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[HFM.]

Date: 19th May 2025.

Global Markets Slide After US Credit Rating Downgrade, Weak Chinese Data Add to Investor Jitters.

Asian markets fell today while US futures and the dollar weakened, as global investors digested Moody’s downgrade of the US sovereign credit rating. The move came in response to the US government's persistent struggle to control rising debt, currently sitting at $36 trillion.

US Credit Rating Downgrade Sends Ripples Through Global Markets​

Moody’s cut the US sovereign credit score from its long-held AAA rating to Aa1 — the first downgrade since 1917. The rating agency cited worsening fiscal conditions, a widening deficit, and increasing concerns over the government's capacity to manage its debt obligations. It follows earlier warnings in 2023 and echoes similar concerns raised by Fitch and S&P in previous years.

The downgrade hit global sentiment hard. The futures for the S&P 500 slid 0.9%, while those for the Dow Jones Industrial Average declined 0.6%. The US dollar weakened, dipping to 145.14 yen from 145.65 yen, while the euro remained flat at $1.1183.

Asian Markets Under Pressure Amid Weak China Data​

Chinese equities slipped after fresh data revealed slower-than-expected economic growth. April retail sales in China rose just 5.1% year-on-year, missing forecasts, while industrial output growth eased to 6.1% from 7.7% in March. The slowdown raises concerns over excess inventories and reduced domestic demand, particularly in the wake of the ongoing US-China trade tensions.

The Hang Seng in Hong Kong fell 0.7% to 23,184.74, and Shanghai’s Composite Index edged down 0.2% to 3,361.72. Japan’s Nikkei 225 dropped 0.4%, Korea’s Kospi lost 1%, and Taiwan’s Taiex shed 0.8%. Australia’s ASX 200 declined 0.1%.

Adding to the pessimism, China’s property market showed no signs of recovery, with new home prices unchanged in April, marking nearly two years of stagnant growth despite government support efforts.

Trade War Uncertainty Looms Over Markets​

Tensions between the US and its trading partners continue to add volatility. Treasury Secretary Scott Bessent warned that President Donald Trump would impose tariffs on countries not negotiating in ‘good faith.’ Although Bessent did not clarify what qualifies as ‘good faith,’ he stated that letters outlining tariff rates would be sent to non-compliant nations.

Trump has already shifted tariff rates multiple times this year. In April, he reduced most tariffs to 10% for 90 days to encourage negotiations, while tariffs on Chinese imports were adjusted to 30%.

Despite last week’s 90-day standstill agreement between the US and China, investor sentiment remains fragile amid concerns over Trump’s unpredictable trade policies.

Wall Street Rallies but Risks Remain​

Despite the looming economic headwinds, Wall Street closed higher last week. The S&P 500 gained 0.7% to 5,958.38, bringing it within 3% of its February all-time high. The Dow climbed 0.8% to 42,654.74, while the Nasdaq rose 0.5% to 19,211.10. Optimism over potential tariff rollbacks helped fuel the rally, but fears of a recession and stubborn inflation still weigh heavily.

Moody’s downgrade also underscores long-term structural challenges for the US economy, as successive administrations have failed to rein in government spending.

Consumer Sentiment, Inflation Expectations Worsen​

The University of Michigan’s latest consumer sentiment index showed another decline in May, though the pace of deterioration slowed. More troubling, Americans now expect inflation to reach 7.3% over the next year, up from 6.5% the month before, further complicating the Federal Reserve’s path toward rate cuts.

Hope remains that softer inflation readings and slowing economic activity could eventually prompt the Fed to ease monetary policy,a key support for markets facing trade shocks and fiscal uncertainty.

Gold Gains on Safe-Haven Demand​

Gold prices edged higher as investors turned to safe-haven assets amid mounting US fiscal concerns. Spot gold rose 0.5% to $3,218.30 an ounce in Singapore after briefly surging as much as 1.4% earlier in the session. The Bloomberg Dollar Spot Index slipped 0.2%.

Moody’s downgrade of the US credit rating supported gold’s appeal. The precious metal, which hit record highs above $3,500 an ounce last month, remains up over 20% this year despite recent pullbacks driven by easing geopolitical tensions.

Oil Prices Dip on Weak Data and Credit Worries​

Oil prices fell Monday following the US credit rating downgrade and underwhelming Chinese economic data. Brent crude slipped 0.5% to $65.06 a barrel, while US West Texas Intermediate (WTI) dropped 0.4% to $62.23. The more actively traded July WTI contract also fell 0.5% to $61.66.

While the recent truce between the US and China initially lifted crude prices, concerns over the durability of the agreement and China’s faltering recovery have kept investors cautious.

Corporate Highlights: Mergers and Market Moves​

In corporate news, Charter Communications rose 1.8% after announcing a merger with Cox Communications. The combined entity will retain the Cox name and be headquartered in Stamford, Connecticut.

Nvidia-backed CoreWeave jumped 22.1% after the tech giant increased its stake in the AI cloud computing firm from just under 6% to 7%.

Meanwhile, US-listed shares of Novo Nordisk fell 2.7% after the company announced CEO Lars Fruergaard Jørgensen will step down amid recent market challenges, despite the popularity of its Wegovy weight-loss drug.

Outlook: Uncertainty Ahead​

With the US credit rating downgrade, wavering trade relationships, and mixed economic signals from China, financial markets are likely to remain volatile. While some positive inflation data could support a dovish Fed pivot later in the year, uncertainty over global trade policies and fiscal stability will continue to dominate investor sentiment.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date: 21st May 2025.

Dollar Weakens Ahead of G-7 as Traders Watch for US Policy Shifts.

The US dollar slipped to its lowest level in two weeks on Wednesday, as market participants turned their attention to the upcoming Group-of-Seven summit for clues on whether the Trump administration is favouring a weaker greenback. The Bloomberg Dollar Spot Index fell for a third straight session, losing 0.4% on the day.

Speculation has grown after Japan’s Finance Minister, Katsunobu Kato, expressed his intent to hold currency discussions with US Treasury Secretary Scott Bessent during the G-7 meeting. South Korean officials have already confirmed that exchange rates were addressed during recent bilateral talks with the US, fueling expectations of a coordinated policy shift.

Fiscal concerns are adding to the dollar’s woes. Lawmakers in Washington are working on a proposed tax cut plan that aims to keep the revenue impact within $4.5 trillion over a decade, currently estimated at $3.8 trillion. This comes on the heels of a credit downgrade by Moody’s, which cited persistent and unaddressed budget deficits as a key reason for lowering the US government's credit rating.

‘The dollar is declining in tandem with rising long-term US yields, as investors grow uneasy about financing America's twin deficits,’ said Moh Siong Sim, FX strategist at Bank of Singapore. ‘We’re likely witnessing the early stages of a broader reallocation away from overweight US positions by global investors.’

Geopolitical Tensions Lift Oil, Equities Mixed in Asia

Oil prices spiked following a CNN report that suggested Israel may be preparing for a military strike on Iran’s nuclear facilities. US benchmark West Texas Intermediate crude rose $1.21 to $63.24 per barrel, while Brent crude added $1.20 to reach $66.58. The report, citing unnamed intelligence sources, said no final decision had been made by Israeli leaders, but any strike could derail ongoing nuclear negotiations and heighten instability in the Middle East—a region responsible for roughly a third of global oil supply.

Asian equity markets were mixed. The Hang Seng gained 0.4%, Shanghai’s Composite edged up 0.2%, and Australia’s ASX 200 advanced 0.8%. South Korea’s Kospi rose by the same margin, and Taiwan’s Taiex climbed 0.6%. Tokyo’s Nikkei 225, however, dipped 0.1% amid ongoing trade tensions with the US

Japan reported weaker trade data, with April exports to the US falling nearly 2% year-on-year. Total global export growth slowed to 2% from 4% in March, while imports from the US plunged over 11%. The country recorded a trade deficit of 115.8 billion yen ($804 million), and the yen's recent strength has further dampened export competitiveness. Vehicle exports, a core component of Japan’s trade, dropped nearly 6%.

The Japanese government continues to urge Washington to remove the tariffs introduced under President Trump, particularly the 25% levy on autos and duties on steel and aluminium. Economic Revitalisation Minister Ryosei Akazawa is expected to meet with US officials this weekend in a third round of negotiations.

Adding to domestic political pressures, Agriculture Minister Taku Eto resigned following controversial remarks about receiving free rice, triggering public backlash amid rising staple food prices.

Wall Street Dips as Travel Stocks Lag; Quantum Firm Soars

US stocks ended lower on Tuesday. The S&P 500 fell 0.4% to 5,940.46, its first decline in seven sessions. The Dow dropped 0.3%, and the Nasdaq lost 0.4%. Travel-related shares dragged the market lower, with Norwegian Cruise Line falling 3.9%, United Airlines off 2.9%, and Airbnb down 3.3%. Viking Holdings, despite better-than-expected earnings, slumped 5%.

Home Depot shares slid 0.6% after quarterly earnings missed estimates, though revenue came in ahead. The company maintained its full-year guidance, contrasting with other corporations that have cited tariff uncertainty and economic headwinds as reasons to withhold forecasts.

In contrast, D-Wave Quantum surged nearly 26% after launching a next-generation quantum computing platform, claiming it can tackle problems traditional computers cannot handle.

Investors are watching for earnings from Lowe’s and Target today.

Bonds and Currency Moves

Treasury yields were little changed. The 10-year yield inched up to 4.47%, while the 2-year yield dipped slightly to 3.96%, reflecting expectations around future Federal Reserve policy. The dollar softened, trading at 144.10 yen from 144.51, while the euro climbed to $1.1307.

UK & Canadian Inflation Reports Raise Stakes for June Rate Decision

This morning UK inflation jumped to 3.5% y/y in the headline rate, from 2.6% y/y in the previous month, with prices rising a whopping 1.2% m/m. The later timing of Easter and the start of the new fiscal year clearly impacted the higher-than-expected number. Core inflation accelerated to 3.8% y/y from 3.4% y/y, with services price inflation hitting 5.4% y/y, up 0.7% points over the month. The wider CPIH rate accelerated to 4.1% y/y from 3.4% y/y. The higher-than-expected number backs warnings from Chief Economist Pill that inflation risks have not disappeared and is prompting traders to trim rate cut bets.

Also, Canada’s April inflation data delivered a mixed picture. Headline CPI slowed to 1.7% year-over-year, the weakest since September, due to lower energy prices and the carbon tax repeal. However, core inflation surprised to the upside: the median rate climbed to 3.2% (from 2.9%), the trim rose to 3.1%, and the average core measure accelerated to 3.15%. The three-month moving average of core inflation jumped to 3.4% from 2.9%.

These stronger core figures complicate the Bank of Canada’s upcoming rate decision on June 4. The central bank held rates steady at its April 16 meeting but may now face pressure to act amid persistent underlying inflation.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM.]

Date: 22nd May 2025.

Bitcoin Surges Above $111K for the First Time as Institutional Demand and Regulatory Optimism Fuel Rally.

Crypto markets outperform as equities stumble under bond market pressure and rising US debt concerns.

Bitcoin hit a new record high on Thursday, crossing the $111,000 threshold for the first time amid growing institutional interest and hopes for improved regulatory clarity in the US. The digital asset rose as much as 3.3% to reach $111,878, according to Bloomberg. Ethereum, the second-largest cryptocurrency, also saw notable gains, climbing up to 5.5% intraday.

Sentiment was lifted by progress in the US Senate on a key stablecoin bill, which investors interpret as a sign of potential pro-crypto regulation under President Donald Trump. This comes alongside mounting demand from major institutional players, including Michael Saylor’s Strategy, which now holds over $50 billion in Bitcoin.

There’s no shortage of demand for BTC from SPAC and PIPE deals, which is manifesting in the premium on Coinbase spot prices.

Several newly formed or obscure public companies are driving fresh demand, funding their Bitcoin purchases through convertible debt, preferred equity, and other instruments. One example is Twenty One Capital Inc., a new firm modelled after Strategy and launched by an affiliate of Cantor Fitzgerald LP in partnership with Tether Holdings SA and SoftBank Group. Meanwhile, a merger between a subsidiary of Strive Enterprises Inc., co-founded by Vivek Ramaswamy, and Nasdaq-listed Asset Entities Inc. will create a Bitcoin treasury company.

‘This rally is not just momentum-driven’, said Julia Zhou, COO of Caladan, a crypto market maker. ‘It’s supported by tangible, sustained demand and supply dislocations’

Bitcoin’s dominance is growing, as alternative cryptocurrencies struggle. An index tracking smaller altcoins has declined about 40% in 2025, while Bitcoin is up 17% year-to-date.

In the ETF space, 12 US Bitcoin exchange-traded funds have attracted around $4.2 billion in inflows this month. On Deribit, the largest crypto options exchange, open interest is heavily concentrated around June 27 expiry calls at $110,000, $120,000, and even $300,000.

The latest breakout confirms the broader bullish trend. The sharp pullback from January’s highs to below $75,000 in April now looks like a correction within a bull market. A firm break above $110,000 could set the stage for a move toward $125,000.

The latest rally coincides with a private dinner on Thursday between Trump and top holders of his memecoin at his golf club near Washington. Ethics experts warn that such events raise concerns about potential conflicts of interest and access through financial contributions. However, analysts say the meeting has had minimal direct market impact.

Asian Markets Retreat on Bond Market Worries and US Debt Concerns

Asian equity markets fell sharply on Thursday as pressure from rising US Treasury yields and concerns over surging American debt rattled investor confidence.

Japan’s Nikkei 225 dropped 1.0% to 36,944.55, while Hong Kong’s Hang Seng Index fell 0.9% to 23,615.21. Mainland China’s Shanghai Composite edged 0.1% lower to 3,383.10. Australia’s ASX 200 slid 0.5% to 8,342.80, and South Korea’s Kospi lost 1.1% to settle at 2,595.69.

The US still has the biggest markets and deepest liquidity, but not even dollar inertia can outrun compound interest and structural deficits forever. The weaker US dollar also weighed on regional markets. A depreciating dollar undermines the value of Asian nations’ dollar-denominated assets and negatively impacts exporters like Japan’s automakers, whose overseas profits diminish when converted to local currency.

In currency markets, the greenback slipped to 143.27 Japanese yen from 143.68 yen. The euro strengthened slightly to $1.1335 from $1.1330. A year ago, the dollar was trading near 150 yen.

Investors are also increasingly wary of President Trump’s policy decisions, particularly on tariffs that affect Asian firms and ongoing negotiations in Congress over a major funding bill.

Wall Street Flat Ahead of Tax Vote

US stock futures were little changed early Thursday as markets awaited the outcome of a vote on President Trump’s proposed tax reform bill. Dow futures dipped 0.1%, while S&P 500 and Nasdaq 100 futures traded flat.

Despite internal GOP disagreements, House Speaker Mike Johnson said a floor vote could happen as early as Thursday night. The latest version of the bill includes more generous deductions for state and local taxes (SALT), aimed at appeasing Republican holdouts.

However, unresolved issues surrounding Medicaid funding and green energy tax credits have investors concerned. Moody’s recently downgraded the US credit outlook, citing the bill’s potentially massive deficit implications as a contributing factor.

Markets reacted on Wednesday with broad declines and a jump in bond yields. The 30-year Treasury yield briefly breached 5%, its highest in months, amid renewed concerns over the US’s growing debt burden.

Beyond politics, investors on Thursday will also digest key economic data, including weekly jobless claims, existing home sales, and the ISM’s Purchasing Managers’ Index (PMI).

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.