Highlights

• Houthi forces struck Israel’s Ben Gurion Airport with a ballistic missile, prompting Israeli airstrikes on Yemen’s Hodeidah port and an evacuation order for Sana’a Airport; major airlines (Delta , Lufthansa, Air France) suspend Israel flights.1218
• Hamas rejects further ceasefire talks as Israel plans mass displacement in Gaza, deepening the humanitarian crisis and drawing UN condemnation.3
• U.S. escalates trade war, imposing 145% tariffs on China and 25% on Japanese autos; China and EU threaten retaliatory measures, with India facing a $100bn deficit due to diverted Chinese exports.4
• EU prepares tariffs on €100bn of U.S. goods if trade talks fail, responding to U.S. threats to tax €549bn of EU exports.5
• Gold surges over 26% YTD, with a $100 daily jump on tariff and geopolitical risks; markets await Fed policy signals.6
• Taiwan dollar jumps 5% intraday on U.S. trade deal speculation, sparking volatility across Asian FX and prompting central bank intervention.8
• HKMA intervenes, buying $7.8bn USD to defend HKD peg; Hibor rates fall as HKD tests strong end of trading band.7
• Bank of England signals quarter-point rate cut this week, with possible further easing in June, citing tariff-driven inflation and growth concerns.9
• China’s services PMI drops to 7-month low (50.7) as U.S. tariffs hit sentiment; export orders and employment decline.10
• EU to propose full ban on Russian gas imports by 2027, including existing contracts, pending alternative LNG supply deals.11
• Russia faces $42bn budget deficit, 0.3% GDP drop, and falling Urals oil prices; EU mulls further sanctions on Russian shadow fleet.16
• DoorDash to acquire Deliveroo for £2.9bn ($3.85bn), expanding global food delivery reach.19
• Sumitomo Mitsui in advanced talks to buy up to 51% of Yes Bank; shares rally despite no RBI approval yet.20
• Brazil’s central bank expected to hike Selic rate to 14.75%, highest globally, amid inflation concerns.15
• UBS to pay $511m after Credit Suisse pleads guilty to U.S. tax evasion charges; negative impact expected on UBS results.17
• Ukrainian drones disrupt Moscow airports ahead of Victory Day; Russia intercepts 105 drones nationwide.13

Commentary

Markets are navigating a complex landscape of escalating geopolitical risks, trade tensions, and currency volatility. The direct Houthi missile strike on Israel’s Ben Gurion Airport and Israel’s subsequent retaliatory strikes on Yemen mark a dangerous regional escalation, with immediate impacts on aviation, shipping, and energy security. The suspension of major international flights to Israel, including by Delta , underscores growing operational risks for global carriers and could further disrupt supply chains, particularly if Red Sea shipping faces renewed threats.118 The deepening Gaza crisis and Hamas’s rejection of ceasefire talks add to the region’s instability, keeping a bid under safe-haven assets.3

Trade wars are back in focus as the U.S. sharply increases tariffs on China and Japan, with China and the EU threatening significant retaliation.45 This has already triggered a sharp contraction in global trade flows, supply chain disruptions, and negative revisions to GDP forecasts across the U.S., China, and Japan.4 The EU’s readiness to impose tariffs on €100bn of U.S. goods further raises the risk of a global trade recession.5 India, meanwhile, is grappling with a surge in cheap Chinese imports, exacerbating its trade deficit and pressuring domestic industries.4

Currency markets are highly reactive: the Taiwan dollar’s historic surge and the HKMA’s intervention to defend the HKD peg highlight the fragility of Asian FX amid shifting capital flows and trade realignment.78 The Bank of England’s signal for an imminent rate cut—potentially the first of several—reflects the growing urgency among central banks to cushion their economies from tariff-induced inflation and slowing growth.9 China’s services PMI hitting a seven-month low, with export orders and employment falling, points to further downside risks for Asian equities and commodities.10

Commodities are responding to these cross-currents: gold has surged over 26% YTD, outperforming equities as investors seek shelter from geopolitical and economic volatility.6 The EU’s move to ban Russian gas imports by 2027 will keep energy markets on edge, especially as Russia faces a ballooning budget deficit and falling oil revenues.1116 Meanwhile, Brazil’s central bank is set to raise rates to a world-leading 14.75%, underscoring inflation risks in emerging markets.15

Traders should watch for further escalation in the Middle East, any signs of de-escalation or new trade negotiations among the U.S., China, EU, and Japan, and central bank policy signals—especially from the Fed and Bank of England. FX volatility, safe-haven flows, and commodity price swings are likely to persist. In equities, M&A activity (e.g., DoorDash /Deliveroo, Sumitomo Mitsui stake talks) provides some bright spots, but the broader risk environment remains skewed to the downside.1920 Stay nimble and monitor cross-asset correlations for signs of stress or opportunity.