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Investing.com - Trade talks in London between officials from the U.S. and China are under close scrutiny at the start of the new trading week. A crucial reading of consumer price inflation may provide clues into the effect of President Donald Trump’s punishing tariff agenda on inflation. Tesla (NASDAQ:TSLA) is in the spotlight following a bitter spat between CEO Elon Musk and Trump, while Oracle (NYSE:ORCL) and Adobe (NASDAQ:ADBE) are due to headline to weekly corporate earnings calendar.
1. U.S.-China trade talks
Crunch discussions between the U.S. and China at an undisclosed location in London are set to be major focus for markets on Monday.
Investors are optimistic that the world’s two largest economies will achieve a rapprochement following a period of increased trade tensions.
Both sides have been at odds over Trump’s threat of elevated tariffs and the supply of rare earth minerals from China, despite a preliminary agreement reached in Geneva last month that included a temporary pause and lowering of punishing tit-for-tat levies. Trump’s so-called "reciprocal" duties on China are now on hold until August 12.
"Financial markets are leaning towards a glass-half-full view of the world right now," analysts at ING said in a note to clients on Monday, adding that the "[t]rade talks [...] should keep the risk environment calm and the dollar supported."
Treasury Secretary Scott Bessent, U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick are due to represent Washington during the discussions, while Vice Premier He Lifeng will helm China’s contingent.
Last week, Trump and Chinese counterpart Xi Jinping spoke for over an hour on the phone. Trump said the conversation was mostly focused on trade and had a "very positive conclusion", although a Chinese government account noted that Xi told Trump to back away from his aggressive trade measures and avoid taking steps to support Taiwan.
2. Consumer price data ahead
On the economic calendar, all eyes will be on the release of May’s reading of U.S. consumer price, which could provide a glimpse into the impact of Trump’s aggressive tariff policies on inflation.
The Labor Department’s consumer price index is tipped to speed up slightly to 2.5% from 2.3%, while the month-on-month gauge is expected to match April’s pace of 0.2%.
Cutting out more volatile items like food and fuel, the index is seen edging up to 2.9% year-over year and 0.3% on a monthly basis.
Following the release of the data on Wednesday, further data points are due out that track producer prices and consumer expectations for inflation in the months ahead.
"If the inflation numbers for May stay on a cooling trajectory, the case for a dovish pivot in Federal Reserve rhetoric would grow stronger amid signs of softening growth," analysts at Vital Knowledge said in a note to clients.
3. Tesla in focus amid Trump-Musk feud over fiscal bill
In the corporate sector, the spotlight is likely to remain on Tesla as traders assess the fallout from a bitter and public feud between CEO Elon Musk and Trump.
Morgan Stanley (NYSE:MS) has retained its “overweight” on the electric vehicle manufacturer, seeing an upside of nearly 39% from the stock’s close on Friday.
Tesla shares had fallen by more than 2% in premarket U.S. trading on Monday. Despite although recovering somewhat in the prior session, the stock plummeted nearly 15% last week as a dispute between Musk and Trump over a massive fiscal bill currently making its way through Congress devolved into personal attacks against each other on social media.
However, “while emotions are running high, we are not convinced the longer-term vectors that drive the stock’s value have changed,” Morgan Stanley said, in a note.
4. Oracle, Adobe to report
The quarterly earnings season, meanwhile, is drawing to a close, with only a trickle of companies set to report this week.
Among the headliners will be cloud-computing group Oracle, which is slated to unveil its results on Wednesday.
In March, Oracle CEO Safra Catz outlined a solid growth trajectory for the business over its next two fiscal years, underpinned by surging demand for cutting-edge artificial intelligence products. Oracle has made AI a pillar of its future strategy, and is pushing to use the nascent technology to help its cloud services process large reams of information.
Elsewhere, AI will be a major focal point for Adobe when the Photoshop-owner delivers its latest earnings after the close of U.S. markets on Thursday.
Adobe is working to fold AI into its suite of software tools crucial for online marketing. Yet monetization of its AI efforts has so far been sluggish, leading the group to forecast relatively tepid second-quarter returns. Shares in Adobe have dipped by over 5% year-to-date.
5. Apple (NASDAQ:AAPL) WWDC keynote
markets will be keeping tabs on Apple’s annual Worldwide Developers Conference, which is due to begin on Monday with the iPhone maker’s traditional keynote address.
The event typically pulls away the veil on some of Apple’s software updates due to be made available later this year.
Bloomberg News has reported that Apple will likely debut a new numbering regime for its operating system, shifting from a sequential series to one based on the year. Apple’s iOS 26, for example, is reportedly tipped to include major design changes, but little is currently known beyond potential improvements to the artificial intelligence-enhanced Apple Intelligence service.
Meanwhile, Apple’s promised move to bring more AI into its Siri voice assistant is likely not coming this week, after the firm said three months ago that the upgrade was taking longer than initially projected.
A perceived lack of progress on AI has partly dented sentiment around Apple, sending shares in the company down by more than 16% so far this year.
"For the WWDC, expectations for this year’s keynote are muted as Apple will likely only highlight modest software upgrades it can guarantee delivery of after being forced to walk back the timing on various AI products," the Vital Knowledge analysts said. "With Apple Intelligence still very much inchoate and the company facing myriad macro pressures, it’s unlikely WWDC dramatically changes the [...] narrative around the stock."