US trade woes deepen as stock futures dip and oil prices rise
Futures contracts on American stock indexes are experiencing declines. Increasing trade tensions are heightening concerns about the state of the United States economy, and the Organisation for Economic Co-operation and Development has revised downwards its growth forecasts for the USA. Simultaneously, the US dollar is strengthening, and oil prices are rising.
Futures contracts on major American indexes show a downward trend. Futures on the S&P 500 are down 0.2%, on the Dow Jones Industrial they are down 0.3%, and on the Nasdaq Composite they are down 0.1%. This situation reflects growing investor anxiety regarding the prospects for the American economy.
Deteriorating trade relations between the United States and other countries, particularly with China, are causing increased concern in financial markets. Tensions escalated after President Donald Trump accused Beijing of violating a temporary trade agreement. However, the Chinese side rejected these allegations, and investors are still hopeful for the potential of negotiating a new agreement between the two powers.
In a Tuesday report, the Organisation for Economic Co-operation and Development (OECD) significantly lowered its growth forecasts for the USA. According to the latest predictions, the American economy will grow by only 1.6% this year and 1.5% in 2026. This marks a notable deterioration compared to the March forecasts, which predicted growth of 2.2% in 2025. The adjustment is mainly due to uncertainty related to tariff policies.
Trade tensions between the USA, China, and the European Union
The European Union criticised Donald Trump's announcement to double tariffs on steel to 50%, arguing that such a move undermines ongoing trade negotiations. The European Commission announced that it will present strong arguments this week for reducing or completely eliminating American tariffs.
European Commission spokesman Olof Gill expressed the Union's position by saying, "We don't want to go down the route of tariffs. Rather than have them increase, we want them to decrease and where possible eliminate them." According to the information provided, the EU's trade commissioner Maros Sefcovic will meet with the United States Trade Representative Jamieson Greer on Wednesday in Paris. At the same time, the Commission's negotiating teams will hold talks in Washington.
Despite the ongoing uncertainty related to trade policy, some analysts remain optimistic about the short-term prospects for the stock market. Jeff deGraaf, head of research at Renaissance Macro, stated on CNBC's "Closing Bell" that "the next six weeks are some of the best six-week periods, historically, really rivaling only what we see in the fourth quarter." He also added that "this is not a time to lighten up on positions, just from the calendar’s perspective."
The situation in Europe and commodity markets
Preliminary data on inflation in the eurozone showed a drop to 1.9% year-on-year in May. This reading turned out to be lower than both market expectations and the European Central Bank's inflation target of 2.0%. These data will be significant for the ECB's interest rate decision, which is to be announced later this week. The market expects a rate cut of 25 basis points on Thursday.
We observe mixed moods on European stock exchanges. The Stoxx Europe 50 index was down 0.20%, the British FTSE 100 was up 0.09%, the French CAC 40 was down 0.25%, and the German DAX was up 0.13%.
In the currency market, the US dollar is strengthening its position. The EUR/USD exchange rate is down 0.2% to the level of 1.1391. USD/JPY quotations are rising by 0.2%, reaching a value of 143.15.
Oil prices are showing an upward trend. WTI crude oil listed on the NYMEX is up 0.5%, reaching a price of $62.80 per barrel. Meanwhile, Brent crude on ICE is gaining 0.4%, reaching $64.90 per barrel.
