🌐 Market Report.
📈 Up to Trump’s tariff deadline of July 9, the White House intends to have weekly trade negotiations with six different countries. Markets believe that tariffs have peaked and that Trump will have to reduce his levy on China, especially after big American retailers told him last week that their shelves would soon be bare if he didn’t. The internal impact this is having on the Chinese economy is being ignored in spite of everything. Closed factories? How long are they able to continue? Prior estimates have shown that the United States consumes twice as much as the EU as a whole.
🤝 U.S. Treasury Secretary Scott Bessent did not back President Trump’s assertion that tariff talks with China were underway, and said he did not know if Trump had spoken with Chinese President Xi Jinping. Bessent said he had interactions with his Chinese counterparts last week during IMF meetings, but they were focused on traditional issues like financial stability and global economic early warnings, not tariffs. When asked why China was denying any trade talks, Bessent suggested they may be “playing to a different audience.”
🌾 Agriculture Secretary Brooke Rollins said the U.S. was holding daily conversations with China over tariffs, but did not provide further details.
🌍 Global policymakers gathering for the IMF and World Bank Spring Meetings in Washington expressed a “collective sigh of relief” that the U.S.-centric economic order was not collapsing. There are deeper questions about whether the world can still count on the U.S. dollar as the global safe haven and on the IMF and World Bank to support the international economic system. There is no ready alternative to the U.S. as the world’s financial hegemon, and the euro is not yet ready to dethrone the dollar as a reserve currency.
🇨🇭 Switzerland’s President Karin Keller-Sutter is lobbying Trump administration officials in Washington this week, as Switzerland is concerned about the double hit to its competitiveness from tariffs and a soaring Swiss franc.
⏳ The 90-day tariff pause has given Switzerland’s President Karin Keller-Sutter time to make Switzerland’s case, but market uncertainty from Trump’s trade war is causing investors to flock to the safe-haven Swiss franc, putting pressure on Switzerland’s export-oriented economy. The Swiss National Bank’s options are limited, as cutting interest rates further or intervening to weaken the franc could draw Trump’s ire over currency manipulation. Manufacturers and watchmakers may have to accept lower profit margins in the hope the tariffs and franc strength are temporary, but more significant adjustments may be needed if the shock is not short-lived.
🤖 Huawei is preparing to test its newest and most powerful artificial intelligence (AI) processor, the Ascend 910D, in an effort to replace some of the higher-end products made by U.S. chip giant Nvidia. The company hopes the Ascend 910D will be more powerful than Nvidia’s H100 chip, which is currently one of the most advanced AI processors on the market. The U.S. government has sought to limit China’s technological development, particularly in the military domain, by cutting off access to Nvidia’s most advanced AI products, including the flagship H100 chip.
📉 European Central Bank (ECB) policymakers are becoming increasingly confident about cutting interest rates in June as inflation continues to decline. ECB governors gathered in Washington for the IMF and World Bank Spring Meetings and took stock of a weakening economy in the euro zone and globally. Data showed business growth stalling in the euro zone and pay hikes expected to ease considerably. This means many governors now see a growing chance of an eighth quarter-point rate cut at the ECB’s June 4 meeting, when it will update its economic forecasts. Policymakers see no reason to consider a larger, 50-basis-point rate cut, as they believe it could raise unnecessary alarm among market participants.
📊 According to a poll by Ipsos MORI, confidence among people in Britain about the economy over the next 12 months has fallen to the lowest on record: 75% of Britons expect the economy to get worse over the next 12 months, up 8 percentage points since March. The minus 68 net balance represents the lowest degree of optimism since Ipsos began collecting the data in 1978. This level of economic pessimism is on par with the recessions of 1980 and 2008, as well as the COVID-related cost-of-living crisis.
🇬🇧 However, the UK is one of the few countries that maintains a trade deficit with the US. Trump applied only 10% reciprocal tariffs to the UK, while applying 37% to the EU. Perhaps a trade agreement between the US and the UK could reverse the pessimism. Still, relations between the two countries aren’t the best, given that the current UK Prime Minister campaigned against Trump during the US elections.
🌍 Geopolitics:
🇺🇦 President Trump urged Russia to stop its attacks in Ukraine, while Secretary of State Rubio said the U.S. may walk away from peace efforts if it doesn’t see progress soon. Trump said his meeting with Ukrainian President Zelenskyy at the Vatican went well, and he sees Zelenskyy as “calmer” and wanting to make a deal. Rubio warned that the U.S. cannot continue to dedicate time and resources to the peace efforts if they are not going to come to fruition.
🛡️ German Defense Minister Pistorius said Ukraine should not agree to the American proposal, which he said went too far in ceding territory. Trump’s national security advisor Waltz said the U.S. president has expressed frustration with both Putin and Zelenskyy, but remains determined to help negotiate an agreement.
📜 As a reminder, many analysts have determined that the origin of this conflict dates back to 2014, when neo-conservative American politicians travelled to Ukraine and interfered in the country’s political agenda, as well as the course of the government. Victoria Nuland designed Ukraine’s new emerging government, and a civil war broke out in the country, leading to the current conflict between Russia and Ukraine. Trump continues to try to resolve the damage caused by his predecessors.
🇷🇺 Russia will never participate in negotiations that involve the idea of deploying European troops in Ukraine, stated Valentina Matviyenko, Head of the Russian Federation Council.
📈 Market View:
📊 US market futures remain static at the highs reached on Friday. Mini S&P 500 futures are currently trading at 5,525 points. Nasdaq 100 futures are at 19,455 points.
📉 As usual, European markets seem to be leading the way, with DAX 40 futures once again close to all-time highs, currently standing at 22,430 points, just 1,000 points off their highs. EuroStoxx 50 futures are also advancing, albeit with less confidence, currently standing at 5,110 points.
💵 The dollar index is holding steady in the 99.60 point range, and the euro-dollar seems to have remained below 1.14 since last Thursday, currently trading at 1.1365.
🛢️ The oil market has remained stable since last Wednesday, with Brent crude trading close to $66 a barrel. Tensions in the Middle East, between Yemen and the United States, as well as the possible conflict between India and Pakistan, do not seem to be affecting it too much.
🪙 The gold market also appears calm, with gold futures trading at $3,300 after reaching $3,500 last week.
💻 Finally, Bitcoin has made a spectacular comeback since last week and has managed to stay above 92,000, which we established as the pivot point zone. It is currently trading at 94,435, and if it remains there over the next few days, it could start to resume its upward trend towards its highs.
