The risk sentiment of the continuous decline of the US dollar has cooled down, and the global market is waiting for the confirmation of the direction of fundamentals

The US dollar has weakened for the second consecutive trading day, and global stock markets have adjusted after a continuous rise, indicating that the market rebound previously driven by the suspension of US China tariffs is gradually cooling down.

After experiencing a significant increase in risk assets at the beginning of this week, investors have turned to wait-and-see and begun to reassess the strength of economic fundamentals support. As of Friday's opening, global stock market indices have risen for seven consecutive days, approaching the record high set in February.

The trend of Asian market is divided: Taiwan and Australia stock markets rose, South Korea was in shock, while Japan and Chinese Mainland markets fell. Alibaba's quarterly financial report fell short of market expectations, causing a 6.7% drop in the Hong Kong stock market and dragging down the overall market.

Vey Sern Ling, Managing Director of Ruilian Bank, pointed out that "the market currently lacks a clear direction. Previously, the suspension of US China tariffs boosted market sentiment, but investors have high expectations for Chinese technology stocks and are also waiting for more fundamental support. Alibaba's financial report did not meet expectations, becoming the trigger for market correction." | | | US stock index futures have hardly changed. The S&P 500 index rose 0.4% on Thursday, mainly benefiting from the previously weak high dividend defense sector. In terms of technology stocks, Meta led the decline among large technology stocks due to rumors of a delay in the release of its flagship AI model.

Despite the recent strong performance of the stock market, the rapid increase has made the market begin to ignore the previous adjustment pressure. The S&P 500 is only about 4% away from its historical high, and the Nasdaq 100 has also rebounded from the bear market edge back to the technical bull market range. This optimistic sentiment is heating up against the backdrop of short-term easing in US China relations, while the White House is sending a more moderate trade negotiation signal to the outside world.

Lamar Villere, portfolio manager of Villere&Co., said, "Although we may not be overly optimistic, we may refocus on corporate fundamentals this summer. If you had told me a month ago that the market had rebounded significantly at this time, I would have been incredulous." | | | In the foreign exchange market, the US dollar weakened against most major currencies, while safe haven currencies such as the Japanese yen and Swiss franc strengthened. The yield of 10-year US treasury bond bonds continued to decline, continuing the trend of 10 basis points lower the previous day. Traders generally expect the Federal Reserve to cut interest rates twice this year.

The strengthening of the bond market is directly related to a series of weak economic data. In April, producer prices in the United States experienced the largest decline in five years, retail sales slowed down, factory output fell for the first time in six months, the New York manufacturing index declined, and confidence in home builders also declined. These signs indicate that companies are absorbing the cost impact of some tariffs on their own.

Frances Cheung, head of interest rate strategy at OCBC Bank, stated that the market trend reflects the current "relatively mild" economic background and believes that investors have high expectations for the Federal Reserve to initiate interest rate cuts within this year, "but the Fed still needs more data to confirm the rationality of the policy shift.

In terms of the bond market, yields on 2- to 10-year US Treasury bonds generally fell by over 10 basis points on Thursday. The yield of 30-year US Treasury bonds once approached 5% during trading, indicating that investors still have divergent views on the trend of long-term interest rates.

CreditSights Chief Strategist Zachary Griffiths believes that "weak economic data is positive for the bond market," and he pointed out that Thursday's data further strengthened signals of an economic slowdown.

In the Asia Pacific region, US President Trump revealed that India has expressed willingness to reduce tariffs on US goods to avoid encountering additional import taxes in a new round of negotiations. India is the first country to proactively restart trade negotiations since Modi's visit to the United States in February.

In terms of the Japanese economy, the latest data shows that the country's GDP recorded negative growth again this quarter, indicating that its economy was already showing signs of fatigue before Trump's new tariffs officially came into effect. The Japanese yen rose 0.2% against the US dollar on Friday, closing at 145. Bank of Japan policy member Toyoaki Nakamura will deliver a speech later that day.

The profound impact of tariff measures on the global economy remains to be observed. Federal Reserve Vice Chairman Michael Barr stated that the fundamentals of the US economy are stable, but also warned that supply chain disruptions caused by tariffs could slow down economic growth and exacerbate inflationary pressures.

JPMorgan CEO Jamie Damon is more cautious. He stated at the Paris Global Market Conference that although he does not want to see a recession, the possibility cannot be ruled out. If a recession really comes, we cannot predict its intensity and duration. "| | | The Investment Research Institute of Wells Fargo believes that despite short-term uncertainty, the stock market is still expected to continue to improve in 2025 with the prospects of US economic growth recovery, clearer tariff policies, and steady improvement in corporate profits.

In terms of commodity markets, crude oil prices rebounded slightly on Friday. Previously, influenced by Trump's statement that the US Iran nuclear deal was "close to being reached", oil prices plummeted on Thursday. Gold has slightly fallen, reflecting a slight cooling of market risk aversion.