Last week, U.S. President Donald Trump posed a new round of tariff threats to several trading partners in the country, with some countries and regions expressing consideration of retaliatory measures. The market has been closely monitoring negotiations between the U.S. and its major trading partners, while also cautiously assessing the impact of rising commodity prices on U.S. inflation prospects. Last week, the three major U.S. stock indices collectively fell. Specifically, the Dow Jones Industrial Average fell by 1.02%, the S&P 500 index dropped by 0.31%, and the Nasdaq Composite slightly decreased by 0.08%.
The market is focusing on the “major statement” that the Trump administration is set to make regarding Russia this Monday. Investors are closely watching for further sanctions against the Russian oil industry by the U.S. side. Additionally, the International Energy Agency forecasted last week that strong travel and electricity demand in the Northern Hemisphere could lead to a tightening supply in the global crude oil market in the short term. These factors have led to an increase in international oil prices last week, with Brent crude increasing by 3.02% and WTI crude by 2.16%.
International gold prices saw a slight increase last week. In terms of precious metals futures, last week, the U.S. government’s new round of tariff threats impacted the global trade system, prompting some investors to increase their holdings of gold as a hedge against risk. However, the dollar index slightly rebounded, suppressing the rise in gold prices, resulting in a modest increase of 0.63% in international gold prices last week.
This week, the international capital markets will focus on the release of U.S. June CPI data. The general expectation is that this data will initially reflect the impact of the tariff policy on U.S. price levels. Looking at recent data, the pressure from the Federal Reserve to curb inflation has not dissipated, with core commodity prices still slowly rising, and service sector inflation remaining stubborn. The U.S. government’s tariff policies may further push up domestic prices. Moreover, a recent research report by Bank of America Merrill Lynch pointed out a strong correlation between changes in securities prices and inflation. The report suggests that the recent significant rebound in the U.S. stock market might be driving up inflation, measured by the Personal Consumption Expenditures (PCE) Price Index. The rise in corporate stock prices brings more returns and also drives up inflation expectations, potentially limiting the Fed’s future monetary policy space.
U.S. retail sales data for June will be released this week.
Additionally, the retail sales data for June will also provide investors with insights into the impact of tariff policies this week. A report by Barclays Bank noted that imported goods subject to a 30% or higher tariff rate arrived at U.S. ports by the end of June and early July, and the broader effect of price increases began to emerge from June to July. It is expected that the core inflation rate in the U.S. will rebound to 3.6% due to tariff policies in the short term.
Trump’s tariff policies impact the world