US stocks rally as the US Treasury Secretary says the US-China trade conflict is unsustainable and is likely to ‘de-escalate’ soon. But surveys show weaker US economic activity in April due to tariff uncertainty. Also: gold backs off a new high.
In our bonus Deep Dive interview, as ANZ Research downgrades its Asia-ex China growth forecasts, ANZ Chief Economist for Southeast Asia and India Sanjay Mathur analyses how policymakers might respond to the tariff shock.
5 things to know in 5 minutes:
US stocks and the US dollar rallied overnight as US Treasury Secretary Scott Bessent said the trade conflict between the US and China was unsustainable and he expected it to de-escalate. ANZ Head of G3 Economics Brian Martin says the rally was also supported by traders re-evaluating the pressure being put on Federal Reserve Chair Jerome Powell by President Donald Trump.
A number of surveys on US business conditions in April were released overnight, including the Richmond Fed’s manufacturing index, down nine points to minus 13. The Philadelphia Fed’s non-manufacturing activity index also fell 10.2 points to minus 42.7. Brian says the surveys point to a weakening US economy.
The US dollar index was up 0.4% at 98.74 at 4am Sydney/Melbourne time after the Bessent trade comments. But it is still down over 10% from 110.18 in mid-January. ANZ Group Chief Economist Richard Yetsenga says there is potential for the dollar to come under further pressure.
The gold price retreated after hitting new record highs above US$3,500 an ounce overnight, trading down 0.4% at US$3,411 an ounce at 4am Sydney/Melbourne time. ANZ Commodities Strategist Soni Kumari describes the factors that could temper the recent rally.
ANZ Senior China Strategist Zhaopeng Xing says China’s strong first quarter growth data has reduced the need for the People’s Bank of China to cut rates immediately.
Cheers,
Bernard
PS: Catch you tomorrow with an assessment of how much the global trade turmoil is feeding through into Australian business and consumer confidence.
