HONG KONG: PMIs in Hong Kong Up But Still Contracting

The ESM5 had a Friday night range of 5633.50 - 5724.75, Asia is currently trading 5681. The market had another leg higher on the back of a stronger than expected Payrolls print(177k). 

• Asia has given back some of these gains early in our session as Trump says - “NO PLANS TO TALK TO XI THIS WEEK, CHINA AND US OFFICIALS TALKING ABOUT 'DIFFERENT THINGS'”.(per BBG)
• Berkshire Hathaway has been a net seller of stocks for ten consecutive quarters, trimming or exiting positions. At the 2025 annual shareholder meeting, Buffett explained that the firm is waiting for “extraordinarily attractive” opportunities, preferring to hold cash rather than overpay in an overheated market. The company’s cash pile has increased to an unprecedented $348 billion.
• The Stock market has seemed to price in the fruition to a lot of positive scenarios. The reality still feels a little way off with tariffs still high and trade deals not yet finding a resolution. The market will need to start seeing some specifics on these deals this week to build on this bounce.
• ISM Services PMI tonight will be important and will dictate price action tonight. Any move back towards a contraction will get the market worried about growth once more.
• The SPX has had a big bounce from its lows on 4800 handle, but we are approaching some key resistance between 5600-5800, the longer-term sellers should be active around here.
• Data: ISM Services PMI

Fig 1: SPX Weekly Chart

Source: MNI - Market News/Bloomberg

• The US has announced a reciprocal tariff rate of 46 percent on all Vietnamese products, a move that is already showing to significantly impact Vietnam’s trade-dependent economy.
• Whilst Vietnam's PMI has trended lower since the end of last year the pace of the April result looks likely to be a direct impact from tariff threats.   
• Falling to +45.6 from +50.5 in March it is one of the largest one month declines since COVID
• Vietnam had tried to change with tariffs on US goods being reduced and had even pushed through a regulatory change to  allow Elon Musk’s SpaceX to launch its Starlink in the country.
• Today's PMI however shows the real impact on the economy despite suggestions that tariffs may not go ahead and comes at a time when China's leader has been visiting nations such as Vietnam to sure up relations and offer alternatives.  
• SE nations PMIs for April have largely collapsed and how long it lasts will directly impact these export orientated economies.   

TYM5 is trading 111-12, up 0-07 from its close. 

• The US 10-year yield closed in the US around 4.3083%, it's a holiday in Japan today.
• The Wall Street Journal via BBG - "Beijing is considering ways to address the Trump administration’s gripes over China’s role in the fentanyl trade... potentially offering an off-ramp from hostilities to allow for trade talks to start.”
• “Jerome Powell won’t be fired as Fed chair ahead of his scheduled exit, Trump suggested as he again urged the “already late” central bank to cut rates.”(per BBG)
• MNI Economist on FOMC Decision - “The FOMC will extend its series of rate holds to a third meeting in May, keeping the Fed funds target rate at 4.25-4.50% while maintaining its forward guidance in the Statement. At the press conference, Chair Powell is likely to warn about the risks to both sides of the dual mandate. Don’t anticipate any meaningful changes in the Statement, though any signal that the Fed is looking seriously at “soft” survey data to assess the outlook could be significant.
• The 10-year Yield range seems to be 4.10% - 4.45%, with the pivot the 4.30% area for now.
• Data: ISM Services PMI