Gold bars to be exempt from tariffs, White House clarifies
Investing.com - U.S. stock futures retreated Monday as tensions between China and the U.S. rose once more, reopening the chance of a costly trade war. Elsewhere, the chance of a interest rate cut by the U.S. Federal Reserve this year remains possible, according to a Fed policy maker, while bitcoin rebounded after weekend losses and crude soared in the wake of the latest OPEC+ meeting.
1. Heightened U.S-China trade tensions
The period of detente between the two largest economies in the world hasn’t lasted long.
China said on Monday that U.S. President Donald Trump’s accusations that Beijing had violated the consensus reached in Geneva trade talks were "groundless", and promised to take forceful measures to safeguard its interests.
The comment by the commerce ministry was in response to Trump’s remarks on Friday that China had breached a bilateral deal to roll back tariffs.
The ministry said China had implemented and actively upheld the agreement reached last month in Geneva, while the U.S. had introduced multiple "discriminatory restrictive" measures against China.
Those measures included issuing guidance on AI chip export controls, halting sales of chip design software to China and revoking visas for Chinese students, the ministry added.
Beijing and Washington agreed in mid-May in Geneva to pause triple-digit tariffs for 90 days. In addition, China also promised to lift trade countermeasures that restricted its exports of the critical metals needed for U.S. semiconductor, electronics and defence production.
However, late last week U.S. Treasury Secretary Scott Bessent stated that trade talks with Beijing had stalled.
2. U.S. futures start new week lower
U.S. stock futures fell Monday, starting the new week on a negative note as rising trade tensions between the U.S. and China increased concerns over slowing global economic growth.
At 04:15 ET (08:15 GMT), the S&P 500 futures traded 35 points, or 0.6%, lower Nasdaq 100 futures dropped 150 points, or 0.7%, and Dow futures fell 225 points, or 0.5%.
Wall Street is starting the new week, and month, on a weak note, handing back some of the prior month’s strong gains following a war of words between the U.S. and China [see above].
On Friday, the broad-based S&P 500 ended May with a more than 6% gain, its best monthly performance since November 2023. The tech-heavy Nasdaq Composite surged more than 9% and the blue chip Dow Jones Industrial Average gained about 4%.
Worries over the economic outlook could hinder the main stock indices this week, and thus investors will be focusing on a slew of reports due this week that could provide insight into how tariffs have affected the U.S. economy, in particular the May nonfarm payrolls reading on Friday.
This report is expected to show the economy created 130,000 new jobs, down from a higher-than-expected 177,000 in April.
3. Fed can still cut this year - Waller
The end of the week sees the release of the widely-watched monthly U.S. jobs report, which will provide key insight into the state of the economy heading into another bout of trade turbulence.
This comes just days after PCE price index data - the Fed’s preferred inflation gauge - showed some cooling in inflation in April.
The Federal Reserve will still be able to cut interest rates this year, with recent data supporting this outlook, Fed Governor Christopher Waller said on Monday.
Speaking at a conference in South Korea, Waller said that a rise in inflation from President Donald Trump’s trade tariffs was unlikely to be persistent, giving the Fed more confidence to lower rates later this year.
If “underlying inflation continues to make progress to our 2% goal,” along with tariffs settling at lower rates and employment remaining “solid,” “I would be supporting good news rate cuts later this year,” Waller said.
The Fed governor flagged recent progress on inflation in April, and noted that the labor market also remained strong, giving the central bank additional time to see how trade negotiations play out, before needing to decide on interest rates.
4. Bitcoin bounces after weekend losses
Bitcoin, the world’s largest cryptocurrency, rose Monday, bouncing after heavy losses over the weekend as risk appetite was battered by heightened trade tensions between the U.S. and China.
At 04:15 ET, Bitcoin steadied at $105,530, up 1.1%, after falling back from a record high of over $111,000 seen in late-May.
Losses in Bitcoin came as exchange-traded fund flow data showed institutional money sold heavily in the last two trading days of May.
Bitcoin’s run to record highs was in part driven by optimism over a U.S.-China trade deescalation, but also progress towards more U.S. crypto-friendly policy.
The cryptocurrency logged a 11% surge in May.
Piper Sandler analysts said they came away from the 2025 Bitcoin Conference in Las Vegas “incrementally more optimistic on the momentum we’re seeing across Bitcoin and digital assets broadly.”
The analysts cited growing support from U.S. policymakers, increasing corporate adoption, and new financial products as signs of a maturing and expanding crypto ecosystem.
5. Crude soars despite OPEC+ production increase
Oil prices rose strongly Monday after OPEC+ announced plans to increase production in July by the same amount as the prior two months, something of a relief after talk of a bigger increase.
At 04:15 ET, Brent futures climbed 3% to $64.66 a barrel, and U.S. West Texas Intermediate crude futures rose 3.4% to $62.88 a barrel.
Both benchmarks have jumped higher Monday, after dropping more than 1% last week, after the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, decided on Saturday to raise output by 411,000 barrels per day in July.
This is the third consecutive month the group of top producers has increased output by the same amount, and followed reports that they were set to discuss a bigger production hike as it looks to wrestle back market share.
Increased military action between Russia and Ukraine and reports of more U.S. sanctions on Russia’s oil industry, this time pressuring major buyers such as China and India, also boosted sentiment in the crude market.
(Reuters contributed reporting.)