Morning Wrap (30.05.2025)

Asian markets tumble as Trump tariffs reinstated by appeals court, ending brief rally from Wednesday's trade court block. Regional indices fell sharply Friday with Hong Kong's Hang Seng down 1.5% and Chinese markets declining 0.5-0.7% as Treasury Secretary Bessent confirmed trade talks with Beijing had "stalled" in recent weeks. Japan's Nikkei 225 dropped 1.3% on stronger-than-expected Tokyo inflation data that boosted Bank of Japan rate hike expectations for July. S&P 500 futures fell 0.3% ahead of crucial PCE inflation data later today.

Trump's tariff whipsaw continues as legal battles intensify following an appeals court decision to reinstate levies while case proceeds. The president lashed out at trade court judges in social media posts, calling them "backroom hustlers" and expressing confidence the Supreme Court will uphold his tariff authority. Trump signaled alternative mechanisms could be used if courts rule against him, keeping his July deadline for major tariff implementation intact. Markets now face prolonged uncertainty as legal sparring continues, with the next hearing scheduled for June 5.

China trade negotiations hit a roadblock as Bessent acknowledges talks have stalled despite May deescalation agreement. U.S.-China tensions escalated further this week with Washington imposing additional export restrictions on ethane and butane shipments to China, while Beijing criticized semiconductor controls. Factory activity likely contracted for a second consecutive month in May according to Reuters poll, with official PMI expected at 49.5 Saturday. Trump's 145% China tariffs threaten export-led recovery as the economy battles deflation and property crisis.

Japan inflation surge strengthens BOJ rate hike case with Tokyo core CPI hitting stronger-than-expected levels in May. The bellwether reading reinforced market expectations for 25 basis point rate increase in July, supporting yen strength against dollar. Industrial production declined less than forecast while retail sales exceeded estimates, showing economic resilience. USD/JPY fell 0.3% as safe-haven demand boosted Japanese currency amid renewed trade uncertainty.

Oil heads for second weekly decline on OPEC+ supply increase expectations and tariff uncertainty. Brent crude fell 0.48% to $63.84 while WTI dropped 0.51% to $60.63, both down 1.5% for the week. Eight OPEC+ members meet Saturday with analysts expecting production hike potentially exceeding previous 411,000 bpd increases. JPMorgan forecasts prices easing to high $50s by year-end as global surplus widens to 2.2 million bpd. Memorial Day travel supported U.S. demand but monthly global expansion tracks 250,000 bpd below expectations.

Trump-Powell White House meeting yields no policy shift as Fed chair stresses independence in first face-to-face encounter since inauguration. Trump told Powell he was making a "mistake" by not lowering rates, citing economic disadvantage versus China and other countries. Fed statement emphasized monetary policy will depend "entirely on incoming economic information" with decisions based on "non-political analysis." Markets price September rate cut with December follow-up as policymakers await tariff policy clarity.

Musk prepares dramatic White House exit with joint Oval Office press conference scheduled for 1:30 PM today. Trump announced Tesla CEO's final day with administration after reports of quiet off-boarding process following Musk's criticism of tax cut legislation. Department of Government Efficiency fell short of fiscal reduction goals amid public backlash over federal job cuts. Musk indicated he would refocus on companies including Tesla, which faced sales boycotts and vandalism during his government tenure.

Gold declines toward weekly loss despite tariff reinstatement as dollar strength and profit-taking pressure precious metals. Spot gold fell 0.7% to $3,293.44 with August futures down 0.8% to $3,316.67, heading for over 1% weekly decline. "TACO" meme - "Trump Always Chickens Out" - gains social media traction reflecting market skepticism over tariff follow-through. PCE inflation data due Friday could influence Fed policy outlook and dollar direction. Industrial metals also declined with copper futures down 0.1% on London Metal Exchange.