TL;DR

India-Pakistan military escalation, Russia-Ukraine talks stall, US-China tariff negotiations yield no breakthrough.

Highlights

• Pakistan and India exchanged missile and air strikes on military sites; Pakistan disabled 70% of India’s power grid in a cyberattack 119.
• Pakistan’s PM called an urgent National Command Authority (nuclear oversight) meeting, first since 2019 2.
• Russia rejected a 30-day Ukraine ceasefire, proposing direct talks in Istanbul on May 15; Western leaders threaten new sanctions 3.
• Russia launched a major drone attack on Ukraine after a brief truce; US approved transfer of HIMARS/MARS and Patriot missiles to Ukraine from Germany 45.
• US and China opened Geneva tariff talks after 145% US tariffs took effect; Trump claims “great progress,” but no deal yet 6.
• China’s April CPI fell 0.1% YoY and PPI dropped 2.7%, reflecting ongoing deflation amid weak demand and US tariffs 7.
• US Treasury warned of a potential default on $36T debt by August unless Congress acts; GOP bill ties debt hike to Trump’s agenda 8.
• Trump administration launched a Section 232 probe into imported commercial aircraft and parts from the EU, UK, and Japan, raising tariff risk 12.
• Trump and UK PM Starmer announced a preliminary trade deal, maintaining a 10% US tariff but opening $5B in new US export markets 13.
• gold has surged 85% since 2023, outperforming the S&P 500 by 33% in 2025; major banks raised gold price forecasts 16.
• Saudi Aramco Q1 profits fell 4.6% to $26B on lower sales and higher costs, highlighting pressure on Vision 2030 funding 14.
• TSMC posted record April revenue ($11.6B, +48% YoY) on AI demand and pre-tariff orders, but faces margin pressure from Taiwan dollar strength 15.

Commentary

South Asian risk has escalated sharply, with Pakistan and India engaging in direct military exchanges and Pakistan executing a large-scale cyberattack that disabled much of India’s power grid 119. The convening of Pakistan’s nuclear command authority signals heightened alert 2. These developments introduce significant volatility risk for Indian and Pakistani equities, EM FX, and could indirectly affect regional commodity flows, particularly if the situation worsens.

In Europe, the Ukraine conflict remains unresolved. Russia’s rejection of a Western-backed ceasefire and renewed drone attacks on Ukraine 34, combined with new US and German arms transfers to Kyiv (Lockheed Martin Corp. ) 5, suggest continued military activity and the likelihood of further sanctions. This maintains a volatile backdrop for energy markets, especially natural gas and oil, as the region adjusts to shifting supply chains—evidenced by Nord Stream 2’s restructuring 17 and the surge in US LNG imports to Spain 18.

US-China trade tensions remain front and center. The Geneva talks are a positive sign, but no concrete progress has been reported 6. China’s persistent deflation, with both CPI and PPI negative, reflects weak domestic demand and ongoing tariff pressure, even as Beijing eases policy 7. The new Section 232 probe into imported aircraft and the UK-US trade deal highlight the US administration’s continued use of tariffs as leverage, affecting global supply chains in aerospace (Boeing Company ) 12 and autos.

Gold ’s continued rally, outpacing equities, reflects sustained demand for safe havens amid geopolitical and macro uncertainty 16. Major banks have raised price targets, and central bank buying remains strong. In commodities, Saudi Aramco’s profit decline underscores ongoing softness in oil prices 14, while TSMC ’s record results demonstrate robust tech demand but also highlight FX and tariff headwinds for the sector 15.

Traders should monitor South Asia and Ukraine for further escalation, watch for updates from US-China and Iran talks, and track US debt ceiling negotiations. Expect volatility in EM assets, defense, energy, gold , and sectors exposed to tariff risk.