Stocks on Wall Street closed lower after a volatile trading session. Traders of the dollar and bonds are awaiting the release of US consumer price data, which will help clarify the likelihood of a rate cut. Oil prices are trading sideways ahead of Trump-Putin talks. Gold declined by 1.5%.
Market jitters: investors watch negotiations and economic data
On Monday, global stock markets closed in the red, reflecting uncertainty amid swings in trade and geopolitical relations. At the same time, yields on long-term US Treasuries moved lower, while market participants' attention was fixed on upcoming macroeconomic releases and international talks.
Trade pause between US and China
Just hours before higher tariffs on Chinese goods were set to resume, US President Donald Trump signed an order extending the current tariff truce for another three months. This decision came as a surprise to some analysts, given the tough rhetoric from both sides in recent weeks.
Leaders to meet in Arctic
Later in the week, talks between Donald Trump and Russian President Vladimir Putin are scheduled to take place in Alaska. Political analysts note that the meeting's agenda may cover both security issues and strategic economic topics.
Pressure on Wall Street
US stock indices ended the session lower. The steepest declines were seen in energy and technology shares, while consumer staples, consumer discretionary, and healthcare stocks posted gains.
Trading results
- Dow Jones Industrial Average: -0.45%
- S&P 500: -0.25%
- Nasdaq Composite: -0.30%
- STOXX 600 (Europe): -0.06%
- MSCI World: -0.25% (938.16 points, near July highs)
Focus on inflation
The key event of the week will be Tuesday's release of US consumer price data. Economists estimate that tariff effects will lift core inflation by 0.3%, bringing the annual rate to 3%, which remains above the Federal Reserve's 2% target.
Rates in spotlight: September scenario may change
A potential increase in the key interest rate could undermine market confidence in the imminent easing of monetary policy. Economists note that altering expectations would require a significant move, given the impact of declining job numbers on current forecasts. At present, market participants estimate the probability of a rate cut in September at around 90%, also factoring in at least one more reduction before the end of the year.
Political pressure on Fed
US President Donald Trump continues to criticise the Federal Reserve for its refusal to cut rates at recent meetings. The financial community is also closely watching who will succeed the current chairman, Jerome Powell, whose term expires in May.
Dollar on the rise
The US currency strengthened against major global peers. The exchange rate against the Japanese yen rose by 0.26% to 148.11. Against the Swiss franc, the dollar added 0.47% to 0.812. The euro weakened by 0.21% to 1.1615. The US dollar index gained 0.27% to 98.50.
Australian dollar loses ground
Ahead of the Reserve Bank of Australia's meeting, which is expected to confirm a course towards an interest rate cut, the Australian currency fell by 0.18% to 0.6512 US dollars. In July, the regulator surprised markets by leaving policy unchanged while awaiting fresh inflation data.
Gold under pressure
Gold prices fell by 1.50% to 3347.69 dollars per ounce after Trump announced he would not impose tariffs on imported bullion. December futures in the US closed 2.5% lower at 3404.70 dollars per ounce.
Oil edges higher on positive signals
Oil prices posted modest gains on Tuesday. Brent crude rose by 0.06% to 66.63 dollars per barrel. US WTI added 0.13% to settle at 63.96 dollars.
Asian markets in the green
Asian equity indices ended the day higher. The Japanese market set a new all-time high, supported by the extension of the tariff truce between the United States and China, as well as expectations for the release of a key US inflation report that could determine the next steps on interest rates.
Reserve Bank of Australia cuts interest rates
The Australian S&P/ASX 200 index (.AXJO) strengthened, while the Australian dollar fluctuated. As expected, the regulator cut the key rate by 0.25 percentage points to 3.60%, the lowest level in the past two years.
Nikkei hits record, tech sector grows
Japan's Nikkei index (.N225) renewed its all-time high, supported by a strong rally in technology stocks and revived optimism over trade prospects with the United States.
China and Hong Kong: mixed results
China's CSI300 blue-chip index rose by half a percent. Hong Kong's Hang Seng (.HIS) remained virtually unchanged. The broader MSCI index for the Asia-Pacific region excluding Japan posted a modest gain.
Year of trade battles
Over the past 12 months, the United States and China have exchanged tariff blows, leading to a series of negotiations in Geneva, London, and Stockholm that began in May. The main issue has been the gradual reduction of retaliatory tariffs from extreme levels.
Inflation and Fed rates
An unexpected acceleration in inflation could strengthen expectations for interest rate cuts by the Federal Reserve this year. Markets are pricing in at least two cuts in 2025, while JPMorgan analysts forecast four consecutive cuts starting in September.
