By Mike Dolan
LONDON (Reuters) - What matters in U.S. and global markets today
By Mike Dolan, Editor-At-Large, Financial Industry and Financial Markets
It's Friday, so today I'll provide a quick overview of what's happening in global markets and then offer you some weekend reading suggestions away from the headlines.
Today's Market Minute
* Beijing is "evaluating" an offer from Washington to hold talks over U.S. President Donald Trump's 145% tariffs, although it warned the United States not to engage in "extortion and coercion."
* Japan could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, raising explicitly for the first time its leverage as a massive creditor to the United States.
* Apple CEO Tim Cook told analysts on Thursday that tariffs could add about $900 million in costs this quarter as the iPhone maker shifts its vast supply chain to minimize the impact of the trade war.
* The Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday, removing the "de minimis" exemptions availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.
* A Reuters review of almost 100 Chinese and Hong Kong companies added to the U.S. entity list in 2023 and 2024 found more than a quarter contained erroneous details, such as incorrect names and addresses and outdated information.
Buy in May?
The U.S. stock rebound has gathered steam as the new month gets underway, confounding the old 'sell in May' adage, largely due to trade war de-escalation hopes and some selective tech optimism.
April's employment report on Friday will tell us a lot about the durability of this rally, as last month's jobs market picture remained mixed. A big jump in jobless claims last week was put down to seasonal quirks related to a late Easter.
Meanwhile, the broader economic picture continues to be less a cause for cheer than a case of "it could have been worse". ISM's manufacturing survey on Thursday showed an ongoing contraction in factory activity in April, but by slightly less than feared.
Signs of some rowback in the extreme U.S.-China trade standoff could be more of a boost, coming as they do alongside the week's impressive Microsoft and Meta earnings beats.
That said, the fortunes of Big Tech megacaps may be diverging. Apple disappointed the Street overnight after it noted the high costs associated with shifting its supply chains, and its stock was down about 4% ahead of Friday's bell. And Amazon shares were also down 2% as its cloud business and income guidance fell short of expectations.
Pharma stocks were also hit on Thursday. Even though Eli Lilly results topped expectations, its shares tumbled 12% after CVS Health said it was dropping Lilly's obesity drug Zepbound from some lists of medicines covered for reimbursement.
And yet the more positive mood music around the trade war seems to have encouraged the broader market nonetheless.
Beijing is "evaluating" an offer from Washington to hold talks over President Donald Trump's steep tariffs, China's Commerce Ministry said on Friday, signalling a potential breakthrough in the severe faceoff.
The pressure to talk has been building as the Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong, removing "de minimis" exemptions.
Taking it all in, however, S&P 500 futures were up another 0.5% ahead of Friday's open, adding to yesterday's cash market gains. Futures on the small cap Russell 2000 were up 1%.
All of which means the main Wall Street indexes have recovered most or all of the losses seen since the April 2 tariff sweep, even though they remain deeply negative for the year.
Given the unusually negative start for the year, many strategists wonder if seasonal trends captured in the "sell in May and go away" quip will hold this year. And most reckon the huge macro uncertainties mean it's equally impossible to apply it in reverse.
Flipping back to Friday's diary, the payrolls report will dominate early on, with consensus set for a drop in job growth last month to 130,000. 'Big Oil' dominates the earnings slate.
With next week's Federal Reserve meeting set to leave interest rates on hold for now, Treasury yields backed-up sharply on Thursday on a combination of relief at the ISM survey results and the stock market rally.
The Trump administration was not short of advice for the Fed.
Renewing his attack on Fed Chair Jerome Powell as "a guy in the Fed that I'm not a huge fan of", Trump said: "He should reduce interest rates. I think I understand interest a lot better than him, because I've had to really use interest rates."
Treasury Secretary Scott Bessent also said the Fed should cut.
"We are seeing that two-year rates are now below fed funds rates, so that's a market signal that they think the Fed should be cutting," he said.
Maybe even more alarming for the bond market, Japan finance minister Katsunobu Kato said the country could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, raising explicitly for the first time its leverage as a massive creditor to the United States.
The dollar fell back across the board, as the yen recouped some of its losses and China's offshore yuan hit its highest since March.
Elsewhere, Britain's FTSE 100 is heading for its 15th straight consecutive daily gain, which would be the longest winning streak since the index was first compiled in 1984.
Weekend reading suggestions
Here are some articles away from the day-to-day headlines that you may find interesting.
1. TRADE DEFENSE: In a videoed conversation this week with Council on Foreign Relations President Michael Froman, Donald Trump's first term Trade Representative Robert Lighthizer shared his take on the current administration's trade agenda, sketching out the rationale for these policies.
2. TARIFF ILLUSION?: In an article published on CEPR's VoxEU site, geopolitics and economics professors Simon Evenett and Marc-Andreas Muendler examine the extent to which U.S. import tariffs could fund the government.
3. PARADISE LOST: Pacific archipelago Palau, the site of some brutal World War Two clashes, is once again on the frontline. Reuters correspondents Pete McKenzie and Hollie Adams show how China and the United States and its allies are preparing forces in an intensifying contest for control over the Asia-Pacific region.
4. TAX WEDGES: The annual OECD report on take-home pay shows that as inflation fell last year, the average worker's post-tax income rose in real terms in almost three quarters of the 38 countries surveyed after two years of declines for a majority of them.
5. ENDURING TAILWINDS: In an article for Project Syndicate, economist and professor Nouriel Roubini - once known as "Dr Doom" - takes a positive long-term view of the U.S. economy amid a blistering critique of the current administration. He argues that American private sector leadership in tech and other sectors will see it resume its 'exceptional' performance over the coming decade despite this year's policy shocks.
6. AI AND MINERALS: Reuters correspondent Ernest Scheyder shows how control of a U.S. government-created artificial intelligence program that aims to predict the supply and price of critical minerals has been transferred to a non-profit organization, helping miners and manufacturers strike supply deals.
7. RE-ARM, RE-GREEN: As Europe juggles defence and climate priorities, Bruegel Senior Fellow Simone Tagliapietra outlines seven converging interests between both agendas.
8. TRIPLE HEDGING: In another Project Syndicate article, economist and author Dambisa Moyo discusses how investors hedge against "worse case" scenarios of economic, financial and rule-of-law breakdowns, with the last of the three likely to require holding real, physical, portable assets.
9. RIGHT OFF: Reuters correspondents Anita Komuves, Andrew R.C. Marshall and Krisztina Than explain how U.S. tariffs have undermined hopes among Europe's far right leaders that Trump's presidency would usher in a golden era for them.
Chart of the day
It was a rollercoaster April for the so-called "Magnificent Seven" U.S. big tech megacap stocks - Microsoft, Apple, Alphabet, Amazon, Nvidia, Meta and Tesla. Exchange-traded funds invested in the group plunged as much as 13% after April 2's tariff sweep only to regain all that ground by May 1. First-quarter earnings from three of the seven were greeted favorably by investors in the past week, though Apple and Amazon were snubbed again overnight. Despite the wild swings, the Mag 7 remain down 12% for the year so far. Excluding these huge stocks, the rest of S&P 500 is effectively back to where it started 2025.
Today's events to watch
* US April employment report (8:30EDT), March factory orders (10:00EDT)
* U.S. corporate earnings: Exxon, Chevron, Dupont De Nemours, Franklin Resources, T Rowe Price, Cigna, Apollo, Cboe
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Mike Dolan; Editing by Anna Szymanski and Joe Bavier)
