Markets Cautious Ahead of Trump-Xi Talks; Dollar Dips as Trade Tensions Persist
Shares in Asia showed modest gains while U.S. futures slipped on Tuesday amid lingering concerns over U.S.-China trade tensions. Investors remained cautious as erratic U.S. trade policies continued to cloud market sentiment ahead of an anticipated phone call between U.S. President Donald Trump and Chinese leader Xi Jinping. The conversation is highly anticipated as both sides seek to manage ongoing tariff disputes that have unsettled global markets.
Recent data underscored the impact of tariffs on manufacturing activity, with U.S. factory output contracting for a third consecutive month and delivery delays reaching a near three-year high. Similarly, China’s factory activity shrank for the first time in eight months, signaling that tariff pressures are starting to weigh on production. These developments have heightened concerns about the broader economic implications of the trade standoff.
Market reactions were mixed as U.S. stock futures declined during Asian trading hours despite slight gains on Wall Street overnight. Analysts noted the pivotal role of the Trump-Xi call in shaping near-term market confidence, though uncertainty remained due to China’s historically cautious communication. Additionally, investors are closely monitoring a looming June 4 deadline for trade deal submissions from U.S. partners.
The U.S. dollar fell to a six-week low early Tuesday but recovered slightly later in the session, reflecting investor nerves ahead of Friday’s key U.S. nonfarm payrolls report. This employment data is expected to influence Federal Reserve policy outlooks, with softer job growth potentially prompting consideration of easing measures. Meanwhile, the Senate begins debating a significant tax-and-spending bill expected to increase U.S. debt, adding another layer of market concern.
In commodities, oil prices rose slightly on supply worries, while gold retreated from recent highs. The Bank of Japan indicated a future interest rate hike contingent on economic growth acceleration, signaling ongoing cautious optimism amid global economic uncertainties. Overall, markets remain on edge as geopolitical and economic risks continue to influence investor behavior.
Source: Reuters