Morning wrap (05.06.2025)

Volatility on Wall Street remained limited yesterday, as investors refrained from risky moves ahead of today’s employment data release (NFP). Alongside mixed index performances (DJIA: -0.2%, Russell 2000: -0.2%, Nasdaq: +0.3%, S&P500 flat), we saw a drop in yields (with the 10-year yield falling by nearly 10 basis points).

Weak ISM services data and ADP figures below forecasts fueled expectations of monetary policy easing in the U.S. According to Minneapolis Fed President Neel Kashkari, the labor market is indeed showing some signs of slowing, but more clarity in the data is still needed. Kashkari also emphasized that inflation in the U.S. remains above target, thereby balancing the implications of the new data with the Fed’s existing narrative.

Caution during yesterday’s session defines sentiment in the Asia-Pacific region. Among the indices, South Korea’s Kospi gained the most (+1%) along with China’s HSCEI (+0.5%), while Japan’s Nikkei 225 dropped 0.45% in reaction to exceptionally weak demand at the latest 30-year bond auction.

China’s Caixin Services PMI rose above expectations to 51.1 (previously 50.7; forecast 51), reflecting expansion in the sector after the trade truce with the U.S. Employment increased along with deflationary pressure, but business sentiment remains undermined by uncertain outlooks and already visible weakening of foreign demand.

On the forex market, we also observe relatively low volatility. The dollar is slightly recovering from losses in the previous session (USDIDX: +0.1%), while safe-haven currencies like the yen (USDJPY: +0.25%) and Swiss franc (USDCHF: +0.1%) are retreating the most. The only currency strengthening against the USD is the New Zealand dollar (NZDUSD: +0.07%). EURUSD is posting a slight correction after rising above 1.40 yesterday (-0.07%).

Commodities are mostly down: Brent and WTI crude oil are declining by 0.2% and 0.38%, respectively, and gold is also in the red, down 0.2% to $3,365 per ounce.

Major cryptocurrencies are posting modest gains: Bitcoin is up 0.11% to $104,790, and Ethereum is rising 0.25% to $2,613.