The commitment between Japan and the United States to cooperate on currency constitutes a strategic shift to stabilise global financial markets against currency volatility that has seen the reverse carry trade hammer the market 2 years ago. The rapid unwinding of yen-funded investments triggered severe sell-offs in the stock market as investors were forced to liquidate global assets to cover yen-denominated debt. By synchronising interest rate communications and necessary market interventions, this partnership aims to provide the transparency needed to prevent such abrupt, cascading liquidations from reoccurring. Central to this stabilisation effort is U.S. Treasury Secretary Scott Bessent’s "3-3-3" strategy, which functions as his "whole strategy" for restoring economic order through 3% GDP growth, a 3% deficit cap, and 3 million additional barrels of oil production per day.
EQUITY
The S&P 500 and Nasdaq secured another record high at the end of first-quarter earnings season, with over 80% of S&P 500 companies exceeding expectations, generating an estimated 28.6% year-over-year profit growth. The semiconductor sector led the market as investor confidence in hardware demand grew. Besides chips, companies like Lumentum had also prospered, with their stocks rising 186% this year alone due to its role in developing co-packaged optics, a high-speed connectivity solution for AI data centres.
GOLD
Gold climbed above $4,750 before retreating as a softening dollar and escalating Middle East tensions were countered by Prime Minister Modi’s directive for Indian citizens to cease bullion purchases. Market direction now hinges on upcoming US consumer inflation data, as investors weigh whether the Iran conflict will force the Federal Reserve to maintain higher interest rates. The gold supply sector remains fundamentally active, with Barrick Mining’s 67% higher revenue.
OIL
Brent crude held its price above $100 following President Trump’s declaration that the month-old ceasefire with Iran is "on life support". Gains remain capped by an eventual weakening demand outlook as traders weigh the impact of US-China trade tensions and upcoming high-level diplomatic talks in Beijing. Market volatility remains as investors balance regional instabilities against domestic indicators, including anticipated draws in U.S. crude inventories and inflation data.
CURRENCY
The dollar index rallied on fading Middle East ceasefire hopes, driving oil prices higher and hopes for another round of rate cuts lower. While geopolitical risks pushed the Indian rupee and Indonesian rupiah to record lows, the Chinese yuan hit a three-year high ahead of the high-stakes Trump-Xi summit in Beijing. In Japan, the yen remains in an "intervention watch zone" near 157 per dollar, even with U.S. Treasury Secretary Bessent’s signals of coordinated volatility management.
