MARKET WRAPS
Stocks:
Stocks were lower in Europe, as lingering angst about the impact of the trade war continued to hurt sentiment.
Such concerns were highlighted by the OECD, which on Tuesday cuts its 2025 global growth forecast to 2.9%, down from 3.1%, and slashed its U.S. growth forecast to 1.6% from 2.2%.
It cited the U.S. president’s tariff policies for the economic downgrades, while also warning the protectionism may revive inflationary pressures.
The U.S growth revision dovetailed with a soft manufacturing survey published on Monday, adding to fears that activity in the world’s biggest economy is contracting, and news that China’s manufacturing touched its lowest level since September 2022 as orders dropped.
“As economic data trickles in, a picture is starting to emerge of the new economic order. Trump’s tariffs have delivered an economic shock, and the damage could take some time to reverse,” XTB said.
Pepperstone said it remained “In a dynamic of ‘buy America’ or ‘sell America’, as opposed to one of ‘risk on’ or ‘risk off’.”
Stocks to Watch
UBS could see light at the end of the tunnel with an update on Switzerland’s new capital requirements expected on Friday, Jefferies said as it upgraded it to buy from hold and lifted its target price to 37 Swiss francs from 22 francs.
EasyJet was well positioned to exceed consensus expectations for fiscal 2026, RBC Capital Markets said as it upgraded its rating on the company to outperform from sector-perform.
It forecasts headline pretax profit about 3% ahead of consensus.
U.S. Markets
Stock futures edged lower, as investors awaited progress on both U.S.-China talks and Trump’s push on his tax-and-spending megabill.
Forex:
The dollar edged higher, recovering after falling to its lowest in six weeks against a basket of currencies.
However, weak JOLTS job openings and durable goods orders, due at 1400 GMT, could send the currency lower again, ING said.
“Another round of soft data, particularly in the labor market, can push the dollar back to its April lows.”
And any renewed increase in U.S. government-bond yields would push the dollar lower still, it added.
The recent rise in the euro reflected vulnerability in the dollar and not euro strength, Danske Bank said, adding that the euro would continue to gain against the currency until the U.S. saw a clear improvement in economic data.
Bonds:
Treasury yields dropped, after a decline in JGB yields prompted by a strong 10-year auction.
“The Japanese 10-year auction saw stronger-than-expected demand and pulled the 10-year JGB yield below the 1.50% mark,” Swissquote Bank said.
UBS stayed long in 10-year Treasurys due to growth risks, expecting that they will likely struggle to trade below 4% in the coming months.
“We think that underpriced risks of a growth slowdown and relatively benign U.S. CPI prints in May/June will support 10-year [Treasurys].”
The 10-year Bund yield was expected to remain above the 2.5% level as the market awaits the flash estimate for eurozone inflation data, Commerzbank said.
“Regarding the HICP flash data, the potential for positive surprises seems limited.”
Energy:
Oil rose, following the trend in geopolitical tensions, which has led traders to more than shrug off OPEC+’s decision to accelerate production hikes, although some OPEC+ members–including Russia–objected.
These objections have eased concerns of further production hikes in the second half of the year, and investors have since unwound bearish short positions, ANZ said.
Metals:
Gold futures slid, paring some gains made in Monday’s strong rally but remained at elevated levels as trade tensions boiled over.
Copper
Copper inventories in LME warehouses were near two-year lows, ANZ said, noting that prices recently gained 1.2% amid fears that it could be the next in line to be hit with new tariffs.
U.S. trade officials are reviewing the impact of the country’s copper imports on the local industry.
Uranium
Why Trump’s Nuclear Plans Have So Far Failed to Boost Uranium Prices
EMEA HEADLINES
Meta to Challenge EU Tech Crackdown on Platforms
Meta Platforms’ lawyers will go up against the European Commission on Tuesday to challenge having part of the company’s lucrative social-networking business included in the bloc’s crackdown on Big Tech market power.
At issue are Facebook’s Messenger and Marketplace features, which Meta argues the European Union’s digital regulators shouldn’t have classified as so-called core platform services that must obey the Digital Markets Act, the bloc’s new tech antitrust rule book. A hearing is scheduled for Tuesday morning in Luxembourg at the General Court of the European Union, the bloc’s second-highest court.
Turkey Inflation Keeps Falling in Boost to Central Bank
Annual inflation continues to ease in Turkey after the central bank lifted its key interest rate in response to recent political turmoil and market jitters.
Consumer prices were 35.4% higher on year in May, a rate of annual inflation that eased from 37.9% in April, the country’s statistics authority said Tuesday. Economists polled by FactSet had expected a rate of 36%.
British American Tobacco Raises Outlook on Better-Than-Expected Revenue
British American Tobacco said revenue in the first half was slightly better than expected, and raised its outlook for the year.
The FTSE 100 tobacco group on Tuesday said it now expects to deliver revenue growth for the first half and the year of 1% to 2% at constant rates, up from a prior 1%. The company reported revenue of 25.87 billion pounds ($35.04 billion) for 2024.
GLOBAL NEWS
China’s New Trade Negotiator Is Ready to Play Hardball
In its deepening face-off with the Trump administration, Beijing’s trade negotiator has given a preview of Xi Jinping’s chief objective for this trade war: It won’t be like last time.
In Geneva in mid-May, Vice Premier He Lifeng extracted a 90-day trade truce from a Trump team that had until then declined to pause a tariff blitz on China the way it had for other countries. The deal calmed the nerves of investors and markets around the world.
Russia and Ukraine Ratchet Up War While Trying to Show Trump They Want Peace
WASHINGTON-Ukraine’s weekend attacks against military airfields deep inside Russia signal the long-stalemated war is entering a perilous phase, with both sides seemingly intent on escalation and prospects for a U.S.-brokered peace deal receding.
Only a day after the Ukrainian drones dealt a blow to Russia’s bomber fleet in a brazen attack that stunned Moscow, the two sides met for a second round of talks in Istanbul after President Trump declared again that he wanted a quick deal to halt the fighting.
U.S. Proposes Lifting Oil and Gas Development Curbs at Alaska Reserve
The federal government has proposed removing restrictions on oil and gas development at a 23 million-acre natural reserve in Alaska.
The Interior Department said Monday it is proposing to rescind a rule put in place last year that added regulations to development in the National Petroleum Reserve.
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This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
06-03-25 0528ET
