Daily Summary, May 6

Mixed Sentiment as Fed Meeting Approaches

Global markets showed mixed performance yesterday with European indices slightly up while U.S. stocks broke their longest winning streak since 2004. The S&P 500 fell 0.6% as investors took profits ahead of tomorrow's Federal Reserve meeting. Market participants remain attentive to key themes including U.S.-China trade negotiations, economic resilience, and the Fed's monetary policy outlook.

The Stoxx 600 edged up 0.2%, with Germany's DAX leading European gains (+1.1%). Technology stocks gained momentum in Europe, rising 4.4% over the past week, while the banking sector continued to show strength. In Asia, markets are broadly higher this morning, with Hong Kong's Hang Seng up 0.7% and China's CSI 300 advancing about 1.0%.

Economic Data: Services Sector Shows Diverging Trends

U.S. services sector confidence (ISM) recovered in April following tariff-induced concerns in March. The overall index climbed to 51.6 (consensus: 50.2), with new orders and employment components showing moderate improvement. However, pricing pressures accelerated significantly, with the price index jumping to 65.1 - the highest level since January 2023. This renewed inflation pressure could potentially constrain the Fed's policy options.

In contrast, China's Caixin services PMI declined from 51.9 to 50.7 in April, affected by recent tariff announcements that dampened business confidence. Chinese companies reported concerns about rising costs while simultaneously having to lower service prices.

The Eurozone investor confidence showed improvement in May, with the index rising to -8.1% (consensus -12.5%, previous -19.5%). Though still in negative territory, the future expectations component notably improved and moved above zero, indicating cautious optimism despite ongoing trade uncertainties.

Rates, Currency and Commodities

Treasury yields continued their upward trend with the 10-year U.S. yield rising 4 basis points to 4.34%, while the 2-year yield edged up 2 basis points. European sovereign yields saw smaller movements, with German 10-year yields returning to Friday's closing levels.

EUR/USD hovered around 1.132, with limited movement ahead of the Fed meeting. USD/JPY continued its decline, trading below 144. Oil prices rebounded 1.6% this morning after yesterday's drop, with Brent crude trading around $61.20 per barrel, though concerns persist about rising production and potential demand impacts from trade tensions.

Corporate News

Stora Enso has been added to equity recommendations with a BUY rating. Analysts note that the company's current enterprise value significantly undervalues its profitable business operations based on asset valuation analysis. Stora Enso is in the process of selling approximately 12% of its 1.4 million hectare forest holdings in Sweden, which could provide a fair market comparison for its forest assets.

NoHo Partners reported Q1 results slightly below expectations, with revenue mildly underperforming in both international and domestic operations. Profitability remained stable year-on-year with operating margin at 7.4%. The company maintained its 2025 guidance, expecting Finnish operations to maintain current profitability levels and consolidated earnings per share to grow.

Kempower announced a CEO change, with Tomi Ristimäki stepping down effective June 2, to be replaced by Bhasker Kaushal, who currently leads Carrier's Sensitech business.

Outokumpu will report Q1 results on Thursday, with stainless steel delivery volumes expected to have grown approximately 13% quarter-on-quarter. Analysts anticipate a modest improvement in adjusted EBITDA to €51 million despite the challenging market environment.

UPM-Kymmene has cancelled 6 million treasury shares, which will have a positive impact on per-share metrics including earnings per share.

Looking Ahead

Today's economic calendar is relatively light, with investors likely to maintain a cautious stance ahead of tomorrow's Federal Reserve meeting. No changes to rates are expected, with the Fed funds target range anticipated to remain at 4.25-4.50%, but market participants will scrutinize communication regarding the future path of monetary policy.

Have a great day ahead, from The InvestorCaller Team!

Sources: OP Analysis, Nordea, Inderes