Markets Tense as US-China Talks Loom: Gold and Oil Prices Surge Amid Trade Uncertainty
Ongoing uncertainty: U.S. stock markets experience a downward trend
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With a potential US-UK trade deal in the rearview mirror, the focus is now squarely on China. Though optimism about a speedy resolution seems scant, the Wall Street ended the week on a slight down note.
Before the eagerly anticipated weekend talks between the US and China to confront the trade conflict, the Wall Street remained uneventful. The Dow Jones Industrial Average of heavy-hitting stocks closed 0.3% lower at 41,249 points. The broader S&P 500 dipped 0.1% to 5,651 points, while the Nasdaq tech exchange stayed steady at 17,928 points.
Reps from the world's economic heavyweights will meet in Switzerland this weekend to hash out tariffs. Investors pin their hopes on the talks concluding the trade war, a source of concern regarding global economic growth. US President Donald Trump hinted at lower tariffs for Chinese imports on Friday, but experts remain skeptical. "[Tariff reductions] sound like a difference, but if there are still 80% tariffs, most people won't buy goods," said Michael Matousek, senior trader at US Global Investors.
The previous day, the US and the UK finalized an unprecedented trade agreement - the first since Donald Trump enforced initial tariffs last month. However, crucial details are still unclear, and a base tariff for imports into the US remains intact.
Safe Havens in Demand
Sparked by lingering tension on the markets, the gold price ticked up. "Chronic uncertainty regarding tariffs is the primary driver propelling the gold price," said David Meger, head of metals trading at High Ridge Futures. The price of the precious metal used as a havens of last resort nudged up by 0.7% to $3,327 per ounce. In the oil market, the North Sea Brent and US WTI crude each climbed around 1.7% to $63.88 and $60.99 per barrel (159 liters), respectively.
"If both parties agree on a date for formal trade talks and commit to gradually reducing high tariffs during negotiations, the oil price could jack up an additional $2-$3 per barrel," said Vandana Hari, founder of Vanda Insights.
Disappointing financial reports sank Expedia. Shares in the online travel agency plummeted by 7.3%. The company's first-quarter revenue of $2.98 billion fell short of analysts' estimates. On a more positive note, Lyft's business report was well-received by investors. Shares in the Uber rival soared by 28%. The company reported an adjusted earnings per share of 24 cents in the first quarter, exceeding analysts' expectations of 19 cents. Moreover, the company plans to repurchase more shares. Trade Desk's shares skyrocketed by 18.6% following the advertising company's announcement of first-quarter revenue and earnings surpassing Wall Street estimates.
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Source: ntv.de, ino/rts
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- Some analysts have suggested that if both the US and China agree on a date for formal trade talks and commit to gradually reducing high tariffs during negotiations, the average stock price across EC countries might significantly increase.
- In line with the fluctuation of stocks, the employment policy in EC countries could potentially reflect changes, as businesses may respond to the trade market conditions by either expanding or cutting down their workforce.
- As the oil price could jack up an additional $2-$3 per barrel if both parties agree to reduce tariffs during talks, the average cost of daily commuting through oil-powered transport in EC countries could potentially increase, which might indirectly impact employment policy, especially in industries dependent on commuting, such as retail and service industries.
