After nearly three years, France’s manufacturing sector has experienced an increase in output, according to a survey published on Friday.

Increased military spending could potentially balance out the uncertainties caused by U.S. tariffs.

The final purchasing managers index (PMI), a key indicator of economic health in the manufacturing sector, rose to 48.7 in April from 48.5 in March. This information was compiled by S&P Global for the HCOB.

It is worth noting that the PMI is an important economic indicator, measuring the activity level of purchasing managers in the manufacturing sector.

A PMI above 50 represents an expansion when compared to the previous month, while a PMI under 50 represents a contraction.

The rise to 48.7, though still under 50, marks a significant improvement for France’s manufacturing sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Leika Kihara and Makiko Yamazaki

TOKYO (Reuters) -Japan could use its $1 trillion-plus holdings of U.S. Treasuries as a card in trade talks with Washington, its finance minister said on Friday, raising explicitly for the first time its leverage as a massive creditor to the United States.

While Finance Minister Katsunobu Kato did not threaten to sell holdings, his remarks touch on a critical concern global investors have about what Japan and China, the two largest owners of U.S. government debt, might do in seeking tariff concessions from the Trump administration.

The Treasury market saw a huge global sell-off last month after U.S. President Donald Trump’s decision on April 2 to slap sweeping tariffs on trading partners, including key strategic allies such as Japan.

Kato said in a television interview the primary purpose of Japan’s U.S. Treasury holdings - the largest in the world - is to ensure it has sufficient liquidity to conduct yen intervention when necessary.

"But we obviously need to put all cards on the table in negotiations. It could be among such cards," he said when asked whether Japan, in trade talks with the U.S., could reassure Washington it will not sell its Treasury holdings in the market.

"Whether we actually use that card, however, is a different question," Kato added.

The U.S. Treasury Department did not immediately respond to Reuters’ request for comment outside of office hours.

Kato’s remarks contrast with those he made last month, when he ruled out using Japan’s U.S. Treasury holdings in trade negotiations.

On Friday, Kato declined to comment on whether Tokyo’s U.S. bond holdings came up in his bilateral meeting with Treasury Secretary Scott Bessent last week.

However, he said the huge market sell-off in Treasuries in April likely affected Washington’s approach in talks with Japan.

Japan’s and China’s presence in the Treasury market makes them a huge point of attention whenever U.S. yields spike, although little is known about their trading activity.

While Japan, as a close U.S. ally, is seen as less likely to use its Treasury holdings as a bargaining tool, some analysts speculate that China may liquidate its holdings as a "nuclear" option as trade tensions with the U.S. escalate.

So far, there are few signs of such a sell-off. Foreign holdings of U.S. Treasuries rose 3.4% in February, data from the Treasury Department showed last month, with the two largest owners, Japan and China, building up their U.S. debt positions.

But even hints of their huge market presence could be a key weapon for Japan, which otherwise has little leverage due to its economy’s huge reliance on the U.S. car market.

"Playing the card early, while the U.S. bond market is in the minds of the administration after recent weeks, is a smart move," said Martin Whetton, head of financial markets strategy at Westpac in Sydney. "They don’t have to do anything. But they can put themselves in a solid position to negotiate. It is, after all, the art of the deal."

Japan’s top trade negotiator, Ryosei Akazawa, said he deepened talks on trade, non-tariff measures and economic security cooperation in his second round of talks with Bessent in Washington on Thursday. He also said the two sides hoped to hold their next meeting in mid-May.

USE ALL TOOLS

The U.S. Treasury sell-off in April was among factors that led Trump to announce a 90-day pause on his "reciprocal" tariff plan, with Bessent likely playing a key role, according to sources close to the White House.

Aside from the tariffs, Japan has also faced criticism from Trump that it was intentionally weakening the yen to give its exports a trade advantage - an accusation Tokyo denies.

Kato said his meeting with Bessent last week did not discuss any desirable exchange rate or a possible framework to control currency moves.

Analysts say Japan’s huge Treasury holdings can also be used as a bargaining tool in any differences Washington has with Tokyo over currencies.

"(It) should be a card if not an ace card for the negotiation," said Naka Matsuzawa, chief macro strategist at Nomura Securities in Tokyo. "It would work not only to flatten the (bond yield) curve in the two countries but also avoid other outrageous requests such as artificial yen appreciation."

But there are at the same time limits to such threats as unloading Treasuries would hurt Japan and China by disrupting markets and causing huge losses on their remaining holdings.

Given the hit Japan and China themselves would suffer from selling their U.S. Treasury holdings, the idea was an "absolute non-issue in the past," said Nathan Sheets, former U.S. undersecretary for international affairs who is currently global chief economist at Citi Research.

"But countries have to use all the tools they have," he said. "The fact that we need to think about something like that shows the world we’re in."

SEOUL (Reuters) -South Korea’s consumer prices rose 2.1% in April over a year, slightly above market expectations, official data showed on Friday.

That compared with a 2.1% rise in March and 2.0% tipped in a Reuters poll of economists.

The consumer price index rose 0.1% on a monthly basis, after rising 0.2% in the previous month. It was the slowest since November 2024.

The S&P 500 rose Thursday as robust earnings from Microsoft and Meta Platforms, provided fresh signs that the artificial intelligence boom is far from over, fueling gains across stocks. 

At 4:00 p.m. ET (20:00 GMT), the Dow Jones Industrial Average gained 82 points, or 0.6%, the S&P 500 index added 0.6%, and the NASDAQ Composite gained 1.5%.

Microsoft, Meta surge after strong Q1 results

Meta Platforms (NASDAQ:META) shares jumped more than 4% after quarterly results and guidance topped consensus. The parent company of Facebook and Instagram anticipated full-year 2025 capital expenditures in the range of $64-$72 billion, increased from their prior guidance of $60-65 billion. 

"We believe the higher level of investment is justified, as the infusion of AI capabilities across the company’s ad stack and content recommendation engines are already driving tangible benefits for Meta’s Family of Apps and Reality Labs," Wedbush said in a Thursday note.

Microsoft (NASDAQ:MSFT) shares surged more than 7% after the software giant’s first-quarter revenue increased 13%. It also forecast cloud-computing revenue growth of 34% to 35% for the fiscal fourth quarter.

"Microsoft surprised with a much better-than-expected top-line performance, saying that through late-April they had not seen any material demand pressure from the macro/tariff issues," RBC said in a Thursday note.

There are more corporate earnings to digest Thursday, with the highlights being from iPhone-maker Apple (NASDAQ:AAPL) and e-commerce titan Amazon (NASDAQ:AMZN) after the close.

Elsewhere, McDonald’s (NYSE:MCD) stock fell more than 1% after the fast food giant posted a surprise decline in first-quarter global comparable sales, with CEO Chris Kempczinski adding the company was navigating the "toughest of market conditions."

Eli Lilly (NYSE:LLY) stock dropped 11% after the drugmaker posted disappointing sales of its popular weight-loss drug, Zepbound.

Biogen (NASDAQ:BIIB) stock rose slightly after the drugmaker beat first-quarter profit and revenue expectations, as strong demand for its rare disease drugs helped offset declining sales of its multiple sclerosis drugs.

Estee Lauder (NYSE:EL) stock fell more than 11% after flagging ongoing challenges in its travel retail business and subdued consumer sentiment in Asia.

Initial claims rise

The number of Americans filing new applications for unemployment benefits increased more than expected last week, as initial claims for state unemployment benefits jumped 18,000 for the week ended April 26, the Labor Department said on Thursday. 

This potentially hinted at a pick-up in layoffs from tariffs, which weighed on the economy in the first quarter, ahead of Friday’s key nonfarm payrolls report.

The economy contracted last quarter for the first time in three years, swamped by a flood of imports as businesses tried to avoid duties from President Donald Trump’s tariffs.

(Ayushman Ojha contributed to this article.)

By Siyi Liu

SINGAPORE (Reuters) -Oil prices extended declines on Wednesday and were set for their largest monthly drop in more than three years as the global trade war eroded the outlook for fuel demand, while fears of mounting supply also weighed.

Brent crude futures fell by 75 cents, or 1.17%, to $63.50 per barrel by 0641 GMT. U.S. West Texas Intermediate crude futures dropped 79 cents, or 1.31%, to $59.63 a barrel.

Brent and WTI have lost 15% and 17% respectively so far this month, the biggest percentage drop since November 2021.

Both benchmarks slumped after U.S. President Donald Trump’s April 2 announcement of tariffs on all U.S. imports. They then sank further to four-year lows as China responded with its own levies against U.S. imports, stoking a trade war between the top two oil-consuming nations.

Trump’s tariffs on imports into the U.S. have made it probable the global economy will slip into recession this year, according to a Reuters poll.

China’s factory activity contracted at the fastest pace in 16 months in April, a factory survey showed on Wednesday.

Worries about demand amid the trade war have weighed on investor sentiment, said ANZ bank senior commodity strategist Daniel Hynes.

"There are also concerns that recent strength in U.S. economic data was only temporary, due to stockpiling ahead of the tariffs that now appears to be abating," he added.

U.S. consumer confidence slumped to a nearly five-year low in April on growing concerns over tariffs, data showed on Tuesday.

Recent signs of a de-escalation in the trade wars, including a pair of orders Trump signed on Tuesday to soften the blow of his auto tariffs, eased some jitters among global investors.

That said, analysts believe the oil market will stay under pressure as the Trump administration continues to prioritise lower oil prices to manage inflation.

Oil prices were also undermined by fears of mounting supply from the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+.

Several OPEC+ members will suggest a ramp-up of output hikes for a second straight month in June, sources told Reuters last week. The group will meet on May 5 to discuss output plans.

On the supply front, {{8849|U.S. crcrude oil inventories rose by 3.8 million barrels last week, market sources said on Tuesday citing American Petroleum Institute data. [API/S]

U.S. government data on stockpiles is due at 10:30 a.m. ET (1430 GMT) on Wednesday. Analysts polled by Reuters expect, on average, an 400,000 barrel increase in U.S. crude oil stocks for last week. [EIA/S]

By Chen Aizhu and Trixie Yap

SINGAPORE (Reuters) -China’s used cooking oil (UCO) exports to the United States, its largest buyer, are set to plunge in coming months due to steep tariffs, forcing sellers to divert shipments to Europe and elsewhere, industry players said.

With Trump administration is now charging 125% import tariff on Chinese UCO from this month. Shipments to the U.S., valued at $1.1 billion last year, are tumbling with the last cargoes sailing around late March and early April before trade grinds to a halt, said three China-based UCO traders.

China’s UCO exports hit an all-time high last year at nearly 3 million metric tons or worth $2.64 billion, according to Chinese customs.

"For the time being, arbitrage to the U.S. is closed and we think it will remain so for the medium term," said Richard Dickinson, Shanghai-based head of trading Amarus Trading, one of the largest dealers of Chinese UCO.

"Some of the exports will be diverted to Europe and new markets in Asia such as Korea, Thailand, Malaysia and India."

At least four new Sustainable Aviation Fuel facilities, which use UCO as an ingredient and totalling at least 700,000 metric tons per year of production capacity, have started up or will begin operation by this year in Thailand, Malaysia and Japan, according to industry insiders.

Exports to the U.S. have fallen since last December as Beijing removed tax rebates for UCO exports and also due to the new U.S. clean fuel tax policy that discourages the use of imported UCO, and the latest tariffs only exacerbates the situation, a shipper of the fuel said.

Most Asian stock markets were little changed on Wednesday as investors digested a series of key economic indicators, chiefly weak factory activity data from Japan and China, and Australian CPI inflation.

Meanwhile, Indian stocks edged lower amid rising geopolitical tensions with Pakistan, while equities in South Korea fell amid heightened political unrest in the country.

Regional markets took few cues from a positive overnight close on Wall Street. Major U.S stock indexes closed with modest gains on Tuesday, while futures tied to these benchmark indexes fell in Asian trading on Wednesday as, globally investors awaited key PCE price index data and major corporate earnings due in the coming days.

Trump Tariffs slam China, Japan industrial activity

Fresh economic data from China and Japan revealed a slowdown in industrial activity, largely attributed to escalating U.S. tariffs under President Donald Trump’s administration. 

China’s official manufacturing Purchasing Managers’ Index (PMI) fell to 49.0 in April, down from 50.5 in March, indicating a contraction in factory activity. 

This decline marks the first contraction since December 2023 and is attributed to the intensifying trade war with the U.S., which has imposed a whopping 145% tariff on Chinese goods. 

The Caixin reading also reflected a sharp drop in overseas orders following Trump’s tariffs.

The downturn has prompted calls for economic stimulus as the impact of these tariffs becomes more evident. 

China’s Shanghai Composite was muted, while the Shanghai Shenzhen CSI 300 were also unchanged. Hong Kong’s Hang Seng edged 0.3% higher

Meanwhile, Japan’s industrial production decreased by 1.1% m-o-m in March, surpassing market expectations of a 0.5% drop. 

These reductions are linked to disrupted auto part supplies, a consequence of the U.S. imposing a 25% tariff on car and truck imports and a temporary 10% tariff on all Japanese goods. 

Japan’s Nikkei 225 index was largely muted while TOPIX rose 0.4%, as markets returned after a public holiday.

Australia Q1 CPI supports RBA rate cut bets

Data on Wednesday showed that Australian consumer price index inflation grew slightly more than expected in the first quarter, while underlying inflation fell back into the Reserve Bank of Australia’s target range of 2%-3%, supporting the case for a rate cut.

The RBA is expected to cut interest rates by 25 basis points at its next policy meeting on May 20.

Australia’s S&P/ASX 200 edged 0.3% higher.

Other Asian stock indexes only edged higher despite easing U.S. tariff tensions.

Nifty 50 down amid Indo-Pak tensions; KOSPI down on political unrest

India’s Nifty 50 fell 0.2% at open.

Pakistan’s Information Minister Attaullah Tarar stated on Wednesday that the country has reliable intelligence indicating India may carry out a military strike within the next 24 to 36 hours.

This development comes amid growing tensions between the two nuclear-armed neighbors, after India alleged that Pakistani elements were involved in last week’s attack that killed 26 people at a tourist site in Indian Kashmir.

Meanwhile, South Korea’s KOSPI declined after media reports showed that South Korean prosecutors were searching the private residence of ousted President Yoon Suk Yeol.

Yoon was ousted after he declared a martial law in South Korea in December last year.

Chinese manufacturing activity shrank more than expected in April, government data showed on Wednesday, as local producers were slammed by a sharp drop in overseas orders after U.S. President Donald Trump imposed steep trade tariffs against Beijing.

A separate, private survey showed China’s manufacturing sector still remained in expansion, albeit at a much slower pace.

The official manufacturing purchasing managers index read 49.0 in April, compared to expectations of 49.7. The print also fell sharply from the 50.5 seen in the prior month.

A reading below 50 indicates a contraction, with China’s manufacturing PMI now back in contraction territory after two months of gains. 

The drop in manufacturing activity came as China became embroiled in a bitter trade war with the U.S. through April. Trump imposed 145% tariffs on Chinese goods, while China retaliated with a 125% levy on American goods.

But the U.S. tariffs are expected to largely stymie American demand for Chinese goods- a trend that bodes poorly for Chinese manufacturers, given that U.S. exports represent a major revenue stream. 

This notion drove April’s weakening in activity, as new business orders were slashed across the board. 

China’s non-manufacturing activity also disappointed in April, with the non-manufacturing PMI rising 50.4 against expectations for a print of 50.6. The reading also fell from 50.8 in the prior month. 

This brought China’s composite PMI down to 50.2 in April from 51.4 in March, with the print now barely remaining in expansion territory.

Wednesday’s PMI reading highlights the impact of steep U.S. tariffs on China’s manufacturing powerhouses, as they are cut off from American markets. But the country has so far shown little intent in trade talks with the U.S., having recently denied Trump’s claims that negotiations were taking place.

Caixin manufacturing PMI remains in expansion

Separately, a private survey of China’s manufacturing sector read stronger than expected for April, remaining in expansion albeit at a sharply slower pace from the prior month.

The Caixin manufacturing PMI read 50.4 in April, higher than expectations that it would shrink to 49.8. The reading still fell from the 51.2 seen in the prior month.

The Caixin reading also reflected a sharp drop in overseas orders following Trump’s tariffs. This resulted in Chinese industries operating at lower capacities, which in turn spurred job shedding in the sector.

"The U.S. tariff hikes took a toll on external demand, with new export orders declining at the fastest rate since July 2023... The ripple effects of the ongoing China-U.S. tariff standoff will gradually be felt in the second and third quarters. As such, policymakers should be well- prepared, with action taken sooner rather than later," Wang Zhe, Senior Economist at Caixin Insight Group said in a statement. 

The Caixin data differs from the government data, in that while the government PMI covers larger, state-run industries in the north, the Caixin PMI focuses on smaller, private companies in the South. Investors usually use both surveys to gain a broader picture of the Chinese economy.

Wednesday’s data shows China’s economy clocked a weak start to the second quarter of 2025 after some improvement earlier in the year.

The soft economic data furthers the case for more government stimulus, with Beijing having outlined both fiscal and monetary measures to help support the economy.

The S&P 500 closed sharply higher Tuesday for the sixth-straight day, underpinned by falling Treasury yields and signs of flexibility on tariffs from the White House as well as signs of further trade deals just as the earnings season continues to heat up. 

At 4:00 PM ET (21:00 GMT), the Dow Jones Industrial Average gained 300 points, or 0.8%, while the S&P 500 index gained 0.6%, and the NASDAQ Composite gained 0.6%. 

U.S. President Donald Trump, who is set to sign an order on Tuesday, easing some of his 25% tariffs on cars and car parts, said the reprieve will offer automakers short term help.

"We just wanted to help [automakers] enjoy this little transition, short-term. If they can’t get parts, you know, it has to do with a very small percentage. If they can’t get parts, we didn’t want to penalize them," Trump said.

In another positive note on the trade front, Commerce Secretary Howard Lutnick told CNBC that the U.S. was close to announcing a major trade deal.

The move comes a day after Secretary Bessent in an interview with CNBC on Monday, said many countries have offered "very good" tariff proposals to the U.S.

However, this positive tone was undermined by the White House slamming Amazon for reportedly planning to display the cost of President Donald Trump’s tariffs next to the total price of products on its site.

“This is hostile and political act by Amazon,” White House press secretary Karoline Leavitt said at a press briefing earlier Tuesday.

Treasury yields drop as consumer confidence falls

Treasury yields slumped on Tuesday after the Conference Board announced consumer confidence fell 7.9 points to 86.0 in April.  This was the lowest reading since May 2020 and below the 87.7 expected by economists polled by Investing.com.

"In the details of the report, a gauge of current conditions slipped 0.9 points to 133.5, a seven-month low, and a gauge of future expectations plunged 12.5 points to 54.4, the lowest reading since 2011," Stifel said in a Tuesday note.

Elsewhere, the Atlanta Fed’s GDP Now for Q1 fell to -2.7%, from -2.5%, and the JOLTS Job Openings for March fell to 7.192 million from 7.48 million.

Investors are also bracing for a series of other U.S. economic data releases later this week, including the Federal Reserve’s preferred inflation gauge – the PCE price index, and the monthly U.S. jobs report.

Busy earnings schedule awaits "megacaps"

Markets also awaited earnings from the “magnificent seven” megacaps, including Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META), this week.

Microsoft and Meta are set to report on Wednesday, while Apple and Amazon are scheduled to report their earnings on Thursday.

This is set to be a very busy earnings week, with about one-third of S&P 500-listed firms slated to post results this week.

Earlier Tuesday, General Motors (NYSE:GM) stock fell 0.7% despite the auto giant reporting first-quarter earnings and revenue that topped analyst expectations, as it suspended its guidance and froze share buyback program in response to new Trump tariffs.

Coca-Cola (NYSE:KO) stock gained 0.8% after the soft drinks giant reported a drop in first-quarter revenue, even after price hikes.

Spotify (NYSE:SPOT) stock fell more than 3% after the streaming music service unveiled a current-quarter guidance for monthly active users that was below expectations.

United Parcel Service (NYSE:UPS) stock slipped 0.5% lower even after the delivery giant reported better-than-expected first-quarter 2025 results, with adjusted earnings and revenue surpassing analyst estimates.

Royal Caribbean (F:RCL) stock was flat after the cruise operator raised its annual profit forecast on Tuesday, benefiting from strong bookings for its premium sailings to regions such as Alaska and Japan.

(Ayushman Ojha and Peter Nurse contributed to this article.)