Market Report.
🇺🇸 U.S. President Donald Trump stated his patience with Iran is running out after talks with Chinese President Xi Jinping yesterday. China, a major buyer of Iranian oil, opposes militarization of the strait and any toll for its use.
🤝 The White House stated that Xi promised not to send military equipment to Iran and expressed interest in purchasing more American oil to reduce dependence on the strait. Both leaders agreed Iran should never obtain nuclear weapons, though Tehran denies seeking such capabilities.
🚢 An Indian cargo vessel carrying livestock was sunk by a missile or drone attack off Oman on Wednesday with all crew members rescued by Omani authorities. The United States paused its airstrikes on Iran last month but continues a blockade of Iranian ports while diplomatic talks remain stalled over the nuclear program.
⚓ Iran is making deals to allow some ships to pass through the strait under its terms. A Japanese tanker crossed on Wednesday after Japan’s prime minister requested help from Iran’s president, and a huge Chinese tanker also crossed.
📊 Iran’s Revolutionary Guards said 30 vessels had passed since Wednesday evening, still far short of the 140 on a typical pre-war day. Shipping analytics firm Kpler reported 10 ships sailed through the strait in the past 24 hours, up from five to seven daily in recent weeks.
🏛️ US China business meeting:
🇺🇸 Donald Trump said he made “fantastic trade deals” with Xi Jinping as the US and Chinese leaders held a second day of talks in Beijing, though few concrete agreements emerged. US Trade Representative Jamieson Greer said he anticipates that China would commit to billions in American agricultural purchases. Trump told Fox News that Xi offered to help on Iran. Beijing urged the reopening of the Strait of Hormuz. Follow the latest developments in our live blog.
🏭 Trump’s CEO Entourage Wants Rare Materials: The real reason powerful executives accompanied Trump to China is access to rare earth materials. Companies like Tesla, Apple, Boeing, and GE Aerospace desperately need China’s resources, while Beijing structurally needs them less and less.
🔋 Total U.S. Dependence on China: The American military industry is now entirely dependent on China. Without access to Chinese rare earths and materials, it cannot function, placing the U.S. in a position of structural vulnerability.
🌍 China controls 70 percent of global extraction, 85 percent of refining, 90 percent of permanent magnets, and 99 percent of dysprosium and terbium. Without these elements, no F-35 fighter jet takes off, no MRI machine functions, and no iPhone powers on.
⚠️ Not all of the words were positive.
🗣️ Xi Jinping warned Donald Trump that Taiwan could lead to “clashes” between the superpowers during their meeting. Beijing released Xi’s remarks before the nearly two-and-a-half hour meeting ended, underscoring the gravity of the message.
🤔 Trump must decide if Xi will allow Taiwan to derail the broader US-China relationship, with Xi set to visit the White House in September. A planned $14 billion US arms sale to Taipei could trigger bipartisan backlash in Washington if Trump tries to quash it. If the deal is approved, Trump will face Beijing’s wrath.
🤫 Trump and White House officials were uncharacteristically quiet after the warning. Trump did not brief reporters on the outcome, and the US readout made no mention of Taiwan. US Secretary of State Marco Rubio told NBC that American arms sales to Taiwan “did not feature prominently” in the Trump-Xi talks.
Rubio stated that any forced change in the status quo would be bad for both countries.
⚖️ Xi’s hand was strengthened further when the Supreme Court struck down Trump’s levies.
The war in Iran has highlighted US vulnerabilities, with Trump entangled in a conflict that has depleted military stockpiles. Before the summit, Chinese officials renewed a push for the US to change its stance on Taiwan independence, from “do not support” to “opposes.”
🇬🇧 Britons are also interested in doing business with China.
✈️ British Foreign Secretary Plans China Visit: Yvette Cooper is expected to visit China from June 2 to 3. She will hold talks with Chinese Foreign Minister Wang Yi in Beijing before traveling to the tech hub of Shenzhen to meet with businesses.
🤝 The visit seeks to capitalize on relatively cordial ties following Prime Minister Starmer’s January trip, where he and President Xi announced a reset. That earlier engagement led to approval of a new Chinese embassy in London and the lifting of Chinese sanctions on six British lawmakers.
🚫 A British decision in March to block Chinese wind turbine maker Ming Yang from offshore projects on security grounds has frustrated Beijing. The ruling dealt a blow to a planned 1.5 billion pound investment in Scotland. Officials communicated the decision in advance to try to keep Cooper’s visit on track.
📅 Both British and Chinese officials are bracing for a High Court review of the embassy approval, due in June or July. Beijing is likely to retaliate if the project is stalled again, making this a potential flashpoint.
🏛️ The political turmoil in the UK persists.
📰 Josh Simons is set to announce he is stepping down from his Makerfield seat in Greater Manchester. This will trigger a by-election and open a parliamentary vacancy. The vacancy gives Greater Manchester Mayor Andy Burnham a route back into the House of Commons, which is a prerequisite for any Labour leadership bid. Burnham is the only senior UK politician with a net positive approval rating among voters.
⚖️ Keir Starmer’s allies previously blocked Burnham from contesting a seat, but the Prime Minister has since been weakened by losing that seat to the Green Party and a disastrous set of local election results. Many Labour MPs and some cabinet ministers are now calling for Starmer to set a timetable for departure.
🎯 Burnham would need to win the by-election, which is not guaranteed given the rise of populist parties. If he enters Parliament, he must then secure the backing of 81 Labour MPs to run.
📉 The failure of gold and the new Fed.
🔻 A bullish cradle pattern has failed, triggering a wave of trader exits and sell orders. The failed technical setup has added immediate downward pressure on gold.
📈 Inflation Data Kills Rate Cut Hopes: This week’s rise in both CPI and PPI in the United States strongly suggests the Federal Reserve will not cut interest rates this year. The absence of rate cuts supports a stronger dollar, reducing the incentive to hold gold as a store of value and shifting preference toward dollar reserves.
🏦 Fed Leadership Split Complicates Policy: Jerome Powell is stepping down as chair today, with Kevin Warsh taking over. The promise of future rate cuts is now complicated by a split within the Fed, as both figures remain on the board and represent different guardian factions. This internal division reinforces the no rate hikes narrative.
🇮🇳 Modi Urges Indians to Curb Gold Buying: Indian Prime Minister Modi has asked citizens not to buy gold to help preserve national reserves. Since India is one of the most active gold markets, this public appeal is dampening physical demand.
📊 Short-Term Yields Surge Faster Than Long Bonds: While the 30-year Treasury yield piercing 5 percent grabs headlines, borrowing costs at the front end of the curve are spiking even more. The two-year yield is up 50 basis points this year, compared to a 20 basis point rise for the 30-year yield, pushing short-term rates near 4 percent.
💸 Relying on short-term bills works well when the yield curve slopes normally and short rates are low. But with the curve flattening and the Fed leaning toward hikes rather than cuts, the Treasury is increasingly exposed to rising financing costs each time it rolls over debt.
🔒 There is little risk of a buyers strike, given nearly 8 trillion dollars parked in money market funds and the Fed buying about 40 billion dollars of bills monthly. The real danger is a vicious cycle where higher short-term rates drive up debt servicing costs, widen the deficit, and potentially feed the very inflation policymakers want to contain.
📈 The average rate on marketable federal debt was around 3.5 percent at the end of last year, nearly triple its level five years ago. As that rate climbs further, higher servicing costs could unintentionally widen the deficit, creating a self-reinforcing loop of more borrowing and more inflation pressure.
🔥 The Iran war energy shock is lifting inflation and extinguishing expectations of Federal Reserve rate cuts. This directly hits short-dated yields, which are more sensitive to the policy outlook, making it more expensive for the Treasury to borrow at the front end.
🌐 Energy Shock Now Hitting Currencies:
⛽ The underlying energy disruption is historic. Oil spiked as high as 119 dollars a barrel in March 2026, and Persian Gulf exports fell nearly 57 percent from prewar levels. Tight global LNG supplies are expected to persist into 2027, amplifying scarcity.
📉 The worst performing currencies since the Iran war began are almost all from energy importing nations. The Egyptian pound, Philippine peso, South Korean won, and Thai baht have been the biggest losers.
💱 Energy importing emerging markets face ballooning import bills and widening current account deficits. These pressures trigger capital outflows as investors pivot toward commodity exporters, further weakening currencies and fueling imported inflation.
🌏 Heavy importers like South Korea, Thailand, and the Philippines are especially vulnerable. Downstream effects include fuel shortages, with Shell and BP stations running dry in Indonesia, and Chinese exporters pivoting green tech sales to offset shifting demand.
🔥 Russia Launches Massive Drone Attack on Ukraine.
🚀 Russia fired over 1,500 drones at Ukraine in one of the largest aerial attacks in history, targeting Kiev among other locations. The strike was billed as retaliation for Ukrainian drone attacks on Russian cities during the Victory Day ceasefire period. The office of drone company Skyeton was hit, suggesting Russia considered it complicit.
🏭 The New York Times reports that Russian forces have been hitting major U.S. company warehouses and factories in Ukraine since last summer. Targets include Cargill, Coca-Cola, Boeing, Mondelez, and Philip Morris. American executives told senators they believe the strikes are deliberate, aimed at discouraging U.S. business involvement in Ukraine.
🇪🇪 Estonia Presses Ukraine to Control Its Drones
⚠️ The Latvian defense minister was fired after two Ukrainian drones crashed on Latvian territory, likely after Russian jamming. Estonia publicly called on Ukraine to better control its drones after the Latvian incursions. The statement reflects growing Baltic unease over being dragged into provocative operations that could trigger a wider European war.
🏢 Corporate News:Nvidia Surges 20 Percent in Seven Days.
📈 Nvidia shares extended a blistering rally, rising as much as 4.7 percent to 236.47 dollars on Thursday. The advance added more than 900 billion dollars to its market capitalization and pushed the company close to a 6 trillion dollar valuation, a milestone never reached by any firm.
🤝 Nvidia drew additional attention after CEO Jensen Huang joined President Trump on his visit to China as a last minute addition to the delegation.
📊 The Philadelphia Semiconductor Index has soared nearly 70 percent since the end of March. Major names like Intel, Micron Technology, Advanced Micro Devices, and Broadcom have all posted sizable gains alongside Nvidia.
💥 Bubble Concerns Rise: The scale of the surge is fueling worries that an AI bubble is inflating the stock market. Nvidia and Micron alone have accounted for more than 30 percent of the entire gain in the S&P 500 Index this year, underscoring extreme concentration.
Market view.
📉 The chart report must begin with the remarkable moves seen in gold and the US dollar.
🥇 Gold futures collapsed sharply, falling more than 3% since yesterday’s session and reaching lows around $4,560 per ounce. Prices are currently showing a modest rebound to approximately $4,575. The primary driver behind this move was the explosive rally in the US dollar index (DXY), which surged 0.75% during yesterday’s session, climbing to 99.20.
💱 Unsurprisingly, the foreign exchange market reacted aggressively. EUR/USD broke below the 1.1650 support level, reflecting broad dollar strength.
📉 US futures broke to new highs during yesterday’s session but have pulled back in recent hours as markets await potential positive developments from Donald Trump’s meeting in China.
📊 E‑mini S&P 500 futures reached 7,540 during the session before retreating to around 7,482.
💻 Nasdaq 100 futures posted a high of 29,782, but have since eased back to approximately 29,425.
🛢️ Oil prices have resumed their upward momentum, with spot Brent crude once again approaching the $108 per barrel level.
₿ Meanwhile, Bitcoin, which lost the $80,000 support level on Wednesday, has staged a recovery. It reached $82,000 during yesterday’s session and is currently experiencing modest pullbacks around $80,715.
