Although markets around the world remain sensitive to the tensions between the US and China over Hong Kong, as well as the protests and clashes against police violence in American cities, the fact that economies are opening up after countries lift coronavirus restrictions is helping investors’ mood.
Sino-US Trade
As the first week of June started, the Beijing government ordered state-owned companies to stop buying American agricultural products due to Washington’s Hong Kong policy.
Speaking about the issue during a daily briefing on Tuesday, the Chinese Foreign Ministry spokesperson Zhao Lijian did not deny the news and said China’s stance on trade and economic matters with the United States was “consistent and clear”.
But sources from the US agricultural sector told Reuters that Chinese state firms bought on Monday at least three 180,000 tons of American soybean cargo they had ordered in October and November last year.
Rise in the Stock Market
Countries’ opening their economies is the main reason for the rise in stock markets. Many stocks from Asia to Europe rose to their highest levels of the last three months in the wake of the coronavirus crisis.
US President Donald Trump’s threat to use federal army forces to end violent protests in American cities and China’s order to stop US soy purchases caused a short wobble in futures on Wall Street.
German airline Lufthansa’s approval of a government rescue package, and auto companies’ decision to restart production, and the government’s promise of a 5 billion euro aid package led to over 2% gains in pan-European STOXX 600. The increase of DAX in Germany reached 4%.
The euro climbed to the top of the last two and a half months with 1.1187 against the falling US dollar. The euro was also encouraged by an EU stimulus scheme of 750 billion euros offered for Italian and Spanish bonds.
Brexit Trade Negotiations
The EU-UK negotiations on post-Brexit trade relations, beginning again today, are the most important issue for sterling investors to follow.
A spokesman for British Prime Minister Boris Johnson reiterated on Tuesday that the Kingdom will not compromise on fisheries and level playing field in trade. The spokesperson described the EU’s position regarding the talks “wishful thinking.”
The negotiations between the diplomats of the two sides will continue with higher political meetings towards the end of the month.
Oil
Oil prices rose to a three-month high on Tuesday, amid expectations that major producers will agree to extend production cuts during a video conference this week.
Brent crude rose 2.2% or 83 cents at 12:15 GMT. US West Texas Intermediate (WTI) crude rose by 2% or 70 cents to $ 36.14 a barrel, then to 36.49.
However, prices are still 40% lower on an annual basis. OPEC+ countries are considering extending 9.7 million barrels (BPD) production cuts per day, which corresponds to about 10% of global production, at the meeting expected on June 4.
