MARKET WRAPS

Watch For:

Germany CPI; trading updates from Burberry, Salvatore Ferragamo, Hapag-Lloyd, Telefonica, E.ON, Pirelli, Bouygues, ABN AMRO Bank, Compass Group, Experian, TUI

Opening Call:

European stock futures fell early Wednesday. Asian stock benchmarks tracked Wall Street indexes higher; the dollar edged lower; Treasury yields steadied; while oil and gold futures fell.

Equities:

Stock futures point to a lower open on Wednesday in European markets as traders digest U.S. inflation data amid uncertainty over where U.S. tariffs will settle.

A few hours after Beijing and Washington agreed to temporarily slash levies on each other's goods, the Trump administration also cut charges for low-value Chinese packages that it had imposed after closing a loophole known as the "de minimis" exemption.

Extreme volatility in the U.S. stock market has evaporated, with a popular gauge of investor anxiety now sending a bullish signal after the initial tumult surrounding President Donald Trump's sweeping tariffs settled down.

"Whereas markets were reacting with excessive fear, now they're probably reacting with excessive optimism," said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute. "These are still large tariffs."

Forex:

"While the USD has found short-term stability, it still lacks the macro justification for a sustained rally, possibly keeping the DXY in a 98-102 range with a downside bias," said DBS's Philip Wee.

The de-escalation in U.S.-China trade tensions has reduced recession risks for the U.S. economy, though it remains unexceptional, with the White House pushing the Fed for monetary policy support, Wee added.

Bonds:

The 10-year Treasury yield's improving upward momentum suggests near-term upside bias on the weekly chart, said Quek Ser Leang of UOB. This week, the yield has risen swiftly and upward momentum is starting to build, with the weekly moving average convergence divergence indicator poised to cross into positive territory, he noted.

However, a contracting weekly moving average envelope points to nondirectional price movements for now, he said. Hence, any advance of the 10-year yield is unlikely to break above the top of the weekly moving average envelope, which is now at 4.809%.

Energy:

Oil fell slightly early Wednesday amid market focus on Trump's visit to the Middle East.

"Trump's Middle Eastern tour is timed very well, as it is just ahead of Memorial Day weekend, when prices at the pump will play a key role in driving demand," Rystad Energy's Mukesh Sahdev said. "Preventing any oil price spikes in the summer will likely remain central to the president's agenda," he added.

Metals:

"Selling exhaustion" of gold already seems likely, TD Securities' Daniel Ghali said. Despite the U.S.-China trade deal, Chinese gold ETF inflows continue to gather steam, he said.

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Copper rose slightly amid positive sentiment. The U.S.-China trade truce has triggered further gains across the commodity complex, ANZsaid.

Base metals have ridden the resultant wave of positive market sentiment, as tariff reductions lift the global economic outlook and raise demand expectations.

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Iron ore futures rose as concerns of weaker demand eased following the de-escalation of the trade war between the U.S. and China, said ANZ.

Around 10% of China's steel output is exported overseas, which were at risk given U.S.-China trade tensions, ANZ noted. With traders' confidence lifted, futures in Singapore broke above $100 per ton for the first time in over a month, it said. Tightening supplies are back in focus.

TODAY'S TOP HEADLINES

Wall Street's fear gauge just dropped with striking speed. What historically comes next for stocks?

Extreme volatility in the U.S. stock market has evaporated, with a popular gauge of investor anxiety now sending a bullish signal after the initial tumult surrounding President Donald Trump's sweeping tariffs settled down.

The Cboe Volatility Index VIX slipped Tuesday to 18.22 , according to FactSet data. That's after closing Monday at 18.4, below its long-term average of 19.5, to slide "solidly back in bull-market territory," said Nicholas Colas, co-founder of DataTrek Research, in a note emailed Tuesday. That marked "a good step toward a more normal investment environment."

China Exults in Trump's Tariff Pullback

SINGAPORE-A U.S.-China agreement to pause bruising tariffs was cheered in Beijing as vindication for leader Xi Jinping and his defiant response to President Trump's trade war, while providing a much-needed boost to China's ailing economy.

During talks in Geneva this past weekend, U.S. and Chinese officials put the brakes on a spiraling trade war between the world's two largest economies. They agreed to a 90-day pause on most of the tariffs they had imposed on each other since April and pledged further negotiations.

Shell Faces Fresh Legal Challenge Over Development of New Oil and Gas Fields

Dutch energy giant Shell is facing a fresh legal challenge over its role in contributing to climate change, from activists seeking to halt new developments of oil and gas projects by the company.

In a statement of its intent to start legal proceedings, the Dutch arm of environmental group Friends of the Earth, Milieudefensie, said Shell was in breach of its legal duty of care under Dutch law due to its continued investment in new oil and gas fields and its inadequate climate policy for the period 2030 to 2050.

Daimler Truck Holdings Cuts Full-Year Guidance

Daimler Truck Holdings lowered its guidance for the rest of 2025, citing heightened demand uncertainty.

The German maker of trucks and buses said it now expects to sell between 260,000 and 290,000 units for the heavy-duty Class 8 market in North America, down from 280,000 to 320,000 units.

Baidu Eyes European Debut for Driverless Taxi

Chinese internet giant Baidu is preparing to test its driverless ride-hailing service for the first time in Europe, marking its latest effort to expand overseas amid rising competition at home.

The Beijing-based company has been in talks with Switzerland's PostAuto, a unit of Swiss Post that provides public bus services, to launch its Apollo Go robotaxi service in the European nation, according to people familiar with the matter. Baidu plans to set up a local entity in Switzerland in the coming months and start testing the technology by the end of this year, the people said.

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Expected Major Events for Wednesday

05:00/FIN: Apr CPI

06:00/GER: Apr CPI

06:00/ROM: Mar Industrial production

06:00/SWE: Apr CPI

06:30/HUN: Mar Construction

07:00/SPN: Apr CPI

07:00/SVK: Apr Core & net inflation development

07:00/SVK: Apr CPI

08:00/CZE: Mar Monthly Balance of Payments

12:00/POL: Mar Balance of Payments

16:59/AUT: May OPEC Monthly Oil Market Report

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-14-25 0016ET