Asian stock markets and the U.S. dollar declined on Monday as escalating trade tensions between the United States and China fueled investor caution ahead of key U.S. jobs data and a potential interest rate cut by the European Central Bank.
اضافة اعلان
Steel manufacturers in South Korea and Vietnam—major exporters to the U.S.—saw their shares fall following President Donald Trump’s Friday threat to double tariffs on steel and aluminum imports to 50% starting June 4. The move drew criticism from EU negotiators.
U.S. Treasury Secretary Scott Besant said Sunday that Trump would speak soon with Chinese President Xi Jinping to resolve the dispute, but Beijing firmly rejected Trump's criticisms and cast doubt on whether the call would happen soon.
White House officials downplayed a court ruling that suggested Trump had overstepped his authority in imposing blanket tariffs on U.S. trade partners. JPMorgan chief economist Bruce Kasman noted that despite legal setbacks, the administration still has multiple tools to enforce trade policy, and intends to maintain baseline tariffs of at least 10% with possible increases targeting specific sectors.
Kasman added that tariffs on ASEAN imports could rise to curb re-exports, and that a similar approach may be applied to EU trade.
Markets are watching closely to see if Trump follows through on his 50% tariff threat on Wednesday or backs off, as he has in the past.
Until then, risk aversion dominated:
MSCI’s Asia-Pacific index (excluding Japan) dropped 0.8%.
Nikkei (Japan) fell 1.3%.
Hang Seng (Hong Kong) slid 2.5%.
South Korea's KOSPI edged up 0.2% on optimism surrounding Tuesday’s early presidential election.
European futures also reflected investor anxiety:
Euro Stoxx 50 futures declined 0.3%.
DAX (Germany) down 0.2%.
FTSE (UK) remained flat.
Uncertainty was heightened by speculation over a dramatic Ukrainian airstrike on Russian bases and its impact on peace negotiations.
In the U.S.:
S&P 500 lost 0.5%.
Nasdaq declined 0.6%, retracing part of May’s strong gains (6.2% and 9.6% respectively).
Outlook on the U.S. Labor Market
Investors are awaiting this week’s U.S. manufacturing and jobs data, expected to show a 130,000 increase in payrolls for May, with unemployment steady at 4.2%.
Higher unemployment could be the only factor to push the Federal Reserve toward rate cuts, though markets no longer expect action in June or July. Instead, there’s a 75% chance of a cut in September, although Fed officials have not confirmed this outlook.
Fed Chair Jerome Powell is set to speak today, followed by remarks from over 11 other Fed officials throughout the week. Governor Christopher Waller said rate cuts remain possible this year due to downside risks to the economy and labor market, and potential inflationary pressures from tariffs.
A weak jobs report could benefit bond markets, where 30-year Treasury yields hover near 5%, reflecting increased investor demands amid growing fiscal concerns. The Senate is also set to debate a tax-and-spending bill that may add $3.8 trillion to the existing $36.2 trillion national debt.
Global Rate Decisions: ECB and Bank of Canada
ECB is expected to cut rates by 25 basis points to 2.0% on Thursday, with potential signals for further easing in July.
Bank of Canada meets Wednesday and is forecast to keep rates steady at 2.75%, though cautious guidance is likely due to tariff-driven recession fears.
Despite widening rate differentials, the dollar has seen limited support:
USD/JPY fell 0.4% to 143.47.
EUR/USD rose 0.2% to 1.1370.
USD/CAD dropped 0.2% to 1.3727, despite Trump’s tariff threats on Canadian steel.
Commodities
Gold rose 0.6% to $3,310/oz, recovering from a 1.9% loss last week.
Oil gained after OPEC+ announced a steady output increase for July:
Brent crude rose $1.46 to $64.24/barrel.
WTI added $1.65 to $62.43/barrel.
— Reuters
