Morning wrap (02.06.2025)

American indices mostly retreated on Friday in response to renewed trade tensions between China and the U.S. Futures suggest continued declines in today’s session (US100: -0.6%, US500: -0.4%, US30: -0.34%).

China’s Ministry of Commerce accused Donald Trump of violating trade arrangements during negotiations, emphasizing China’s readiness to defend its interests. The statement dims hopes for a Xi-Trump meeting despite earlier declarations from Scott Bessent that such talks should happen soon.

The U.S. administration plans to tighten restrictions on China’s tech sector by requiring special licenses for transactions with companies linked to already sanctioned firms (e.g., Huawei).

Trump announced on social media Saturday that tariffs on steel and aluminum will be raised from 25% to 50%, starting Wednesday.

Negative sentiment is spreading across Asia-Pacific markets. The HSCEI index is down the most (-2.15%), with losses also seen in Japan’s Nikkei 225 (-1.3%), South Korea’s Kospi (-0.2%), India’s Nifty 50 (-0.5%), and Australia’s S&P/ASX 200 (-0.24%).

The biggest losers in Asia’s session are tech companies, Chinese EV makers, and firms tied to steel and aluminum.

Australia’s manufacturing PMI fell in May from 51.7 to 51, while Japan’s rose from 49 to 49.4.

On forex markets: the dollar is weakening against all G10 currencies (USDIDX: -0.1%) amid rising U.S.-China tensions. Antipodean currencies are gaining the most (AUDUSD: +0.36%, NZDUSD: +0.52%). The yen is strengthening (USDJPY: -0.48%) following PM Ishiba’s statement that Japan won’t compromise on tariffs. EURUSD rebounds 0.2% to 1.137. The Polish zloty is weakening after the second round of presidential elections (EURPLN: +0.5%, USDPLN: +0.35%).

OPEC+ will raise oil production by 411,000 barrels per day in July, continuing its strategy to regain market share and penalize over-producers. Despite falling prices, leaders like Saudi Arabia and Russia push ahead, citing rising demand and strong fundamentals. Brent and WTI crude oil contracts are up 2.3% and 2.8%, respectively.

Crypto market sentiment remains negative: Bitcoin is down 0.2% to $104,770, while Ethereum drops 1.5% to $2,489.

Gold rebounds 0.9% to $3,320 per ounce on renewed U.S.-China tensions and dollar weakness. Silver gains 0.4% to $33.12 per ounce.