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Lloyd Adams of Team Asset Management offers this week’s market review
US markets rounded off one of their best months since late-2023, boosted by the so-called “TACO Trade” a tongue-in-cheek acronym for “Trump always chickens out”, reflecting hopes that Donald Trump might soften his tough trade stance.
Rising trade tensions between the US and China remain at the forefront of international concerns. China denies breaching the Geneva trade deal, accusing the US of violating terms by tightening export controls and restricting visas for Chinese students. After a brief pause following a tariff suspension, anxiety between the two countries escalated again.
China continues to strictly control rare earth exports and crack down on illegal mining, signalling a firm stance in negotiations. The Trump administration is pushing for a direct call between President Trump and Xi Jinping to clarify talks, but China prefers top-level discussions only after lower-level officials reach agreement. Beyond trade, military tensions are rising in the Indo-Pacific, with the Pentagon warning of an imminent threat to Taiwan from China. Beijing, meanwhile, accuses the US of destabilising regional peace, complicating prospects for improved relations.
Elsewhere, the surprise US move to double steel tariffs from 25% to 50% has sparked an international backlash. The European Union has described the measure as harmful to ongoing trade discussions and signalled it could impose countermeasures if a deal is not reached by 14 July. Canada’s United Steelworkers union also condemned the decision, calling it a direct attack on Canadian workers and a threat to key industries and communities.
US inflation data for April showed only a modest rise in consumer prices, suggesting that President Trump’s newly announced tariffs haven’t yet fed through to everyday costs. Despite Trump’s repeated calls for interest-rate cuts, the US Federal Reserve remains cautious, as policymakers want to assess how tariffs and geopolitical pressures might affect prices in the months ahead.
Turning to commodities, oil prices were volatile again this week. Markets remain uncertain ahead of Saturday’s OPEC+ meeting, where members will decide whether to extend or alter current supply cuts. At the same time, a weaker US dollar and fears of a slowing US economy have weighed on prices.
Industrial metals had a mixed week. Copper held up well, supported by supply constraints and resilient demand, but most other metals slipped amid renewed concerns over global trade. Precious metals like gold and silver saw only minor moves and both finished the week slightly lower, pausing for breath after such a strong run earlier this year.
In the world of crypto markets, exchange-traded funds linked to Bitcoin continue to attract capital, amid signs of broader institutional support. Trump Media announced plans to raise funds for crypto-related purchases and stablecoin company Circle has filed to go public, reflecting growing mainstream acceptance.
A few notable underperformers stood out in equity markets. Auto Trader, (-12.6%) the UK’s leading online car marketplace, saw its shares fall sharply owing to weaker performance in its Autorama leasing business, the impact of the UK’s digital services tax and low stock levels for certain car models. Hewlett Packard, the US tech company, had a disappointing quarter owing to flat profits, tariff worries and efforts to move production out of China having progressed more slowly than expected.
Looking ahead this week, attention turns to central banks and macroeconomic data. The European Central Bank is widely expected to cut interest rates by 0.25 percentage points tomorrow. In the US, May’s employment data, due on Friday, will be a key focus for markets looking for signs of labour market trends. China’s inflation data for manufacturing and services is due midweek and will be closely watched as an indicator of the country’s economic momentum.
Quarterly earnings reports are slowing down, but tomorrow night’s results from US chipmaker Broadcom could still provide some excitement in the technology sector.
