MARKET WRAPS
Watch For:
EU inflation, unemployment; Italy unemployment; no major corporate trading updates expected
Opening Call:
European stock futures advanced, tracking mild gains by Asian stock benchmarks. The dollar rebounded; Treasury yields were little changed; oil futures gained and gold fell.
Equities:
Stock futures rose early Tuesday as traders await further trade developments following another flare-up in global trade tensions.
Investors are “not quite sure where these tariffs go, not quite sure what the strategy is from the White House moving forward,” said Anthony Saglimbene, chief market strategist at Ameriprise.
Forex:
Tariffs and recession fears have been weighing on the dollar. “The greenback is feeling the impact of this breakdown,” Spartan’s Peter Cardillo said. He thinks the weakening can continue “as the trade war intensifies and recession fears continue to mount.”
Bonds:
Fixed-income investors looking for opportunities outside of the U.S. can find appealing options in emerging markets, Payden & Rygel’s Kristin Ceva said. “Global investors may have become overallocated to the US in recent years,” Ceva said.
She said EM debt is “underappreciated despite offering attractive income (7-8% yields), broad diversification (up to 80 countries), and exposure across sovereign, corporate, and local currency markets.”
Some of their currencies are expected to appreciate against the dollar, in an added potential gain.
Energy:
Oil futures rose in Asia amid ongoing geopolitical tensions. “Ukraine’s recent drone strikes on Russian air bases have introduced a renewed element of supply risk into the market,” Kudotrade’s Konstantinos Chrysikos said.
“Geopolitical risks related to the Russia-Ukraine conflict are likely to maintain a risk premium in oil markets, providing support to prices,” Chrysikos said.
Metals:
Gold fell slightly early Tuesday after notching recent gains due to safe-haven demand. Ukraine’s recent drone strikes have cast a cloud over Russia-Ukraine peace talks. The talks in Istanbul on Monday ended after the two sides met for just over an hour with little progress toward an agreement.
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Copper may be supported by improving fundamentals. Inventories in LME warehouses are nearing two-year lows, ANZ said. The bank noted that copper prices recently gained 1.2% amid fears that the metal could be the next in line to be hit with new tariffs.
TODAY’S TOP HEADLINES
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.
Why oil’s rally after Russia’s ‘Pearl Harbor’ moment may be short-lived
Geopolitical shocks have a knack for roiling the financial markets, but the oil sector was still caught off guard by a surprise attack by Ukraine that has been referred to as “Russia’s Pearl Harbor,” and which led to an unexpected rally in crude prices that some analysts believe is doomed to be short-lived.
The upward move in prices came during the same weekend that OPEC+ announced a decision to speed up its production increase for a third month in a row. Some analysts had expected to see oil move lower in the wake of that decision, but that was before Ukraine’s drone strikes on Russian air-force bases that damaged or destroyed bombers used by Russia for missile attacks and potential nuclear strikes, according to the Wall Street Journal.
Poland Has a New Government. The Economy Will March On.
Poland’s economic miracle can’t survive a divided government forever. But it can for a while longer.
Conservative opposition candidate Karol Nawrocki’s 51% to 49% victory in Poland’s June 1 presidential election dealt a blow to Prime Minister Donald Tusk’s Western-leaning government, all but insuring continued vetoes of its key reforms. Markets took the result in stride, however. The iShares MSCI Poland exchange-traded fund was little changed, holding on to a 47% year to date bull run. The zloty nudged up 0.5% against the dollar.
Universal, Warner and Sony Are Negotiating AI Licensing Rights for Music
Major music companies are negotiating licensing deals with two startups that could set a new precedent for how songs are used and artists are paid for remixes generated by artificial intelligence.
Universal Music Group, Warner Music Group and Sony Music Group want to be compensated by startups Suno and Udio when music by artists they represent is used to train generative AI models and produce new music, according to people familiar with the talks.
China’s AI industry is booming. Can Nvidia and other U.S. companies still get in on it?
Despite concerns over whether China will be able to keep up its artificial-intelligence spending in the face of tightening U.S. restrictions on advanced chip sales, some analysts are staying bullish and see the country’s data-center demand growing. That could be good for Nvidia Corp., as it’s expected to launch a new chip to get around the latest rules limiting its China sales.
Jefferies analysts said in a note on Monday that capital-expenditures growth for China’s cloud-service providers exceeded that of U.S. counterparts in the first quarter of the year. Even after taking into account that Chinese companies likely stockpiled chips late last year to get ahead of U.S. trade restrictions, the capex-to-cloud-revenue ratio of Chinese cloud providers “is in fact catching up with those of U.S. peers,” the analysts said.
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Expected Major Events for Tuesday
00:01/IRL: May Ireland Manufacturing PMI
04:30/NED: May Flash Estimate CPI
06:00/ROM: Apr PPI
06:30/HUN: 1Q GDP
06:30/SWI: May CPI
07:00/TUR: May PPI
07:00/TUR: May CPI
07:00/SPN: May Unemployment
07:00/SVK: 1Q Labour Force Sample Survey: Employment & unemployment
07:00/SVK: 1Q Average monthly wage of employees
08:00/ITA: Apr Unemployment
09:00/EU: Apr Unemployment
09:00/EU: May Flash Estimate euro area inflation
15:00/DEN: May Foreign Exchange & Liquidity
All times in GMT. Powered by Onclusive and Dow Jones.
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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 0016ET
