Morning wrap (19.05.2025)

Wall Street closed in the green on Friday (S&P 500: +0.7%, Nasdaq: +0.5%, DJIA: +0.78%, Russell  2000: +0.9%), but U.S. index futures slipped into losses after Moody’s Ratings cut the United States’ credit rating, citing a sharper rise in debt and interest payments over the past decade than in comparable economies.

U.S. Treasury Secretary Scott Bessent played down Moody’s decision, calling the rating a “lagging indicator.” He blamed the downgrade on the Biden administration and insisted the current cabinet is determined to cut spending and spur economic growth. On tariffs, Bessent said the United States would levy duties on countries that refuse to negotiate “in good faith.”

A broad wave of pessimism is visible across the Asia‑Pacific region. Japan’s Nikkei  225 is falling (‑0.77%), as are China’s HSCEI (‑0.5%), South Korea’s Kospi (‑1.15%), and Australia’s S&P/ASX 200 (‑0.6%). Bucking the decline are Chinese food producers, pharmaceuticals, Japanese automakers, and South Korean renewable‑energy firms.

China’s industrial production rose in April above expectations (6.1% year‑on‑year; forecast: 5.5%; previous: 7.7%), while retail sales fell more than anticipated (5.1%; forecast: 5.4%; previous: 5.9%), underscoring weak domestic demand. The figures are boosting expectations for stronger fiscal support from the Chinese Communist Party.

New Zealand's PPI for Q1 came in higher than expected (2.1%, forecast: 0.2%, previously: -0.9%).

Forex: The dollar is weakening against nearly all G10 currencies (USDIDX: ‑0.3%) after the downgrade. Traditional safe‑haven currencies show the biggest gains: the Japanese yen (USDJPY: ‑0.3%), the Swiss franc (USDCHF: ‑0.16%), and the euro (EURUSD: +0.2%). The Australian dollar is edging lower (AUDUSD: ‑0.05%) on the mixed Chinese data.

Commodities: Uncertainty over U.S. equities is lifting precious metals: gold rebounds 0.45% to $3 217 /oz, while silver adds 0.25% to $32.36 /oz. Brent and WTI crude extend last week’s declines (‑0.5% each); NATGAS futures are down sharply (‑2.2%).

Cryptocurrencies: Sentiment is bearish: Bitcoin is down 1% to $103 000, Ethereum off 0.5% to $2 382. Futures on Sushi (‑4.5%), Solana (‑2.6%), Dogecoin (‑2.2%), and Chainlink (‑2%) are also in the red.