Investors are focusing on the outcomes of several trade negotiations for clues on the next turn in markets. Stocks have rebounded to a record since their plunge in April when Trump introduced his sweeping levies and then announced a 90-day pause for countries to negotiate with the US. Major US trading partners hurried over the weekend to secure trade deals.
“This is a reflection of some uncertainty over the July 9 reciprocal tariff expiry deadline,” said Tony Sycamore, an analyst at IG in Sydney. A tariff rate of 10%-15% on most, if not all, countries would be welcomed by traders, whereas a rate greater than 20% “would rattle markets to varying degrees depending on the extent of the increase,” he said.US Commerce Secretary Howard Lutnick said country-by-country tariffs will take effect August 1. Negotiations still remained ongoing ahead of the deadline, with European leaders pushing for a deal that would allow tariff relief on carmakers for increasing US investments.
Treasury Secretary Scott Bessent indicated some countries may be offered a three-week extension to negotiate.“We judge there is a risk that President Trump reinstates higher ‘reciprocal’ tariffs on major economies such as Japan and Europe,” Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients.
Separately, China said it will impose some reciprocal curbs on medical device procurement for companies based in the European Union, adding tensions between the two major trading partners just as Beijing seeks to shore up ties with the US.
Meanwhile, the latest oil supply shockwave unleashed by OPEC+ is set to swell a surplus later this year, pressuring prices for producers the world over while answering Trump’s calls for lower fuel costs.
The increase, faster than traders and analysts foresaw, may contribute to a crude surplus later this year with firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. anticipating that prices sink near $60 a barrel in the fourth quarter.
“For now, the oil market remains tight, suggesting it can absorb additional barrels,” said Giovanni Staunovo, an analyst at UBS AG in Zurich. “But there are rising risks like ongoing trade tensions, implying that the market could look less tight over the coming 6-12 months, which would pose downside risks to prices.”
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