Market awaits clarity amid global trade gridlock and fragile sentiment

Tuesday’s session opened on a cautious note, with market participants digesting a blend of unresolved trade negotiations, underwhelming diplomatic signals, political fragmentation, and mild data disappointments. While the global economy remains in a delicate balancing act, the lack of progress on major geopolitical fronts is keeping risk appetite in check. Below is a comprehensive breakdown of the latest cross-market developments:

US-China trade talks: Progress without substance

Despite a lengthy 20-hour negotiation session between US and Chinese officials in London, the markets found little comfort in the vague outcome. Both parties agreed on a framework to resume trade in sensitive goods, yet no material commitments emerged. The lack of detail left traders uneasy, especially with tariffs still looming and tensions unresolved.

• • Market reaction: S&P 500 futures fell 0.3%, while Nasdaq 100 and Dow Jones futures slid 0.2%.

• • Bond market: US 10Y Treasury yields ticked up to 4.48% as investors brace for May’s CPI data, expected to show a core inflation increase to 2.9% YoY.

• • Commodities: Gold gained 0.4%, and Brent crude inched up 0.2% to $66.99.

• • FX: The dollar firmed slightly; EUR and GBP weakened by 0.1% and 0.2%, respectively.

US-EU trade friction intensifies despite negotiation sprint

The EU sees its ongoing negotiations with the US extending well beyond Trump’s July 9 deadline. The urgency stems from Washington’s threat to apply 50% tariffs on nearly all EU exports. Although the pace of talks has picked up, Brussels believes any final deal may favor US interests disproportionately. In parallel, the EU is finalizing retaliatory tariffs on over $100 billion worth of US goods, including politically sensitive products such as soybeans, cars, bourbon, and Boeing aircraft.

• EU strategy: A push for gradual tariff reductions across key sectors like cars and industrial goods is underway.
• Risks: Any US demands that infringe upon EU regulatory autonomy remain non-negotiable red lines.
• Countermeasures: The EU already has €21 billion in tariffs approved and an additional €95 billion list prepared.

Political landscape shifts: Bessent’s rise and global sentiment

Whispers from the Republican Party suggest that Stanley Druckenmiller protégé Scott Bessent is being considered for Treasury Secretary if Trump wins. Bessent’s views lean toward aggressive deregulation and tighter fiscal policy, which could influence market sentiment if confirmed.

• Implication: His appointment would likely signal a hawkish, protectionist stance—potentially unsettling to fixed income and emerging markets.

Corporate and cultural developments: Tech, media, and leadership

• Musk’s Reversal: Elon Musk admitted regret over the spread of disinformation on his social media platform. His renewed focus on “accuracy algorithms” comes amid pressure from investors and advertisers to restore credibility.
• Nintendo’s record launch: The new Switch 2 console saw explosive demand, with 3.5 million units sold in four days.

Crypto and digital assets: Choppy but active

• Bitcoin slipped 0.4% to $109,567.
• Ethereum rose 0.9% to $2,799.

While volatility persists, crypto remains attractive for traders looking to hedge against fiat instability and geopolitical disruption.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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