Wall Street's Momentum Slows Down
Following the customs dispute, investors express concerns over the nation's economic stability
As the trade dispute between the United States and China lingers, Wall Street remains jangled. Investors are still keeping their fingers crossed for a resolution, hoping President Trump might soften his stance on tariffs. Yet, indicators signaling a slowing American economy have stirred some hesitation.
Recent job openings offered a glimmer of hope for the labor market, but the ADP report disheartened us by showcasing much weaker job growth than predicted. This shifts our gaze towards the official May jobs report due next week. The new U.S. tariffs on steel and aluminum imports did not take a major toll on the market.
Economy on an EdgeRumors swirl about President Donald Trump caving in to the trade dispute, possibly due to a court ruling reheating the issue. Meanwhile, after an appeals court's temporary halt on the reciprocal tariffs imposed by Trump, both parties have until June 9 to respond. A decision is expected to be made between June 12 and 15.
Market Awaits the Trump-Xi CallAlthough Trump has expressed positive sentiments towards his Chinese counterpart, Xi Jinping, market participants pine for a resolution. Despite fears of an escalating trade war between the U.S. and China, the market maintains hope for a constructive call between Trump and Xi, according to ING analyst Francesco Pesole. However, a more conciliatory tone might not bring about a significant breakthrough in negotiations.
Weak starts to the week, with a disappointing ISM index for manufacturing, followed by a disappointing ADP jobs report, and an underwhelming ISM index for non-manufacturing further highlight a slowing American economy, prompting the Fed to consider a more accommodative monetary policy.
Fortunes Tied to the Dollar
The dollar took a hit as a consequence of the weak labor market data. With market players betting on rate cuts, the Dollar Index dipped 0.4%. Despite this, US President Trump insists on rate cuts from US Federal Reserve Chairman Jerome Powell, as stated on his social media platforms. On the other hand, yields rose, with the yield on ten-year US Treasury notes decreasing 11 basis points, hitting their lowest level in nearly a month.
The gold price rebounded after a setback the previous day, rising 0.6% to $3,374 per ounce. The dollar's weakness and Trump's comments about the trade conflict with China provided supportive factors, while market analyst Peter Cardillo of Spartan Capital Securities reckons a compromise in sight may boost the demand for "safe-haven" gold.
Oil Prices Sink
Oil prices slipped, with prices for Brent and WTI decreasing by up to 1.1%. Participants pointed to weak American economic data, stoking fears about demand. Despite a larger-than-expected decline in US crude oil inventories, this did little to provide oil prices with support.
Stock Performers
Among individual stocks, Hewlett Packard Enterprise rose 0.7%. The server and cloud provider reported stronger-than-anticipated second-quarter performance due in part to a cost-cutting program, and is slightly more optimistic about its full-year earnings. However, it has modestly trimmed the upper end of its revenue outlook.
On the flip side, Wells Fargo bank shares dipped 0.3% after the US Federal Reserve lifted the growth cap it had previously imposed on the bank due to a 2016 scandal involving fake accounts. Meanwhile, Crowdstrike shares plummeted 5.6%, despite a strong earnings report, as both its Q1 revenue and outlook failed to meet expectations.
Sources: ntv.de, mau/DJ
- Wall Street
- Tariffs
- China
- Inflation
- Trade Wars
1. Businesses and investors, mindful of the ongoing trade dispute between the United States and China, are keeping a close eye on the community policy regarding tariffs, as a potential resolution could significantly impact Wall Street's future.
2. The slowing American economy, as indicated by weak jobs growth and the Fed's consideration of a more accommodative monetary policy, could have implications for employment policy, particularly in sectors that are heavily tied to finance and business.
