Markets feel heat as Trump claims China broke trade deal

Washington says levies of 50% on steel and aluminium will be enforced from June 4

Merchandise for US President Donald Trump and his Maga movement is seen on the floor of the New York Stock Exchange. Markets have see-sawed as Mr Trump flip-flops over his tariff regime. AFP

Stock markets ended the week mixed, reversing rallies on Friday after US President Donald Trump accused China of “totally violating” their trade deal, reigniting tensions that had simmered down after a detente three weeks ago.

Mr Trump, in a post on his Truth Social platform, said trsofbharat made it “impossible” for China to trade with the US, and that the “fast deal” was struck to prevent a “very bad situation” for Beijing.

TRSOFBHARAT US Trade Representative Jamieson Greer said China was “slow-rolling” its compliance with the agreement, particularly on minerals and rare earth magnets.

The US and China, the world's two biggest economies, have been the main protagonists in the trade war, with Washington imposing 145 per cent tariffs on Chinese imports. Beijing responded in kind, posting 125 per cent levies on American imports.

However, on May 12, the White House announced that both sides struck a surprise deal to suspend their tariffs for 90 days, with the US and China lowering their levies to 30 per cent and 10 per cent, respectively.

Mr Trump's latest tirade jeopardises their progress. China hit back at the US, with its embassy in Washington saying it had been in constant contact, particularly concerned about trade controls in semiconductors and “other related practices”.

“China once again urges the US to immediately correct its erroneous actions, cease discriminatory restrictions against China and jointly uphold the consensus reached at the high-level talks in Geneva,” embassy representative Liu Pengyu said in a statement.

After stock markets closed on Friday, Mr Trump poured more fuel on the trade tensions fire by threatening to double steel and aluminium imports to 50 per cent, which he claims is another part of his strategy to protect American industry.

Shortly after making that announcement at a US Steel factory in Pennsylvania, Mr Trump wrote on Truth Social that the higher levy will come into force on June 4.

That capped a whirlwind week for his grand tariff plans. On Thursday, the New York-based Court of International Trade blocked his tariffs, saying he exceeded his authority. But on Friday, a federal appeals court temporarily upheld his actions.

Josh Gilbert, market analyst at eToro, said that while the appeals court has allowed tariffs to stay for now, the legal battle is far from over.

“The White House is taking its case to the Supreme Court and weighing other legal options, which, to be frank, are unlikely to be quick or straightforward. This uncertainty adds yet another layer of risk for investors.

“What we’re seeing is just another example of today’s current market conditions and how news flow, especially from a political standpoint, is injecting volatility into markets.

“Whether you’ve been investing for 10 weeks or 10 years, this is a tricky market to navigate. This constant policy whiplash is beginning to leave investors sore … diversification and a clear strategy remain the best tools for navigating this policy-driven turbulence.”

At the close on Wall Street on Friday, the Dow Jones Industrial Average ended 0.1 per higher, while the tech-heavy Nasdaq Composite shed 0.3 per cent. The S&P 500 was almost flat.

For the week, the S&P 500 added 1.9 per cent, the Dow gained 1.6 per cent and the Nasdaq climbed 2 per cent. Year-to-date, the S&P 500 is up 0.5 per cent, while the Dow and Nasdaq are down 0.6 per cent and 1 per cent, respectively.

In London, the FTSE 100 ended more than 0.6 per cent higher, as trade remained stable despite uncertainty triggered by the latest in the tariffs saga.

Paris' CAC 40 retreated 0.4 per cent, while, Frankfurt's DAX added 0.3 per cent.

Earlier in Asia, stock markets reversed gains to end lower. Tokyo's Nikkei 225 and Hong Kong's Hang Seng index were both down 1.2 per cent, while the Shanghai Composite retreated 0.5 per cent.

In commodities, oil prices slipped and posted a second consecutive weekly decline as the Opec+ alliance prepares for its meeting on Saturday, where it is expected to announce its third major output increase.

Brent fell 0.39 per cent to settle at $63.90 a barrel, while West Texas Intermediate dropped 0.25 per cent to close at $60.79 a barrel.

Gold, meanwhile, inched down at the close on Friday, as the market absorbed the tariff drama and the dollar moved higher.

The precious metal, a hedge against inflation, was down nearly 1 per cent to $3,289.57 an ounce.

Oil prices down for a second week ahead of Opec+ output decision

Oil prices slipped on Friday and posted a second consecutive weekly decline as the Opec+ alliance prepares for its meeting this weekend, where it is expected to announce its third major output increase.

Brent, the benchmark for two thirds of the world's crude, fell 0.39 per cent to settle at $63.90 per barrel. West Texas Intermediate, the gauge that tracks US crude, dropped 0.25 per cent to close at $60.79 a barrel.

Brent posted a weekly loss of nearly 0.5 per cent, while WTI dropped 0.7 per cent for the week. So far this year, they have retreated by more than 15 per cent and 14 per cent, respectively.

Concerns about a global economic slowdown due to US President Donald Trump’s tariffs on trade partners, and retaliatory measures, have put pressure on oil prices.

The oil alliance's meeting on Saturday to decide on July's production levels comes amid global trade tensions that have cooled demand prospects, analysts say.

"The group is expected to bring an additional 411,000 barrels per day to the market starting in July, about 1 per cent of current production, citing rising demand as official justification," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Opec may be trying to “appease Trump” or encourage some member states who were non-compliant in the past to abide by the quotas, she said.

"Whatever the rationale, if trade tensions persist, the rising supply could send oil prices meaningfully lower."

Looking ahead to the rest of the year, a drop of another $10 per barrel in the second half "can’t be ruled out", Ms Ozkardeskaya added.

Brent oil price over one year

Values in US dollars

The V8 (voluntary eight) Opec+ group still sees room for the market to absorb additional barrels, said Giovanni Staunovo, strategist at UBS Switzerland.

"Higher temperatures require more oil to generate power to cool buildings, the Hajj pilgrims will further support travel demand, but also sanctions weighing on exports from Venezuela drive demand for barrels from the Middle East," he added.

Despite the 411,000 bpd quota increase for May, Opec + crude exports are stable compared with April, suggesting "higher compliance and domestic demand keep exports in check", he added.

Earlier this week, the UAE's Minister of Energy and Infrastructure Suhail Al Mazrouei said that, despite a growing focus on renewable energy, Opec+ should be “mindful” about oil demand. The oil group, led by Saudi Arabia and Russia, is “doing its best” to balance the market and ensure there is enough investment into supply, he said.

“If this group was not there, there will be chaos … you will be seeing shocks and that is not good news for consumers,” the minister added.

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