Global Financial Breakfast: Key Market Insights for June 2, 2025

Global Financial Breakfast | June 2, 2025

Trade tensions are escalating as Trump has announced increased tariffs, with the EU preparing to respond. Meanwhile, Ukraine has launched a “web” operation against Russia, and Hamas has expressed its willingness to initiate a new round of ceasefire negotiations in Gaza. What significant events have occurred globally since last Friday?

Today’s Highlights:

• The U.S. will raise import tariffs on steel and aluminum, prompting a potential EU countermeasure.
• April’s core PCE price index in the U.S. has dropped to a four-year low.
• Ukraine claims its operations have caused $7 billion in losses to Russia, which Russia disputes as false.
• Elon Musk will serve as a presidential advisor after stepping down from his position.
• OPEC+ has announced an increase in production by 411,000 barrels per day starting July.
• The Ministry of Industry and Information Technology is intensifying measures against excessive competition in the automotive sector.
• The U.S. has reportedly paused the sale of engine technology to China, to which the Foreign Ministry has responded.
• China’s manufacturing PMI for May stands at 49.5%, indicating improved conditions.
• The “Stablecoin Regulation” in Hong Kong has officially become law.
• Several major financial policies will be announced at the Lujiazui Forum in June 2025.

Market Overview:

Last Friday, the dollar index experienced fluctuations amid uncertainties regarding tariffs and cooling inflation data, ultimately rising slightly by 0.104% to 99.45. However, this increase could not reverse its trend of decline for five consecutive months. U.S. Treasury yields fell, with the benchmark 10-year yield at 4.408% and the more sensitive 2-year yield at 3.908%.

Despite cooling inflation data supporting market bets on a rate cut by the Federal Reserve, the dollar’s recovery led to a decline in spot gold, which reached $3,300 before closing down 0.84% at $3,289.40 per ounce, while spot silver fell 1.13% to $32.99 per ounce.

International crude oil prices dropped amid rumors of OPEC+ potentially exceeding production expectations. WTI crude fell for the second consecutive day, closing down 0.58% at $60.26 per barrel, marking a three-week low. Brent crude also dipped by 1.14%, ending at $62.58 per barrel.

U.S. stock indices showed mixed results, with the Dow Jones rising 0.13%, the S&P 500 nearly flat, and the Nasdaq falling 0.32%. Notable tech stocks experienced declines, including Intel (down 3.4%), Tesla (down 3.3%), Nvidia (down 2.9%), and Alibaba (down 2.8%).

European stock indices were similarly mixed, with Germany’s DAX30 rising 0.27%, the UK’s FTSE 100 up 0.64%, and the European Stoxx 50 down 0.08%.

In Hong Kong, major indices opened lower and continued to decline, with the Hang Seng Technology Index dropping nearly 3% at one point. By the close, the Hang Seng Index fell 1.2%, down 1.32% for the week, while the Hang Seng Technology Index dropped 2.48%, also down 1.46% for the week. Total trading volume reached HKD 271.563 billion. Consumer and technology stocks led the declines, with BYD Electronics down over 6%, XPeng Motors down over 5%, and Netease, NIO, and Lenovo all down over 4%. New stock Handway Group debuted with a drop of over 18%. Conversely, pharmaceutical stocks rose, with Fosun Pharma up 9.89% and CSPC Pharmaceutical up 6.3%.

The three main indices in A-shares opened lower and continued to decline, with the Shanghai Composite Index down 0.47%, the Shenzhen Component down 0.85%, and the ChiNext Index down 0.96%. Overall market turnover was CNY 1,164.2 billion, a decrease of CNY 49.2 billion from the previous day, with over 4,100 stocks in the red. The innovative drug sector led the gains with multiple stocks reaching the daily limit, while high-priced stocks collectively plummeted, with many hitting the limit down; sectors such as gold, glyphosate, controlled nuclear fusion, humanoid robots, environmental equipment, and consumer electronics saw significant declines.

International News:

1. Global Tariff Situation: The Trump administration is considering measures that could impose tariffs as high as 15% for 150 days. Trump aims for 100% of U.S. cars to be made domestically and plans to raise steel tariffs to 50% starting June 4.
2. U.S. Trade Representative: Tariff lawsuits have not affected trade negotiations, and the scope of Section 301 may be expanded as needed.
3. U.S. Agriculture Secretary: Plans to visit Italy, India, Vietnam, and Japan next week.
4. Japan’s Economic Revitalization Minister: A deal is unlikely if the U.S. does not agree to cancel all tariffs, including those on automobiles.
5. Germany may impose a 10% digital tax on U.S. tech giants. The German Chancellor is set to visit the U.S. to discuss the Russia-Ukraine conflict and trade issues.
6. EU Commission spokesperson: The EU is prepared to respond to U.S. tariff increases and is finalizing discussions on countermeasures.
7. UK media: The UK will urge the Trump administration to enforce a zero-tariff agreement on steel.

U.S. Economic Data:

1. The annual core PCE price index for April in the U.S. stands at 2.5%, matching expectations and marking the lowest since March 2021. Traders are still betting on a Fed rate cut in September.
2. The final Michigan Consumer Sentiment Index for May is 52.2, compared to the expected 51.
3. The Atlanta Fed’s GDPNow model has significantly raised its forecast for Q2 GDP growth from 2.2% to 3.8%.

Middle East Situation:

1. The Houthis have claimed to have used hypersonic missiles to attack an Israeli airport.
2. Hamas has expressed a desire to begin indirect negotiations for a Gaza ceasefire.
3. Egypt and Qatar have issued a joint statement calling for a 60-day temporary ceasefire in Gaza.
4. Plans indicate that the U.S. proposes a 60-day ceasefire in Gaza, including the release of 28 Israeli hostages in the first week, regardless of their condition.

Russia-Ukraine Conflict:

1. Ukraine’s Army Commander has resigned, and Ukraine has attacked several Russian military airports.
2. Two bridge collapses have occurred near the Russian border, classified by Russia’s investigative committee as acts of terrorism.
3. A military base in Siberia has come under attack for the first time.
4. Ukraine launched a large-scale drone operation against Russia, with U.S. officials stating the White House had no prior knowledge.
5. Ukraine claims its “web” operation has led to $7 billion in losses for Russia, which Russian media dismisses as rumors.
6. The Kremlin has announced that a Russian delegation will arrive in Istanbul on June 2 for the second round of talks with Ukraine.

Elon Musk:

1. Trump has praised the achievements of government efficiency, noting that Musk will serve as a presidential advisor.
2. The New York Times reported Musk’s drug use, which he has refuted.
3. Musk stated he does not wish to take responsibility for everything the U.S. government does.

U.S. Courts:

1. A U.S. appeals court has dismissed the Trump administration’s request to halt layoffs and restructuring plans.
2. The Supreme Court has allowed Trump to revoke the legal status of 500,000 immigrants.
3. The Trump administration will allow Nippon Steel to wholly own American Steel.

OPEC+ Developments:

1. Eight major oil-producing countries within OPEC+ have agreed to increase oil production by 411,000 barrels per day in July, following reports that the increase might exceed expectations, leading to a sharp drop in oil prices.

IAEA Report:

1. The IAEA reported that Iran is conducting secret activities involving undeclared nuclear materials. Iran’s atomic energy organization has stated that progress has been made in negotiations with the U.S. regarding its nuclear program.

European Central Bank:

1. Sources indicate that the ECB is intensifying its scrutiny of banks’ exposure to private market risks.

Bank of Japan:

1. According to Nikkei, the Bank of Japan has reserved the maximum allowance for losses in bond trading.

UK News:

1. UK Prime Minister Starmer announced that the UK will restore its combat readiness.

Indian News:

1. India has confirmed the loss of aircraft in the India-Pakistan conflict, stating it never approached the brink of nuclear war.

Japan News:

1. A 6.1 magnitude earthquake struck off the coast of Hokkaido, Japan.

Turkey News:

1. Turkish authorities have ordered the detention of dozens of opposition party officials, expanding their crackdown.

Domestic News:

1. The Ministry of Industry and Information Technology is intensifying measures against excessive competition in the automotive sector to maintain a fair market environment.
2. The U.S. Trade Representative’s office has extended certain exemptions on Section 301 tariffs on China.
3. China has responded to negative comments from the U.S. Secretary of Defense regarding China, stating that the U.S. is exaggerating the “China threat” narrative and has lodged a serious protest.
4. The U.S. has reportedly suspended the sale of engine technology to China, to which the Foreign Ministry responded that this action generalizes national security concerns and maliciously blocks China.
5. The U.S. Treasury Secretary mentioned that trade negotiations with China have “stalled,” to which the Foreign Ministry responded.
6. The Foreign Ministry will study Japan’s request to resume the import of Japanese seafood based on scientific safety principles.
7. The manufacturing PMI for China in May is at 49.5%, reflecting an improvement in manufacturing conditions.
8. As of the end of Q1 2025, the balance of real estate loans in RMB was CNY 53.54 trillion, a year-on-year increase of 0.04%, with an increase of CNY 619.7 billion in Q1.
9. In May 2025, the People’s Bank of China conducted a reverse repo operation of CNY 700 billion using a fixed quantity, interest rate bidding, and multiple price bidding methods.
10. In 2024, a total of CNY 1.3 trillion in housing provident fund loans were issued nationwide.
11. New energy vehicle manufacturers have reported significant increases in delivery volumes for May.
12. According to the Ministry of Industry and Information Technology, domestic smartphone shipments in April reached 25.038 million units, a year-on-year increase of 4.0%.
13. This year, the sales of consumer goods through trade-in programs have exceeded CNY 1 trillion.
14. The “Stablecoin Regulation” in Hong Kong has officially become law.
15. An important article by General Secretary Xi Jinping titled “Accelerating the Construction of a Strong Education Nation” was published in Qiushi magazine.
16. The Southern Theater Command of the People’s Liberation Army and the China Coast Guard conducted law enforcement patrols in the waters surrounding Huangyan Island.
17. The Lujiazui Forum in June 2025 will announce several significant financial policies.
18. Reports indicate that a state-owned bank has ceased the “high interest-high return” car installment model as of June 1.
19. The National Development and Reform Commission is further reducing the service fees for credit reporting.
20. The Ministry of Industry and Information Technology has issued a notice regarding the “Computing Power Interconnection Action Plan.”

Risk Alerts:

• At 8:00, Fed Governor Waller will speak on economic prospects at the 2025 Bank of Korea International Conference.
• From 15:50 to 16:30, the final manufacturing PMI for France, Germany, the Eurozone, and the UK for May will be released.
• At 22:00, the U.S. manufacturing PMI for May will be announced.
• China’s Shanghai and Shenzhen stock exchanges and domestic futures markets will be closed for the Dragon Boat Festival; the Hong Kong Stock Exchange will operate normally, but north and southbound trading will be suspended.
• At 0:45 the next day, 2025 FOMC voting member and Chicago Fed President Goolsbee will participate in a Q&A session.
• At 1:00 the next day, Fed Chair Powell will deliver opening remarks at an event.

Disclaimer: The market carries risks, and investments should be made cautiously. This article does not constitute personal investment advice and does not take into account individual user investment goals, financial conditions, or needs. Users should consider whether any opinions, views, or conclusions expressed in this article are suitable for their specific circumstances. Investing based on this article is at the user’s own risk.