In the complex world of global finance, the dance of stock markets often reflects the nuanced steps of international diplomacy and economic policy. This Monday, the gaze of investors and analysts alike turns towards a pivotal moment in the ongoing narrative of U.S.-China relations, as senior representatives from both nations convene in London for a round of trade negotiations. This event, coloured by the anticipation of upcoming inflation data releases in the United States, casts a shadow of cautious optimism across Wall Street.
At the heart of these discussions is U.S. Treasury Secretary Scott Bessent, accompanied by two other key U.S. officials. Their dialogue with Chinese counterparts marks not just another chapter in the intricate U.S.-China trade saga but follows a significant precursor — a conversation between former President Donald Trump and Chinese President Xi Jinping, which seemingly bridged a hiatus in the dialogue, rekindling hopes for progress.
The markets’ response to these high-stakes meetings has been a mix of reserve and hopefulness. U.S. stocks, buoyed by previous gains, now hover near record highs, awaiting the outcome of these negotiations. Any hint of reconciliation or progress towards resolving the trade imbroglio could inject a fresh wave of optimism into the markets.
On the European front, the atmosphere is slightly more restrained, with indices reflecting a modest downturn. This contrasts the hopeful but cautious sentiment seen Stateside, indicative of the global reach and impact of U.S.-China trade relations.
Beyond the immediate sphere of stock exchanges, the broader economic landscape is rife with anticipation. This week, the focus sharpens on key U.S. inflation data — a crucial barometer for economic health and policy direction. Last week’s employment data, though subdued, surpassed expectations, crafting a narrative of resilience within the U.S. economy. The markets, with their forward-looking gaze, are now pricing in expectations and potential policy shifts in response to this and upcoming data.
In the corporate realm, movements and decisions reflect both market speculations and strategic repositionings. Notably, Robinhood’s shares saw a decline after an unchanged index constituent announcement, defying some expectations for the online brokerage. Meanwhile, Warner Bros Discovery announced a bold move to bifurcate its empire, delineating its thriving studios and streaming business from its traditional cable networks, signalling adaptability and foresight in content delivery’s evolving landscape.
Tesla, a name synonymous with innovation and disruption, faces a more tumultuous narrative. A broker downgrade, citing over-optimism in robo-taxi advancements and uncertainties around CEO Elon Musk’s political interactions, illustrates the complex interplay between market expectations and corporate strategy.
Analysing the S&P 500 reveals a nuanced picture of market movements and potential inflection points. With the index teasing resistance levels after a commendable recovery, the strategic positioning of investors and the consequential support and resistance levels offer a roadmap to future market dynamics.
The currency domain too mirrors this atmosphere of anticipation and response, with fluctuating dynamics between major currencies as investors and analysts parse through the undercurrents of trade talks and economic data.
Oil markets, a bellwether for economic health and geopolitical dynamics, remain steady, holding onto recent gains. The specter of U.S.-China trade discussions looms large here as well, with the potential for a trade agreement fuelling optimism for increased demand.
The backdrop to these negotiations is a complex tapestry of global economic interactions, from slowing Chinese export growth in the face of U.S. tariffs to the underlying strains of factory-gate deflation in China. These elements paint a picture of the intricate dependencies and vulnerabilities in the global economic system.
In sum, this week presents a tableau rife with anticipation, as the outcomes of U.S.-China trade talks, coupled with key economic data releases, could signal pivotal shifts in global economic dynamics and market sentiments. The interplay of diplomacy, policy, and market psychology in this saga underscores the multifaceted nature of global economics, where every nuance and development can ripple through the markets, shaping fortunes and futures in its wake.
U.S. stocks are subdued on Monday as investors await news surrounding renewed U.S.-China trade talks and look ahead to key inflation data later in the week. U.S. Treasury Secretary Scott Bessent and two other U.S. officials are expected to hold trade talks with representatives from China in London today. Any improvement in relations and progress could boost the market mood.
US Futures
0.12% at 42,813
0.18% at 6009
0.10% at 21780
In Europe
-0.15% at 8816
-0.66% at 24135
- US stocks are muted near record highs
- US-China trade talks take place in London
- Tesla falls after broker downgrade
- Oil holds onto last week’s gains
US-China Trade Talks in Focus
U.S. stocks are subdued on Monday as investors await news surrounding renewed U.S.-China trade talks and look ahead to key inflation data later in the week.
All three leading indices point to muted gains after solid gains last week.
U.S. Treasury Secretary Scott Bessent and two other U.S. officials are expected to hold trade talks with representatives from China in London today. These talks came after Trump and Chinese President Xi Jinping spoke at the end of last week, mending a rift that had stalled talks. Any sense of improving relations or moves towards a trade deal between the two sides could help boost U.S. stocks, which trade just 2% lower from record highs.
The US economic calendar is quiet today, but investors will focus on the May report on Wednesday, followed by inflation on Thursday.
Data last week showed the US economy showed the job creation slowed and made 239k, but this was still above the 130k that was expected.
The market currently expects 46 basis points worth of by the end of 2025 and is pricing in a 55% chance of a 25 basis point cut in September.
Corporate News
Robinhood (NASDAQ:) is falling 5% after the kept its index constituents unchanged in its latest rebalancing, disappointing some who had expected the online brokerage to join the benchmark index.
Warner Bros Discovery (NASDAQ:) jumped 9% pre-market after it said it would split into two companies, separating its studios and streaming business from its fading cable television networks.
Tesla (NASDAQ:) is set to open lower after Baird downgraded the stock to neutral from buy. The firm said CEO Elon Musk’s comments on robo-taxi plans are too optimistic and that Musk’s relationship with President Trump adds uncertainty.
S&P 500 – Technical Analysis.
The S&P 500 continues to test the 6000 resistance after extending its recovery from 4800 in April. The 100 SMA is guiding the price higher. Buyers will need to rise meaningfully beyond the 6000 level to bring 6130, the record high, into play. Support can be seen at 5915, the 100 SMA. A break below here exposes the 200 SMA at 5800.
FX markets – USD Falls, EUR/USD Rises
The is falling, extending losses from last week as attention turns to the US-China trade in London. The USD rebound on Friday following the was short lived.
The is rising amid USD weakness. The last week by 25 basis points, and ECB President Lagarde noted that the central bank is close to ending its rate-cutting cycle. Today, ECB Kazimir suggested that the rate-cutting cycle was done. Eurozone Senix economic sentiment data is due shortly.
is rising towards 1.36 ahead of a busy week for sterling, with UK unemployment and data as well as Chancellor Reeve’s spending review on Wednesday. The pound remains supported by expectations that the BoE will continue to cut rates but only gradually and carefully.
Oil Holds Last Week’s Gains
remain steady, maintaining last week’s gains, as the market anticipates renewed trade talks between the US and China. The possibility of a US-China trade agreement contributed to the increase in oil prices last week.
Three of Donald Trump’s top aides are scheduled to meet with their Chinese counterparts to restart trade discussions that had stalled a few weeks ago. An additional call between Trump and President Xi Jinping at the end of last week further boosted WTI, which rose by 6% during the week, marking its first weekly gain in three weeks.
Chinese export growth decelerated in the three months leading to May due to U.S. trade tariffs impeding shipments. Factory-gate deflation reached a level not experienced in two years. The data indicates that China’s crude oil imports decreased in May to their lowest daily rate in four months.
