volodymyr Zelensky said he would be waiting for Russian President Vladimir Putin in Turkey later this week. Defense stocks have grown exponentially since Russia's invasion of Ukraine ushered in a stream of orders for ammunition and other military hardware, but the prospect that Kyiv and Moscow could engage in peace talks is now weighing on sentiment. Shares in Germany's Rheinmetall are down 5.6%, with Renk Group 7% lower and Hensoldt shedding 10%. Shares in Italy's Leonardo drop 5%, while France's Thales falls 3.4%. In the U.K., shares in BAE Systems are down 2.5%. Babcock International Group stock loses 1.9%. (mauro.orru@wsj.com)
0853 GMT - Agricultural commodities are mixed, with wheat declining 0.6% to $5.19 a bushel but soybeans rising 1.4% to $10.66 a bushel. The U.S. and China have agreed to suspend most mutual tariffs pending further talks, driving soybeans' gains. China had imported the lowest amount of soybeans in April for ten years, Commerzbank analysts say in a note. According to data from the customs authority, April's soybean imports amounted to just over 6 million metric tons, an on-year decline of 29%. This was likely a result of the U.S.-China trade war, as soybeans from the U.S. became prohibitively expensive due to China's 140% counter-tariffs following U.S. levies, Commerzbank writes. The agreement to lower tariffs on U.S. goods to 10% for 90 days pending further negotiations has since raised hopes of increased soybean demand. (joseph.hoppe@wsj.com)
0850 GMT - Hong Kong's Hang Seng Index could have room to run after getting a lift from news that China and the U.S. will lower tariffs. That eases concerns over corporate profits and trade uncertainty, as China's latest stimulus is starting to take effect, says Dilin Wu at Pepperstone. The stimulus aims to boost demand and financing efficiency, reducing reliance on external drivers, Wu says. The next catalysts will be quarterly earnings from Tencent and Alibaba. If results and guidance beat expectations, that could propel the HSI higher, Wu says. Also in focus is a ruling on AI chip-export controls. If Trump scraps curbs as expected and introduces a more streamlined regime, that could be a tailwind for the tech sector, Wu adds. The index finished 3.0% higher. (fabiana.negrinochoa@wsj.com)
0833 GMT - Danone seems to prefer to deploy cash toward acquisitions, but the small size of deals like Monday's for Kate Farms raises the question of whether cash returns should step up, Barclays analysts say. "With Danone's cash improving and deleveraging accelerating, we wonder where the cash goes," the analysts say. As long as deals continue to be small in size like Kate Farms, Barclays wonders whether it is time for Danone's cash returns to increase in the interim, the analysts say. The French food company said it agreed to buy a majority stake in U.S. plant-based nutrition company Kate Farms for an undisclosed sum, but Barclays reckons the deal was likely small. Shares fall 1.6%. (adria.calatayud@wsj.com)
0827 GMT - The coordinated tariff reductions between the U.S. and China signal a change in tone or at the very least a political willingness to pause, Pepperstone research strategist Ahmad Assiri writes in a note. The measures, though temporary, were met with an immediate and strong reaction in markets, Assiri says. The shift creates room to reassess global trade flows and input costs, and may support corporate earnings in the next quarter, the analyst adds. Markets read this as a sign that progress in U.S. and China trade negotiations is possible, the analyst says. It feels like a reverse version of "Liberation Day"--not a full removal of barriers, but a softening. Investors are likely to keep a close eye on upcoming bilateral meetings which will shape the path beyond the 90-day pause, Assiri adds.(jiahui.huang@wsj.com; @ivy_jiahuihuang)
0824 GMT - New highs for markets, especially tech stocks, are on the table in 2025 after the U.S. and China agreed to cut tariffs substantially, Wedbush analysts say in a research note. The base-case scenario for the trade talks over the weekend was some de-escalation and agreement for more discussions, they say. The massive cuts to U.S.-China reciprocal tariffs is the "best-case scenario" from the talks, they note. "This is very bullish news for the tech trade, as the supply-chain concerns will now be significantly reduced," the analysts say. With the U.S. and China on an accelerated path for a broader deal, investors will likely focus on the next steps in these trade negotiations, which will happen over the coming months, they add. (sherry.qin@wsj.com)
0820 GMT - Futures linked to the tech-heavy Nasdaq-100 rise sharply after the U.S. and China agreed to suspend most tariffs on each other's goods pending further negotiations. The E-mini Nasdaq 100 futures contract is up 3.3% on Monday. Tech stocks had been under strain since U.S. President Trump in April levied tariffs on dozens of nations, including China, prompting Beijing to retaliate. Tariffs rattled tech investors who feared a trade war could destabilize supply chains and raise costs for both manufacturers and consumers. Nvidia shares are up 2.7% premarket at $119.74, while Apple stock is up 4.6% at $207.38. (mauro.orru@wsj.com)
0819 GMT - Danone's deal for a majority stake in U.S. plant-based nutrition company Kate Farms seems small, but strategic as it is aligned with the company's goal of bolstering its medical-nutrition operations, Barclays analysts say in a research note. "This is another clear sign of Danone's direction of travel as it bolsters Medical Nutrition, which we consider as Danone's best and fastest-growing business," the analysts say. The French food company didn't disclose the size of the stake nor the price. While the deal isn't material for Danone, it follows a similar path to the Functional Formularies deal, Barclays says, referring to the U.S. acquisition the company completed last year. Danone shares fall 2%. (adria.calatayud@wsj.com)
(END) Dow Jones Newswires
May 12, 2025 06:17 ET (10:17 GMT)
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