Market Report.
Your favourite financial, macroeconomic and geopolitical report is back after a week’s break.
📅 First of all, this week is a key week in terms of data. As on every first Friday of the month, we will have the US labour market data, which greatly influences the Fed’s decisions, at a particularly delicate time for the dollar.
🌍 Last week, global tensions intensified. In this report, we will try to summarise the most relevant points.
🇨🇳 According to Shaun Rein, founder of the China Market Research Group, China has the advantage in the ongoing trade war with the U.S. due to its ability to easily substitute American products with alternatives from other countries. Rein highlighted China’s investments, particularly in semiconductors, as a key factor in reducing its dependence on U.S. technology.
⚠️ However, they omit the obvious risk posed by dependence on US consumption, since it is by far the main destination for their sales, and attempting to replace it with other countries, such as Europe, poses deflationary risks via excess supply for Europe, which does not have the consumption capacity of the US.
📊 David Waddell, CEO of Waddell and Associates, noted that the Chinese stock market has outperformed the S&P 500 year-to-date, indicating China’s economic resilience. However, he fails to mention that the Chinese market highs were last achieved in 2021, and since then, the Chinese market has been struggling to recover, while the SP500 recently broke new historical highs.
💬 China has responded to U.S. President Donald Trump’s accusations that Beijing had violated the consensus reached in the Geneva trade talks, calling the accusations “groundless”. The Chinese commerce ministry said “the U.S. government has unilaterally and repeatedly provoked new economic and trade frictions, exacerbating uncertainty and instability in bilateral economic and trade relations.”
📢 On May 31, 2025, President Donald Trump in a Truth Social post, claimed that China had not lived up to its commitments made in the Geneva agreement, which he had agreed to in order to “save them from what I thought was going to be a very bad situation.” Trump did not provide specific details on how China had allegedly breached the agreement, but his comments signal his frustration and desire to speak directly with Chinese President Xi Jinping.
🤝 In mid-May, China and the U.S. had agreed in Geneva to pause triple-digit tariffs for 90 days, and China promised to lift trade countermeasures that restricted its exports of critical metals needed for U.S. semiconductor, electronics and defence production.
🔨 However, Trump has now announced a doubling of import tariffs on steel and aluminium to 50%, even though China ships very little steel and aluminium to the U.S. after previous tariffs were imposed.
📞 U.S. Treasury Secretary Scott Bessent has stated that the U.S.-China trade talks “are a bit stalled”, requiring the two countries’ leaders, President Trump and President Xi, to speak directly. Bessent indicated there may be a call between the two leaders “at some point” in the coming weeks, as he believes the magnitude and complexity of the trade issues will require direct engagement from the top.
⚡ However, tensions remain as the U.S. has pushed ahead with tech restrictions on Beijing, drawing China’s ire, while China has yet to significantly ease restrictions on rare earths exports as Washington expected.
🌎 JPMorgan Chase CEO Jamie Dimon stated that the “tectonic plates” of geopolitics and the global economy are shifting, and the biggest issue underlying this is “the enemy within” – the U.S. itself and its inability to get its “own act together”. Dimon defined the “enemy from within” as a combination of state-level economic mismanagement, regulatory gridlock, deficiencies in the schooling and health care systems, and the persistent risk of the U.S. economy slipping into a recession.
💡 While Dimon agreed with Warren Buffet’s assessment that the U.S. economy remains “resilient”, he added that “this time is different” and the U.S. “has to get its act together and we have to do it very quickly.”
📉 The European Central Bank is preparing to reduce interest rates for the eighth consecutive time today, with President Donald Trump’s disruptions to global trade clouding expectations for inflation and economic growth. A further rate reduction is anticipated in September, following the completion of negotiations with the U.S. and the release of updated projections assessing the full impact of new tariffs.
✈️ China is considering starting to replace Boeing orders with European Airbus. Negotiations for a potential mega-deal with China have been ongoing for over a year, as Beijing studies options to feed the growth of its domestic carriers amid trade tensions with the U.S., home to rival Boeing. The talks are an extension of discussions over an order for hundreds of jets that surrounded Chinese President Xi Jinping’s visit to France last May, though no deal was concluded at that time. Shares in European aerospace company Airbus rose on Wednesday as evidence of talks to sell hundreds of planes to China gathered pace ahead of a summit of European and Chinese leaders in July.
🚀 Elon Musk lashes out against Trump’s tax plan: ‘Sorry, I can’t hold it in any longer. It’s a disgusting aberration.’ ‘Congress is bankrupting the United States.’
Geopolitics:
🛡️ NATO’s foreign ministers are convening in Brussels today to officially approve a major military equipment expansion initiative, which would result in a new collective defence spending objective of 5% of GDP for all alliance members.
🌐 According to Bloomberg, the US is refusing to provide air defences to back the ‘reassurance force’ that the UK and France are planning in a post-war Ukraine. However, this could well be interpreted as Trump trying to bring an end to the conflict by fulfilling his election promise, while NATO, through Europe, is trying to keep the conflict alive.
🔥 Trump is not the only one under pressure from NATO to escalate the conflict in Ukraine. Putin is also facing internal pressure to take a tougher stance in the war following the latest Ukrainian sabotage attacks on Russian territory. In this regard, Ramzan Akhmátovich, leader of the Chechen Republic, has stated that the only valid strategy would be to occupy all of Ukraine, expelling NATO forces, which would retreat to Poland, and then, if they attacked Russia again, this time it would be considered a direct attack by Poland on Russia, completely changing the terms of the conflict.
⚓ U.S. Defence Secretary Pete Hegseth reassured Indo-Pacific allies that “the U.S. will not leave them alone to face increasing military and economic pressure from China”. Hegseth stated that China’s military is actively training for a potential invasion of Taiwan, which the U.S. has pledged to defend. He called China’s actions a “real” and “imminent” threat.
📢 Hegseth urged Indo-Pacific countries to increase their defence spending to levels similar to the 5% of GDP that European nations are now pressed to contribute. The Chinese delegation accused Hegseth of trying to “provoke trouble, incite division and stir up confrontation” in the Asia-Pacific region.
📞 In their fourth phone call, lasting over an hour, Vladimir Putin and Donald Trump discussed the ongoing Russia-Ukraine conflict and potential diplomatic efforts. Putin expressed concerns over Kiev’s alleged sabotage of negotiations, deliberate strikes on Russian civilian targets, and the degeneration of the Kiev regime into what the Kremlin deems a terrorist organization.
🗣️ While the two leaders did not delve into the draft memorandums or prisoner exchanges, Putin provided Trump with a detailed account of the Istanbul talks, describing them as productive. Trump clarified that the U.S. had no prior knowledge of Kiev’s reported plans to strike Russian airfields. The Kremlin remains hopeful for continued negotiations, though a meeting between Putin and Zelensky was ruled out as impractical.
📖 In this regard, Putin’s geostrategist and advisor, Alexander Dugin, whose daughter died in a terrorist attack by Ukrainian forces, stated: ‘Ukraine is the deep state. They have created a Nazi terrorist regime and turned it into their instrument. Trump is unable to dismantle it because of the depth of its roots.’
📊 For the third consecutive week, Mini S&P 500 futures are attempting to break through the 6,000-point barrier, currently trading at 5,975 points. A similar scenario is unfolding for the Nasdaq 100, which is once again approaching the resistance level of 21,800 points reached last week. This represents a challenge to recover the levels lost after the implementation of Trump’s tariffs.
💵 The dollar, which started last week with a strong recovery, has not stopped declining since, currently standing at 98.95 points. This has caused currency pairs like EUR/USD to trade above 1.14 and GBP/USD to approach the 1.36 zone once again, currently trading at 1.3555.
📈 European stock markets remain at elevated levels, seemingly capitalising on tensions between their two largest competitors, the United States and China. DAX 40 futures are near all-time highs, trading at 24,270 points. EuroStoxx 50 futures are less optimistic but remain at solid levels, currently trading at 5,400 points.
🛢️ Crude oil remains within its range of the past month, moving between $66 and $62.50 per barrel, with Brent currently trading at $64.75.
🪙 Gold futures have surpassed $3,400 per ounce for the second time this week, reflecting the lingering global uncertainty between the United States and China.
📉 Bitcoin continues to cool off from the highs reached two weeks ago, currently trading around $104,500, with $106,700 becoming a resistance level.
