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Markets slip as geopolitical and trade risks flare
Rising global tensions weighed on sentiment, pushing investors toward safe havens as OPEC+ pressed ahead with a supply hike.
Asian equities retreated while gold climbed on haven flows amid renewed trade and geopolitical tensions.
Trump’s tariff threats drew sharp Chinese criticism, while Ukraine-Russia hostilities escalated further.
OPEC+ raised output more aggressively than expected, but warned of potential reversals.
Risk-off tone dominates as investors flee to safety
Global markets began the day on a cautious note. Asian equities broadly declined, while gold rallied to a fresh multi-week high amid heightened geopolitical and trade friction. U.S. and European equity futures posted moderate losses, while crude oil prices jumped sharply as supply concerns overshadowed planned OPEC+ increases.
China's mainland markets remained closed for a national holiday, limiting broader regional liquidity. Meanwhile, the MSCI Asia Pacific index slipped as investors priced in heightened risk following fresh threats from Washington and a political pivot in Eastern Europe.
Trump-Xi trade tensions re-escalate
Beijing publicly accused the U.S. of breaching the fragile trade truce, after President Trump claimed China had acted in bad faith. Chinese officials said they are prepared to respond, sparking renewed volatility in tariff-sensitive assets. In Europe, the UK is reportedly urging the White House to exempt steel from new tariff increases — after Trump suggested duties may rise to 50%, complicating post-Brexit trade alignments.
Market participants now anticipate a potential Trump-Xi call to de-escalate tensions, though no timeline has been confirmed.
Ukraine conflict intensifies with cross-border strikes
The military situation in Eastern Europe deteriorated further as Ukrainian drones reportedly hit deep into Russia, including strategic airfields in Siberia. Moscow retaliated with a massive aerial campaign, marking one of its longest offensive waves of the year. Peace talks are scheduled to resume today in Turkey, but expectations remain low.
Fed’s Waller sees path to cuts — despite inflation risks
Federal Reserve Governor Christopher Waller maintained that interest rate cuts are still likely this year, though he cautioned that renewed tariffs may boost inflation temporarily and weigh on employment. His remarks underscore the Fed’s difficult balancing act as economic data remains mixed while political pressure mounts.
Bessent rules out default, hints at diplomatic reset
Scott Bessent, a senior advisor to the U.S. Treasury, told CBS that the United States will not default on its debt and emphasized the resilience of the financial system. He also hinted at a forthcoming Trump-Xi call aimed at stabilizing bilateral relations but declined to specify when the U.S. Treasury could run out of available funds.
OPEC+ increases July output more aggressively
In a key weekend decision, OPEC+ announced it will raise production by 411,000 barrels per day starting in July — far exceeding the previously expected 134,000 bpd adjustment. The group cited robust demand and low inventory levels but warned the increase could be paused or reversed if market conditions deteriorate.
Goldman Sachs expects a similar hike in August, bringing the total increase close to 820,000 bpd across the summer. Oil futures surged in early trade on concerns that geopolitical disruptions could quickly offset additional supply.
