US-China trade truce: A 90-day gamble

Hey Superheroes,

Markets kicked off the week on a high as news of a US-China trade thaw buoyed investor sentiment. The ASX 200 jumped to nearly 8,400 on Monday while the S&P 500 and Nasdaq saw strong gains, with the ASX and Wall Street both set to end the week in green.

Wall Street quarterly earnings season is now approaching the tail end, with some big names having reported this week.

Let’s unpack the headlines that moved markets.

A US-China truce… for 90 days

After weeks of mounting tariffs and multiple backs-and-forths, the U.S. and China have called a temporary timeout. 

In a joint statement this week, both countries agreed to a 90-day truce that rolls back some of the steepest levies seen in recent history.

📉 From 145% to 30%

The U.S. has now agreed to pare back tariffs on Chinese goods from over 145% to a much lower 30%. 

Similarly, China’s tariffs on U.S. goods have been slashed from 125% to 10%, alongside a vague promise to “suspend or remove” non-tariff restrictions like rare earth export bans.

In total, the truce governs about US$600 billion in trade, bringing some calm to rattled supply chains and sensitive sectors.

⏳ But the clock is ticking

While both economic heavyweights have hit pause, there’s no permanent formal agreement in place. 

Key issues like semiconductor export restrictions remain unresolved and tariffs could rebound to 54% (US) and 34% (China) if no deal is reached by August. 

We’ll keep you posted in this space.

Alibaba falls on earnings miss

While Asian markets breathed a sigh of relief thanks to the temporary truce, one of Wall Street’s largest Chinese companies experienced quite the opposite.

Alibaba shares fell 7.6% overnight after the Chinese tech giant missed Q4 expectations on both revenue and profit. 

Analysts had hoped for a bounce-back amid China’s broader economic reopening – but macro headwinds and structural shifts weighed heavily on the numbers.

📉 Profit halves versus expectations

Here’s how Alibaba performed compared to analyst expectations:

• Revenue: ¥236.5B (~A$51.1B) actual vs. ¥237.2B (~A$51.2B) expected (↓0.3%)
• Net income: ¥12.4B (~A$2.7B) actual vs. ¥24.7B (~A$5.3B) expected (↓49%)
• YoY net income growth: +279%

Despite growing revenue and net income YoY, Alibaba fell short of forecasts. Revenue may have just been missed narrowly, but net income landed at just half of what was expected.

Alibaba said earnings were impacted by the disposal of subsidiaries, partially offset by stronger operating income and revaluation gains on investments.

🛍️ Core commerce solid, but tough

On the bright side, Taobao and Tmall revenue rose 9% YoY. To boost engagement and fight off growing competition, Alibaba is now investing aggressively in its “instant commerce” model – a one-hour delivery feature rolled out this month on Taobao.

Management hopes faster fulfilment will drive stickier usage and set the platform apart from rivals. 

But it comes as Alibaba faces an intense price war with competitors like PDD and JD.com, making profitability a harder battle despite rising volumes.

☁️ AI and cloud drive optimism

Cloud revenue rose 18% YoY to ¥30.1B (~A$6.5B), driven by stronger public cloud uptake and AI services. Alibaba launched Qwen 3, its latest large language model, and reported triple-digit AI product revenue growth for the seventh straight quarter.

However, AI competition in China is heating up. Rivals like DeepSeek are pushing boundaries with their own models, keeping Alibaba on the defensive. 

This will be another space to watch.

🔦  Some other things we’re shining the Spotlight on:

COINBASE HACK SPARKS SELL-OFF: Coinbase shares dropped 6% overnight after disclosing a hack that exposed sensitive customer data, including IDs and Social Security numbers. The breach was linked to rogue offshore support staff, prompting criticism over lax internal controls. While no crypto assets were stolen, the incident has reignited concerns around data governance in centralised exchanges.

APPEN MAKES A COMEBACK: Appen surged over 23% today after revealing a significantly improved financial performance at its AGM. The AI data firm returned to positive underlying EBITDA, cut costs by a further US$13.5 million and reported strong non-Google revenue growth. Appen was previously negatively affected by Google’s decision to end its contract with the company.

CORE LITHIUM DIGS IN: Core Lithium is up over 45% this week after unveiling a new study repositioning its Finniss project as a 20-year, low-cost operation with A$1.8 billion in forecast free cash flow. It also scrapped a legacy offtake deal with Yahua, freeing up potential for future funding. 

UNITEDHEALTH IN THE CROSSHAIRS: UnitedHealth has plunged over 25% after reports emerged of a U.S. Department of Justice criminal probe into potential Medicare fraud. The news compounds investor anxiety after the CEO’s abrupt exit and the company’s withdrawn outlook. 

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