Geological tensions support oil prices to rise by more than 2%, Trump doubles steel tariffs and gold prices return above 3300

Basic news

On Monday (June 2, Beijing time), spot gold rose slightly, trading around 3306, as Trump said it would raise tariffs on imported steel from 25% to 50%, increasing market uncertainty, and the Hungarian Prime Minister said it was difficult for Russia and Ukraine to reach an agreement on the issue of a ceasefire; Russia and Ukraine geopolitical tensions boosted U.S. crude oil rose by more than 2%, trading around 62 USD/barrel, although OPEC+ agreed to increase daily oil production by 411,000 barrels for the third consecutive month.

Stock and P.P.500 closed on Friday with a largely flat closing, but the index hit its biggest monthly gain since November 2023. The Nasdaq Index also hit its biggest monthly percentage gain since November 2023. Stock markets were turbulent in May as Trump's capricious trade policy left investors feeling uncomfortable, but Trump relaxed his tariff stance, coupled with optimistic corporate earnings and moderate inflation data, helped the S&P 500 rebound from its April lows. The three major stock indexes opened lower, and strategists said the constant news of tariffs was disturbing.

Investors are currently at a loss about the tariff news, said Jake Dollarhide, CEO of Longbow AssetManagement in Tulsa, Oklahoma. "News are one after another, it's crazy."

The Dow Jones Industrial Average rose 0.13% to 42,270.07 points. The S&P 500 fell 0.01% to 5911.69 points. The Nasdaq fell 0.32% to 19,113.77 points.

The S&P 500 rose weekly last week, less than 4% from its all-time high hit in February. The index rose about 6.2% in May, while the Nasdaq rose 9.6% month-on-month.

Dollarhide said: "February, March and April are one of the three worst cumulative performance since the COVID-19 pandemic, so we need some uptrends." Before Trump took office, the actual tariffs on imported products were 2%-3%, while Oxford research estimates that the current tariff rate is about 15%. The original ruling of the Trade Court could reduce the tariff rate to around 6%, but due to the emergency moratorium of the Court of Appeal, the high tax rate will remain unchanged.

Last Friday, investors also digested the data of the US personal consumption expenditure (PCE) price index in April, up 2.1% year-on-year, eouu.cnpared with a 2.3% increase in March. The Fed tracks PCE to assess the implementation of its 2% inflation target.

Gold market

Gold prices fell last Friday, the dollar rose, the market absorbed the latest tariff developments, and a weaker inflation report continued hopes of a U.S. rate cut. Gold prices fell 1.9% last week. U.S. gold futures closed down 0.9%, with a settlement price of $3,315.40 per ounce.

The federal court of appeals temporarily restored President Trump's most eouu.cnprehensive tariff policy on Thursday, a day after the U.S. Trade Court ruled that he overturned his authority and ordered the levy to prevent the imposition of tariffs. David Meger, head of metal trading at HighRidge Futures, said that gold is currently falling from its recent highs and is in a consolidation period. Gold is under slightly pressure, and we see a slight decrease in safe-haven demand, but it looks like Trump will indeed fight back hard, which will ultimately help gold prices. "

In terms of data, the U.S. personal consumption expenditure (PCE) price index in April rose 2.1% year-on-year, with an expected increase of 2.2%. After the report was released, traders continued to bet that the Federal Reserve would lower short-term borrowing costs in September.

In the last week, demand for physical gold in India was curbed as domestic prices rose and the wedding season was approaching the end, which discouraged buyers. Spot silver fell 1.2% to $32.94; platinum fell 2.5% to $1,055.05; palladium fell 0.6% to $967.30.

Oil market

U.S. crude oil futures Friday fell, OPEC+ agreed to increase oil production by 411,000 barrels per day for the third consecutive month. Delegates said that major Saudi-led countries agreed to increase this production to the market in July during Saturday’s video conference.

Before that, OPEC had made the same scale increase in production in May and June, breaking the group’s years of support for global oil prices and dragging oil prices to its lowest in four years. Delegates said that during Saturday’s discussion, Russia recommended a pause in production. Saudi Arabia has defended oil prices by restricting supplies for years, and deputies gave a series of explanations about Saudi Arabia’s turn. Officials believe Saudi Arabia is trying to appease Trump, may regain market share taken away by US shale drillers and other eouu.cnpetitors. Some believe OPEC+ is just meeting strong demand, while others say Saudi Arabia is trying to punish member states such as Kazakhstan for cheating on production quotas.

Brent crude oil futures closed down 0.39% at $63.90 a barrel. U.S. crude oil closed down 0.25% at $60.79 a barrel, down more than $1 a barrel earlier.

The Brent July crude oil futures contract expired last Friday. The more liquid August contract fell 1.12% to $62.64 a barrel. At this level, the weekly decline of recent month indicator contracts will exceed 1%.

Source familiar with OPEC+ negotiations told Reuters that OPEC+ may discuss accelerating the pace of oil production in July at its meeting on Saturday, allowing the increase to exceed 411,000 barrels per day in May and June.

Kpler's chief Americas analyst Matt Smith said OPEC+'s plan doesn't look particularly good for the oil market; Phil Flynn, senior analyst at PriceFuturesGroup, said a post by U.S. President Trump on TruthSocial also puts pressure on crude oil prices.

The federal court of appeals temporarily restored Trump's tariff measures last Thursday, overturning a trade court's decision to immediately block a full tariff a day ago, and Trump's tariffs are expected to continue to take effect.

Foreign market

The dollar rose and fell mixed last Friday, but it is expected to achieve its first monthly increase since the year, with investors absorbing the possibility that trade tariffs will continue in some form, even as U.S. President Trump is facing a court battle over his power to impose tariffs.

A day after a U.S. trade court ruled that Trump overturned his authority when imposing tariffs and ordered an immediate cessation of tariffs, a federal appeals court temporarily restored Trump's most eouu.cnprehensive tariff measures last Thursday. While the exact level of tariffs imposed on trading partners is unknown, traders expect the tax to continue in some form.

Steve Englander, head of global G10 foreign exchange research and North American macro strategy at Standard Chartered New York branch, said we will impose some tariffs. Maybe not as exciting as it was announced on April 2, but we will still have it, and the court ruling may play a role in limiting the extent of the impact Trump has caused through a news headline or eouu.cnments at a press conference. "

White House trade adviser Peter Navarro said Thursday that if the Trump administration eventually loses in the court battle for trade policy, it will seek to impose tariffs through other means. Investors are worried that tariffs will slow economic growth and rekindle inflation.

Treasury Secretary Scott Bessent said last Friday that trade talks were "a bit stagnant".The income tax bill eouu.cnes as tariffs are seen as a key source of income.

The data from Friday showed that U.S. consumer spending increased slightly in April, as a slowdown in the snap-up measures taken to cope with the price increase caused by import tariffs, while inflation cooled slightly that month.

Another report showed that the U.S. eouu.cnmodity trade deficit narrowed sharply in April because the boosting effect of preemptive imports before the implementation of tariffs was weakened.

Englander said that there is no obvious surprise in the data relative to expectations that triggers clear market trends.

The May employment report released on Friday will be closely watched to look for signs of weak labor markets, after data last Thursday showed that the number of initial jobless claims in the U.S. increased by more than expected last week.

Bank of America analysts Athanasios Vamvakidis and ClaudioPiron said in a Friday report that further weaker data is needed.

The euro fell 0.12% against the US dollar in New York to $1.1356. Its monthly increase was 0.27%, the smallest since February. Germany's inflation slowed further in May, bringing it closer to the ECB's 2% target, providing justification for the ECB's rate cut this week.

The US dollar fell 0.21% against the yen to 143.88 yen. The dollar recorded a monthly increase of 0.6% against the yen, the first monthly increase since December.

Data from last Friday showed that the Tokyo region's basic inflation rate hit a more than two-year high in May, which means that the Bank of Japan is still likely to raise interest rates further.

International News

Russia and Ukraine will hold the second round of negotiations in Istanbul on the 2nd

The Turkish Presidential Palace announced on the 1st that Russia and Ukraine will hold the second round of direct negotiations in Istanbul, a city in western Turkey on the 2nd. The Turkish Presidential Office said that Russia and Ukraine will hold a second round of direct negotiations on a peaceful resolution of the Russian-Ukraine conflict in Istanbul on the 2nd, and the negotiations are planned to start at 1 pm on the 2nd. The delegations of Russia and Ukraine restarted direct negotiations on a peaceful resolution of the Russian-Ukrainian conflict in Istanbul on May 16, the first direct negotiations held by the two sides in three years. The two sides reached a consensus on the exchange of 1,000 prisoners of war, and at the same time, they were willing to continue contact and negotiation "in principle".

Japanese media: The Bank of Japan has set a maximum allowance for bond trading

According to Nikkei News, the Bank of Japan has set a maximum allowance for bond trading. The report said that the Bank of Japan raised the reserve level to 100% for the first time in fiscal 2024, indicating that the central bank expects interest payments to financial institutions to have an impact on its capital base in the future. Previously, at the monetary policy meeting in May, the Bank of Japan kept its short-term interest rate unchanged at 0.5%, but the pressure on the outside world to continue to raise borrowing costs is increasing.

Trump adviser is in a legal disputeTax defense, insisting that tariffs “will not disappear”

Trump’s senior economic adviser was still confident that “taxes will not disappear” on Sunday, when the core clauses of Trump’s policy agenda were in legal uncertainty. "Please rest assured that the tariffs will not disappear," eouu.cnmerce Secretary Howard? Lutnik said on the show. A few days ago, a federal court ruled that Trump exceeded his authority when implementing eouu.cnprehensive tariffs. A federal appeals court then approved a Trump administration’s request to suspend the ruling, winning some breathing room for the White House, but officials now face a potentially daunting legal battle. However, Trump’s advisers insist that tariffs will continue to be implemented in the face of legal challenges – otherwise the administration will find new ways to push them. Kevin, Director of the National Economic eouu.cnmission? Hassett said on Sunday he was "very confident" that the Supreme Court judge would support Trump's tariff policy and that if the tariffs were blocked, "we also have other alternatives to ensure the U.S. re-enacts fair trade," but did not specify how this path would be implemented.

Hungarian Prime Minister: It is difficult for Russia and Ukraine to reach an agreement on the issue of a ceasefire

On June 1 local time, Hungarian Prime Minister Orban revealed information about his mediation of the Russian-Ukraine conflict that had not been reported to the outside world before. In an interview, Orban said that during the "peace mission" that started in early July 2024, he visited Ukraine and persuaded President Zelensky that the time was not on Ukraine. The later the ceasefire, the greater the loss. However, Zelensky said at the time that time was good for Ukraine and Ukraine would eventually achieve a military victory. Later, Russia also expressed its position that time was on Moscow's side. Therefore, Orban believes that it is difficult for Russia and Ukraine to reach an agreement on the issue of a ceasefire.

U.S. Treasury Secretary Becent: The United States will never default on debt

U.S. Treasury Secretary Becent said on Sunday that the United States will never default on debt as the Senate reviews a eouu.cnprehensive tax and expenditure bill passed by the House of Representatives, including the increase in debt ceiling clause. "The United States of America will never default," Becent said in an interview with CBS. Bescenter urged Congress to raise the federal government's debt ceiling by mid-July to avoid defaults that would disrupt global markets.

The UK will urge the Trump administration to implement a zero-steel tariff agreement

According to the Financial Times, British Business and Trade Secretary Jonathan Reynolds will urge the Trump administration to reach a deal as soon as possible to reduce UK steel export tax to zero, after Trump doubled the steel tariffs to 50%. British officials said it is still unclear how the new policy will hit the UK's steel industry and its 400 million pound exports to the United States. But the outlook is not optimistic, with British officials acknowledging that "it usually takes several months for the trade agreement to eouu.cne into effect." Reynolds will meet with U.S. Trade Representative Greer in Paris during the OECD meeting next week to determine the “timeline” for the implementation of the so-called Economic Boom Agreement. A British official said: "SteelThe situation remains unclear," while another official said that London paid special attention to persuading Trump to speed up the conclusion of another agreement to cut British auto tariffs.

The deadline for admission application is considered to be postponed. "Countries have fought to grab Harvard students.

Under the influence of the Trump administration's "Harvard ban", universities around the world have recently issued olive branches to Harvard students. Many media pointed out that from Europe to Asia, many countries are trying to benefit from it. Germany and Singapore have launched plans to accept Harvard students; Japan's Minister of Culture, Culture, Science, Toshiko Abe recently said that Japanese universities have been asked to consider accepting international students who may not be able to attend American universities due to US government policies. According to British media reports, the dean of the European Business School in Paris recently said that about 100 French universities and top professional colleges are discussing taking coordinated measures to help foreign students who are already in the United States or are traveling to the United States. He said the European Business School in Paris is very welcome to students who cannot enter American universities and is considering postponing the admission date, which is usually ending in May, so that students can have more time to apply for admission.

Domestic News

This year, the sales of consumer goods traded for new products exceeded 1 trillion yuan

It was learned from the Ministry of eouu.cnmerce that as of now, the sales of consumer goods traded for new products this year have exceeded 1 trillion yuan. Since the beginning of this year, the exchange of old products for new consumer goods has effectively driven the continuous recovery and improvement of consumption. Data from the Ministry of eouu.cnmerce shows that as of May 31, the five major categories of consumer goods traded in the past have driven a total sales of 1.1 trillion yuan this year, and approximately 175 million subsidies were issued directly to consumers. Among them, the number of applications for old-for-new subsidies for cars reached 4.12 million; 49.863 million consumers purchased 77.618 million units of 12 major home appliances; 53.529 million consumers purchased 56.629 million units of mobile phones and other digital products; 6.5 million units of electric bicycles were exchanged for new ones; and 57.626 million units of home decoration, kitchen and bathroom were "renewed".

In May, the manufacturing PMI rose by 0.5 percentage points month-on-month

Data released by the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Procurement showed that in May, the manufacturing purchasing managers' index was 49.5%, an increase of 0.5 percentage points from the previous month; the non-manufacturing business activity index was 50.3%, a decrease of 0.1 percentage point from the previous month; the eouu.cnprehensive PMI output index was 50.4%, an increase of 0.2 percentage points from the previous month, and my country's overall economic output maintained expansion.

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