Wall Street stocks saw a downward trend on Monday, mirroring global markets, as trade tensions between Washington and Beijing intensified. Investors remained cautious ahead of key U.S. employment data and a widely anticipated rate cut from the European Central Bank. Both the S&P 500 and the Dow posted modest losses, while the tech-heavy Nasdaq showed little movement. The greenback weakened, and U.S. Treasury yields edged higher as investors processed the latest developments in the trade dispute.
Trade Tensions Impact Market Sentiment
On Sunday, U.S. Treasury Secretary Scott Bessent mentioned that President Donald Trump was expected to speak with Chinese President Xi Jinping soon to address trade tensions, specifically over the rollback of tariffs on critical minerals. Trump’s accusations that China violated their agreement further escalated the situation. Beijing responded by labeling the accusations as “groundless” and vowed to take strong action to protect its interests. As a result, markets reacted negatively due to increased uncertainty and the ongoing volatility in global trade relations.
U.S. Economic Data Adds to Market Woes
Additional pressure on markets came from disappointing U.S. economic data. A report from the Institute for Supply Management showed that the U.S. manufacturing sector contracted at a steeper-than-expected pace in May, further exacerbating concerns over economic growth. Construction expenditures also defied expectations, falling in April. These economic signals contributed to the cautious sentiment ahead of upcoming reports, including the highly anticipated U.S. jobs data.
Geopolitical Risks Heighten Market Volatility
Geopolitical risks added to the market’s uncertainty, with escalating tensions in Ukraine and Russia over the weekend. These developments contributed to the broader market sell-off. In Europe, concerns over trade policy were further fueled by Trump’s announcement that he plans to double tariffs on imported steel and aluminum to 50%, starting June 4. The European Union quickly responded, threatening retaliatory measures, and shares of steel exporters in the region fell as a result.
Commodity Prices Surge Amid Economic Uncertainty
As global markets experienced heightened caution, commodities such as gold and crude oil saw significant price increases. Gold prices surged to a one-week high, attracting investors seeking safe-haven assets amidst the geopolitical and economic turmoil. Spot gold rose 2.64%, reaching $3,376.24 per ounce, while U.S. gold futures rose 2.6%. Copper and aluminum also saw price hikes as market uncertainty continued to drive demand for precious metals and other commodities.
Market Outlook and Investor Caution
The outlook for the markets remains uncertain as trade tensions between the U.S. and China persist, and economic growth faces pressure from rising tariffs and policy uncertainty. The dollar index, which tracks the U.S. currency against a basket of major currencies, fell 0.7% to 98.66. With upcoming economic data and policy decisions likely to influence market direction, investors remain cautious, awaiting further developments in both the U.S.-China trade relationship and global economic performance.