Market Talks covering the impact of U.S. Politics and White House policies on companies and markets. Published exclusively on Dow Jones Newswires throughout the day.
0908 ET - Autos and healthcare are the sectors where tariffs have inflicted the most pain so far this earnings season in Europe, equity and cross-asset strategists at Deutsche Bank say in a research note. "While virtually all companies mentioned increased macro uncertainty, most emphasized limited direct impact on their financials due to local production, diversified supply chains, and mitigation strategies like repricing, relocating production, and using free trade zones," the strategists say. Among Stoxx Europe 600 companies that reported so far, only 12% expect a severe earnings hit from tariffs and 9% cut their guidance, according to Deutsche. The Stoxx Europe 600 rises 1%. (adria.calatayud@wsj.com)
0907 ET - Today's WASDE report, due from the USDA at noon eastern time, may throw more volatility into what's already shaping up to be an active day, thanks to the U.S.-China agreement over the weekend. The reduced tariffs may set the scene for a trade deal similar to the Phase One Agreement of 2020 that obligates China to purchase more U.S. grains. But the WASDE may show larger U.S. supplies than previously anticipated, which could sink CBOT futures. (kirk.maltais@wsj.com)
0904 ET - The U.S.-China trade deal is giving commodities a lift across the board, including most agricultural commodities. "President Donald Trump described the outcome as a 'total reset' of U.S.-China trade relations, emphasizing the importance of opening Chinese markets to American businesses," says John Stewart & Associates in a note. Soybeans are leading row crops on the CBOT higher, up 1.7%. Soybeans are the crop in Chicago most tied to developments in U.S.-China trade. Corn rises 1.1% and wheat is down 0.2%. (kirk.maltais@wsj.com)
0852 ET - Canadians continue to turn their back on the U.S., avoiding travel south as the trade war goes on. Preliminary numbers indicate international arrivals by air and automobile totaled 4.5 million in April, down 15.2% on the same month last year, Statistics Canada says. That marks a third consecutive decline. Canadian-resident return trips by air from abroad stood at 1.8 million, edging down 1.2% on-year as return trips from the U.S. continued to slump with a drop of 19.9% that offset a 9.9% rise in return trips from overseas countries. Canadian-resident return trips to the U.S. by vehicle also continued to fall, sinking 35.2% on-year to 1.2 million for a fourth straight decline. The same month, the number of U.S. resident trips to Canada by automobile fell a third month running, declining 10.7%. (robb.stewart@wsj.com; @RobbMStewart)
0838 ET - The U.S. and China's announcement of a 90-day suspension of most tariffs is a larger-than-expected de-escalation and represents an upgrade to China's outlook, according to ING's Lynn Song. However, after the drop to 30% tariff rate on Chinese imports to the U.S., the negotiation process will likely remain challenging, he says in a note. "The reduction of tariffs on China...is a sufficient enough reduction to allow for a more or less return of normal trade," he says. Exporters, importers, and consumers will share in absorbing the impact of the tariffs, and overall business will likely resume. Moreover, the 90-day pause will prompt upgrades to China's growth outlook for the second and third quarters, he says. (edward.frankl@wsj.com)
0836 ET - The U.S.-China agreement is an important de-escalation in the trade conflict between the two nations, but the question remains whether sufficient progress can be made in the negotiations on details over the next 90 days, Commerzbank's Bernd Weidensteiner and Christoph Balz say. "Success in these talks is not guaranteed, particularly as the U.S. government wants to make trade between the two countries more balanced, which is not in line with Chinese interests," they write in a note. Negotiations on the Phase One deal in President Trump's first term took almost 18 months, so a 90-day deadline seems ambitious. Even a successful deal doesn't mean the goals set out in it will be achieved, they say. (edward.frankl@wsj.com)
0815 ET - The cost of insuring both investment-grade and high-yield euro-denominated credit against default using credit default swaps falls to six-week lows as the U.S. and China made significant progress in trade talks over the weekend. This resulted in an announcement earlier that the two countries had agreed to slash punishingly high tariffs on each others' goods, with the U.S. "reciprocal" tariff on China dropped to 10% from 125%. "This is a big deal," says Aberdeen economist Paul Diggle in a note. The iTraxx Europe Crossover index, which tracks euro junk bond credit default swaps, falls 13 basis points to 308bps, S&P Global Market Intelligence data show. The iTraxx Europe Main index, which tracks euro investment-grade CDS, declines 3bps to 59bps. (jessica.fleetham@wsj.com)
0809 ET - Trump's 'Most Favored Nation' drug pricing policy represents an overhang to the pharma sector despite uncertainty on whether the order will garner sufficient political support in Congress, Bryan Garnier Research analysts say in a note. Trump introduced a similar policy in his first term in 2020, which was blocked by a federal judge and ultimately removed by then-President Biden in 2021, the analysts say. It is unclear which programs of Medicare would be affected if the policy takes effect, they say. Roche, AstraZeneca and Novartis shares fall 3.8%, 3.2% and 2.6% in early afternoon trade, respectively. GSK loses 2%, Sanofi is down 1.8% and Novo Nordisk drops 3.2%.(helena.smolak@wsj.com)
0806 ET - U.S. President Trump's potential drug price cap policy appears alarming for the pharma sector, Berenberg analysts say in a note. Trump said his "Most Favored Nation" policy would lower U.S. drug prices by 30%-80%. "It is worth considering exactly how this might be implemented given the complex system of U.S. drug pricing and reimbursement and lack of full disclosure on ex-U.S. drug prices," the analysts say. The analysts estimate U.S. pharma giant Bristol Myers to be most exposed to price cuts in the government channels, while Sanofi would be the least affected. It remains unclear how the policy will be implemented and whether certain drug classes will be exempted, they say. AstraZeneca shares fall 3.2% in early afternoon trade, GSK loses 2%, Sanofi is down 1.8% and Novo Nordisk drops 3.2%. (helena.smolak@wsj.com)
0755 ET - The U.S. and China have undertaken a huge rollback in bilateral tariffs. Alongside last week's agreement with the U.K., this gives a good indication of the likely cap and floor of tariffs, Deutsche Bank's George Saravelos says in a note. The U.K. has one of the least imbalanced relationships with the U.S. and now has a tariff rate of 10%, while at the other end of the scale, China's tariff rate is 30%. "It is reasonable that these two numbers now set the bounds of where American tariffs will end up this year, a material increase in visibility from just last week," Saravelos says. The more conciliatory turn means the peak of trade-war uncertainty is over, helping improve the global growth outlook, he says. (edward.frankl@wsj.com)
0751 ET - Crude futures extend gains in afternoon trade after a U.S.-China deal eased concerns over a deepening trade war that has threatened global economic growth and oil demand. Brent climbs 3.8% to $66.35 a barrel, while WTI jumps 4.1% to $63.50 a barrel. After weekend talks in Geneva, the world's top consumers of crude agreed to temporarily slash punishing levies on each other while trade negotiations continue. However, "questions remain for markets as to what the end game will be, as the measure will be operational for 90 days, and what the eventual level of tariffs will be," ING analysts say. "Uncertainty is still high, and volatility is likely to remain elevated across commodities markets." Oil prices are still down more than 11% this year so far amid concerns over OPEC+'s accelerated output hikes and easing geopolitical tensions. (giulia.petroni@wsj.com)
0747 ET - The U.S.-China agreement is another substantial retreat from the Trump administration's aggressive stance, Capital Economics' Mark Williams says in a note. The U.S. is suspending for 90 days all but 10% of Trump's reciprocal tariffs, with the 20% fentanyl tariff still applying. While this is a significant de-escalation, there is no guarantee that the 90-day truce will give way to a lasting ceasefire, Williams says. "The U.S. still has higher tariffs on China than on other countries and appears to be trying to rally other countries to introduce restrictions of their own on trade with China. "China's leadership won't offer meaningful concessions while that remains the case," he cautions. (edward.frankl@wsj.com)
(END) Dow Jones Newswires
May 12, 2025 09:08 ET (13:08 GMT)
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