Chinese authorities consider trade talks

There were hints of a possible thawing in trade relations between the US and China, with Chinese authorities stating that they were considering engaging in talks. In other trade news, reports also suggest that the US is considering reducing export restrictions on Nvidia chips to the UAE, with the possibility of an announcement being made during President Trump’s upcoming visit to the country.

The April print of the US ISM manufacturing survey fell marginally, declining to a value of 48.7 from 49.0 in March. The outturn was significantly better than expected, with consensus expectations for a decline to a value of 47.9. There were improvements in several sub-component of the index, including a rise in new order to 47.2 from 45.2 in March. Although the prices paid component only saw a small rise on the month, increasing to 69.8 from 69.4, the measure remains elevated by historical standards.

Initial jobless claims in the week ending 26 April jumped by 18k, to reach 241k. The rise was in part due to regulations which allow New York school workers to apply for benefits during the winter and spring school breaks. Continuing claims rose to 1.92m in the week ending 19 April, its highest level since 2021. Separately, the Challenger report showed work force reductions totaling over 105k in April, an almost 63% y/y rise. The April figure is however lower than the level reach in March, driven by DOGE-related cuts. On a year-to-date basis there have been over 602k job cuts, the highest figure since 2020.

Saudi Arabia has announced Q1 GDP results, with a y/y growth rate of 2.7%. This was a slower pace of growth than the 4.4% seen the previous quarter, revised from the previous reading of 4.5%. The Q1 2025 growth of 2.7% was driven by the non-oil and government sectors. Government activities saw growth of 3.1%, up from 1.7% in Q4, while non-oil activities expanded by 4.2%, down from 4.8% the previous quarter. Oil production in Saudi Arabia averaged 8.95mn b/d in Q1, down 0.5% y/y, driving the oil sector to contract by 1.4% in the national accounts data.

Today’s Economic Data and Events

13:00 Eurozone CPI (Apr): forecast 2.1% y/y

13:00 Eurozone unemployment rates (Mar): forecast 6.1%

16:30 US nonfarm payrolls (Apr): forecast 135k

16:30 US unemployment rate (Apr): forecast 4.2%

18:00 US factory orders (Mar): forecast 4.5% m/m

Fixed Income

Better-than-expected ISM manufacturing data drove a rise in US Treasury yields on Thursday. The 2yr yield gained sharply, jumping 10bps to reach 3.6987%, while the 10yr yield rose by almost 6bps to 4.2176%.

The 10yr UK Gilt yield rose 4bps to 4.4799%. Other major European bonds markets were closed for a holiday.

FX

The dollar strengthened on Thursday, on the back of reports of possible trade talks, with the spot index gaining 0.8%. EURUSD fell 0.3% to 1.129, while GBPUSD declined by 0.4% to 1.3278. USDJPY gained 1.6% to 145.39 after the BoJ’s latest projections showed it will take longer than previously expected to reach the country’s inflation goals.

Commodity currencies weakened against the dollar. AUDUSD fell 0.3% to 0.6383 and NZDUSD declined by 0.47% to 0.5907. USDCAD rose 0.4% to close at 1.3854.

Equities

US equity markets made further gains on Thursday, with investor sentiment buoyed by tech-company earnings and the possibility of US-China trade talks. The Dow Jones rose 0.21%, the S&P 500 gained 0.63%, and the NASDAQ increased by 1.52%.

Local market moves were mixed on Thursday. The DFM fell 0.65%, while the ADX gained 0.2%. The Tadawul in Saudi Arabia fell 1.1%.

European equity markets were closed for a holiday.

Commodities

Moves in oil futures were mixed on Thursday. Brent fell 1.57% to reach USD 62.13/b, while WTI rose 1.77% to reach USD 59.24/b. President Trump said he would impose secondary sanctions on countries or companies that purchase Iranian oil.