Global Markets Waver as Trade Uncertainty and Economic Data Weigh on Investor Confidence
Global markets showed signs of caution on Tuesday as European shares and U.S. stock futures declined, reflecting investor anxiety over unresolved trade tensions between the United States and China. The dollar also hovered near a six-week low before recovering slightly, as markets awaited clarity on a potential call between U.S. President Donald Trump and Chinese President Xi Jinping. Unpredictable trade developments and a looming June 4 deadline for countries to submit their “best offers” to the U.S. added to the uncertainty.
Concerns were amplified by signs of weakening manufacturing activity on both sides of the Pacific. U.S. manufacturing contracted for a third straight month in May, and Chinese factory output shrank for the first time in eight months, underscoring the impact of tariffs. Wall Street’s modest overnight gains failed to hold, with Nasdaq and S&P 500 futures both slipping about 0.5%. European markets followed suit, with the STOXX 600 and FTSE 100 indices both falling.
Investor sentiment remained highly sensitive to geopolitical developments. Analysts noted that Trump’s influence over market direction remains strong, particularly through public statements or developments in trade negotiations. While markets await confirmation from China about the anticipated Trump-Xi call, investors remain wary, especially with the U.S.’s self-imposed trade deadline fast approaching. A lack of concrete progress could lead to further volatility and market instability.
Currency markets reflected these jitters. The dollar initially dropped to a six-week low against a basket of currencies but later recovered modestly. Expectations for upcoming U.S. job data, including Tuesday’s job openings report and Friday’s nonfarm payrolls, added further pressure. A weaker jobs report could renew hopes for Federal Reserve policy easing, particularly as long-term U.S. Treasury yields flirt with the 5% threshold, raising concerns over government debt sustainability.
In broader financial markets, the euro and Swiss franc also responded to shifting economic indicators. Swiss inflation turned negative for the first time in over four years, increasing the likelihood of an interest rate cut. Meanwhile, eurozone inflation eased below the European Central Bank’s target, bolstering expectations for more stimulus. In commodities, oil prices inched higher amid supply concerns, while gold retreated slightly from recent highs as traders sought clarity in a turbulent global environment.
Source: Reuters