Source: Reuters | Stocks Dip
Global markets slipped as investors digested an underwhelming U.S. inflation report, a shaky trade truce between the U.S. and China, and rising Middle East tensions — all of which stoked risk aversion across assets.
Key Drivers
U.S.-China Trade Truce:
- A framework deal was reached allowing Chinese exports of rare earths and student access to U.S. universities.
- President Trump hailed it as a “great deal,” but markets remained skeptical due to lack of specifics and lingering tariffs.
- Trump also warned that new trade letters would be sent to other nations, triggering fresh uncertainty.
Geopolitical Tensions:
- Tensions flared in the Middle East, with Iran threatening to strike U.S. bases if nuclear talks collapse.
- These threats sent oil prices near a two-month high and boosted gold as investors sought safe-haven assets.
Inflation & Interest Rates:
- U.S. consumer prices rose less than expected in May, led by cheaper gasoline.
- Still, inflation is forecast to rise due to tariffs, leading Trump to once again urge the Fed for a rate cut.
- Markets are pricing in a 70% chance of a rate cut by September, though no changes are expected next week.
Market Snapshot
- MSCI Asia-Pacific Index (ex-Japan): -0.3%
- Japan’s Nikkei: -0.7%
- China’s CSI 300: -0.37%
- Hong Kong’s Hang Seng: -0.74%
- S&P 500 / EuroStoxx Futures: also fell
- Dollar Index: dropped to its lowest since April 22, now down 9% YTD
- Euro: hit a 7-week high, trading at $1.1512
- Japanese Yen: strengthened to 144.03 per dollar
Commodities & Safe Havens
- Brent crude: Held near $70/barrel (Stocks Dip), fueled by fears of Middle East supply disruptions
- Gold: Rose 0.5% to $3,370.29, driven by geopolitical and economic uncertainty
Expert Insight
“The U.S.-China deal leaves most tariffs in place. It’s more of a pause than a resolution,” said Shane Oliver, AMP Capital.
“Inflation will either rise or eat into profits. It’s reasonable for the Fed to wait before making any moves.”
Bottom Line
Markets remain on edge amid fragile global diplomacy, murky trade outcomes, and rising geopolitical flashpoints. While inflation is currently soft, the broader economic outlook is tangled in unpredictability – a sentiment clearly mirrored across equities, currencies, and commodities.
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