Global Stocks Fluctuate as Tariff Hike Deadline Looms
The international stock market showed mixed results as the deadline for the United States to increase tariffs on Chinese imports approaches. The rise in tariffs was temporarily halted in May for a 90-day period to allow trade discussions to take place.
Oil Prices Continue to Fall
The decrease in oil prices, which began last week, continued due to anticipated improvements in the conflict in Ukraine. This anticipation is fueled by an upcoming meeting between the U.S. president and his Russian counterpart. A rise in production from OPEC plus countries also contributed to the fall in prices as it signals an increase in supply.
European and Asian Markets
In Europe, Germany's key stock index saw a slight decrease of 0.1%, while the main index in Paris fell by 0.2%. However, the primary index in the United Kingdom registered a gain of 0.2%. In Asia, Hong Kong's main index rose by 0.2%, as did the principal index in mainland China, which increased by 0.3%. Meanwhile, Taiwan's primary index saw a more significant rise of 0.5%.
Tariff Threats and Trade Talks
The potential for triple-digit tariffs prompted a 90-day pause for trade talks between the U.S. and China. However, the deadline for these discussions is rapidly approaching. The most recent round of talks, which took place last month, ended without a definitive statement on whether the deadline would be extended for another 90 days.
Semiconductor Companies and Artificial Intelligence
Unverified information suggested that certain companies had agreed to give the U.S. government a 15% cut of their revenues from chip sales to China used in artificial intelligence applications. This agreement comes after the U.S. government eased restrictions on the sale of certain chips to China. Despite this, the shares of these companies saw a decrease in early trading.
Other Market Movements
Other notable market movements included Australia's primary index, which rose by 0.3%. Meanwhile, South Korea's main index fell slightly by 0.1%. Markets in Japan and Thailand were closed for holidays. In the U.S., technology companies, which hold large stock values, were significant contributors to the market's performance.
Company Reports and Mergers
Several companies reported financial results that exceeded analysts' expectations, prompting an increase in their market value. However, warnings persist that current tariffs could impact company profits. A noteworthy event was the completion of an $8 billion merger, leading to a significant drop in the share value of the merged company and its competitor.
Inflation, Trade War and Economy
Investors will gain more understanding about U.S. inflation, retail sales, and how the ongoing trade war may affect the economy and interest rate policy this week. The imposition of higher import taxes on numerous countries has brought the focus to these areas. While lower interest rates can boost the economy and investment prices, they could also lead to higher inflation. Furthermore, concerns about inflation could be overshadowed by fears of a weakening job market.
Oil and Currency Movements
Early trading saw U.S. benchmark crude oil drop 16 cents to $63.72 per barrel, while Brent crude, the international standard, fell 9 cents to $66.50 per barrel. In terms of currency, the U.S. dollar increased against the Japanese yen, while the euro saw a decrease.