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Barclays anticipates the European Central Bank (ECB) will implement a 25 basis point rate cut in June, September, and December 2025, potentially lowering the deposit rate to 2.00%. This forecast is driven by concerns over global trade tensions affecting eurozone inflation and growth. The next ECB monetary policy meeting is set for June 5, 2025.
UBS has upgraded its rating on Caterpillar from 'sell' to 'neutral', citing reduced bearish potential due to trade de-escalation between the U.S. and China. The price target has been raised from $272 to $357, reflecting improved outlook despite ongoing demand uncertainty. The stock's current PER of 17.5x aligns with historical mid-cycle trading levels.
Despite recent positive developments in U.S.-China trade relations, uncertainty persists, with tariffs remaining significantly higher than pre-conflict levels. UBS warns that inflationary pressures may rise as companies deplete inventories, and advocates for cautious investment strategies to navigate potential economic challenges.
UBS has upgraded Caterpillar (NYSE: CAT) to Neutral from Sell, raising its price target to $357 from $272, citing improved trade relations between the U.S. and China. While downside risks to earnings have lessened, analysts caution that macroeconomic uncertainty may still impact demand. Earnings projections for 2025 have been revised to a 15-20% decline, down from 20-40%, with expectations for U.S. non-residential construction growth at 4% and Caterpillar's North American sales returning to 3-4% growth by late 2026.
The trade dispute between the US and China is easing, with a recent agreement reached with the UK, but investors are still awaiting a deal with the EU. Key economic data from China, including retail sales and industrial production, will be released early in the week, followed by purchasing managers' indices from Germany, the eurozone, and the US on Thursday. The ifo Business Climate Index and Germany's GDP data will also be significant focal points for investors.
The U.S. and China have agreed to suspend most escalated tariffs and reduce reciprocal tariffs to 10% for 90 days, allowing for continued trade discussions. This pause aims to stabilize the trade relationship, which has faced significant disruptions, while the economic impact of previous tariffs is becoming evident. Despite ongoing volatility, there is cautious optimism for a mutually beneficial agreement that could enhance trade flows and support economic recovery.
Wall Street futures indicate a positive opening, with the Dow Jones up 120 points and both S&P 500 and Nasdaq 100 futures rising. The S&P 500 surged 1.5% on Friday, bolstered by easing trade tensions between the U.S. and China, prompting Barclays to revise its U.S. GDP growth forecasts upward for 2025 and 2026.
UBS has revised its EUR/CZK forecast, projecting rates of 25.1, 25.3, 25.3, and 25.3 by Q1 2026, reflecting a more optimistic outlook for the Czech koruna due to reduced customs concerns and delayed US tariffs. Despite this positive shift, risks remain, including potential trade agreements between the EU and the US, a restrictive Czech National Bank stance, and developments in Ukraine that could further influence the koruna's strength.
Japan, India, and China are positioned favorably for a long-term trade deal with the US, according to Frederic Neumann, chief Asia economist at HSBC. He notes that Japan, as a significant US investor and military ally, is typically prioritized, while Singapore and Australia may also advance unexpectedly in negotiations.
Barclays has revised its U.S. economic growth forecasts, now expecting a 0.5% increase this year and 1.6% next year, up from previous estimates of a contraction. This change is attributed to easing U.S.-China trade tensions. However, the bank remains cautious about the euro area, predicting flat growth amid ongoing uncertainties and stalled tariff negotiations with the U.S.
Global Trade Developments
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barclays predicts three rate cuts by european central bank in 2025
05:51 19.05.2025
ubs upgrades caterpillar rating to neutral amid trade de-escalation
16:59 16.05.2025
cautious investment strategies amid ongoing trade tensions and inflation concerns
16:01 16.05.2025
ubs upgrades caterpillar amid easing trade risks and macro uncertainty
15:59 16.05.2025
trade disputes and economic data shape investor outlook for the week
15:39 16.05.2025
China and US reach temporary tariff reduction amid trade negotiations
13:29 16.05.2025
Wall Street futures rise as Barclays upgrades US economic outlook
13:24 16.05.2025
ubs revises euro to czech koruna forecast amid easing trade concerns
10:48 16.05.2025
hsbc identifies japan india and china as top trade deal contenders
10:19 16.05.2025
Barclays revises US growth forecasts amid easing trade tensions with China
08:06 16.05.2025
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