Five things you need to know

• Donald Trump said the US had reached a trade agreement with the UK on Thursday, marking the first of his promised deals. The White House is due to release details of the agreement at 10 a.m. Washington.
• The Trump administration also plans to rescind some Biden-era AI chip curbs, delivering a boost to chipmaker shares. The US is working on replacement regulations, according to people familiar with the matter, that aim to strengthen controls on chips abroad. 
• US stocks futures rallied and Bitcoin powered closer to $100,000. The dollar added 0.2% against a basket of peers, benefiting from the Federal Reserve’s signal that it’s in no hurry to ease monetary policy.
• Even so, companies continue to signal economic pain from tariffs. Toyota expects a ¥180 billion ($1.3 billion) hit to operating income. Danish container giant A.P. Moller-Maersk lowered its forecast for the global transport market.
• Pakistan’s army said it shot down 12 drones from India, a sign that hostilities between the two nuclear-armed neighbors continue to escalate. It’s the sixth time that the two countries have hit each other with military strikes since 1947. India’s Nifty 50 slipped 0.4% and Pakistan’s KSE-30 plunged 7%.  

Junk debt revival

Just weeks after coming to a halt because of Donald Trump’s tariff bombshell, the junk-debt market is starting to crank back into gear again. From Italian sneaker brand Golden Goose to German chain Motel One, even some of the raciest types of corporate lending are suddenly back in vogue.

A spate of high-yield bond deals kicked off the action at the end of April — and now loan issuers are joining the party.

Whether the celebrations last depends on the US president’s future trade pronouncements, but investment bankers are seizing on a welcome bit of respite after a number of deals were pulled or put on hold. Some feared they might be stuck with unsellable debt, as happened in the past when junk markets froze. It’s a temporary reprieve, too, for the midsized companies that rely on borrowed money, doubly so as tariff mayhem threatens economic harm.

A pair of Swarovski jewel-encrusted sneakers at a Golden Goose store. Photographer: Jason Alden/Bloomberg

Much of the surge in activity is taking place in Europe on the expectation that interest rates will fall faster there, and as tariff-scarred American investors look to diversify. But there are signs of life in the US as well.

Among the offerings are the chancier varieties of deals that show investor demand is running hot. This includes dividend recapitalizations, where companies raise cash for payouts to their private equity owners, and payment-in-kind (or PIK) notes, where businesses defer their interest charges.

“The high-yield market has come back with a vengeance and last week was one of the busiest of the year,” according to Daniel Rudnicki Schlumberger, JPMorgan’s head of leveraged finance for EMEA. — Claire Ruckin and Rachel Graf

On the move

• Arm Holdings falls 11% in premarket trading, after the chip-design company gave a disappointing sales forecast for the current quarter.

• Crypto stocks are getting a boost from Bitcoin’s rally. The big gainers: Strategy +4.7%, Hive Digital +2.9%, Hut 8 +5.5%, Bitfarms +2.9%, Cipher Mining +6.6%, Bit Digital +5.5%, Riot Platforms +4.5%, MARA Holdings +4.7%, Coinbase +4.1% and CleanSpark +5.9%.

• Fortinet tumbles 10% after the security software company reported results that missed elevated expectations. Watch cybersecurity stocks: Palo Alto Networks, Zscaler, SentinelOne, Cloudflare and Crowdstrike.

• AppLovin jump 14%. The AI-powered advertisement platform reported results that beat expectations and agreed to sell its video-games unit to London-based Tripledot Studios. 

• Carvana rises 4.5% as the online used-car retailer doubled its profits in the first quarter.

• Eli Lilly (-1.4%), AbbVie (-1.4%), Moderna (-0.8%), Bristol-Myers Squibb (-1.1%) and Gilead Sciences (-1.1%). Shares of drugmakers are dropping after a report that Trump plans to revive an effort to dramatically slash drug costs.

Japan’s youth embrace risk

When it comes to investing, attitudes in Japan are undergoing a sweeping generational shift driven by the return of inflation and the rollout of a financial education program.

Younger people are putting more of their money into riskier assets, breaking with the conservatism of their parents and grandparents, who often favored cash savings. The change is helping to fuel a resurgent Japanese stock market that’s benefiting from corporate reform and activist investing.

“I started investing because, given Japan’s aging society, what really worries me is whether our pension is going to be enough when we get old,” said Asuka Koizeki, a 19-year-old student at Keio University in Tokyo. “Savings have no risk of losing principal, but they’re not necessarily safe in the sense that their value could be eroded.”

Koizeki said the recent market turbulence had made her more aware of the inherent risks of investing. “But I’ll keep investing rather than park my money in a bank account,” she said.

The number of people in their 20s in Japan funneling money into mutual funds, stocks and fixed income nearly tripled to more than 36% last year from 13% in 2016, according to the Investment Trusts Association. For those in their 30s it increased to 42.5% from 24%. —Yasutaka Tamura, Natsuko Katsuki and Yui Hasebe

Bubble-tea billionaires

China’s bubble tea market has produced another billionaire couple. Husband-and-wife founders, Shan Weijun and Zhou Rongrong, have a combined net worth of about $1.7 billion, according to the Bloomberg Billionaires Index.

Their fortune is solely derived from their stake in Auntea Jenny, the fourth-largest network of freshly-made tea shops in China. On Thursday, the company started trading in Hong Kong, registering a one-day gain of 53%. —Diana Li, Pui Gwen Yeung and Lulu Shen

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