US stock index futures dip

Asian Pacific stock indices came under selling pressure overnight as trade war headlines dominated. Markets reacted to President Trump’s claims that China had failed to uphold its side of a recent trade deal. 

The Japanese Nikkei led the losses, ending the session down 1.4%. Hong Kong’s Hang Seng and the Shanghai Composite lost 0.6% and 0.5% respectively. The losses reflected the region’s sensitivity to US-China developments.

European stock indices were mixed in early trade. Having followed US futures lower overnight, European equities rallied as US markets made back a fair proportion of earlier losses. 

The move took the German DAX back up towards the highs hit last week. Other European stock indices are lagging somewhat, although the UK’s FTSE 100 continues to consolidate within sight of its own all-time high from March this year.

Source: TN Trader

Economists expect a weak GDP print this week, with high-frequency data already pointing to stagnant growth in the first quarter of 2025 - a period that predates the recent escalation in global trade tensions. While agriculture is expected to be a bright spot, other key sectors - including mining, manufacturing, construction, and trade - likely struggled amid high operating costs, infrastructure inefficiencies, and lingering structural issues.

The South African Reserve Bank recently lowered its full-year growth forecast to 1.2% from 1.7%, aligning with a broader consensus that sees 2025 growth falling short of earlier expectations. Hopes for a mid-year recovery remain, but the current economic backdrop suggests that the government’s 3% growth target is drifting further out of reach.

FX markets reflected the broader risk-off tone, with the US dollar again under pressure. The USD/JPY dropped back below 143.00, while EUR/USD surged above 1.1400. Both the Japanese yen and Swiss franc strengthened against the US dollar, drawing safe-haven flows amid ongoing trade tensions.

Source: TN Trader

The dollar’s decline across the board suggested traders are growing wary of near-term macro risks.

Gold was up 2% in early trade on Monday as investors once again spurned risk and sought out safe-haven assets. This swift reversal in sentiment was sparked by renewed concerns over escalating geopolitical tensions, particularly between the US and China.

Source: TN Trader

Oil prices surged higher on Monday, with front-month WTI gaining over 3% in early trade. The rally came after OPEC+ announced over the weekend that they would increase output by a further 411,000 barrels per day (bpd) in July. 

This is now the third consecutive month when the group has raised production by 411,000 bpd as it seeks to unwind previous production cuts. Traders had feared that OPEC+ would announce a significantly larger increase in production.

Source: TN Trader

In addition, increased military activity between Ukraine and Russia and rumours of additional US sanctions on Moscow helped support prices.

Bitcoin has steadied somewhat following its recent sell-off. Just over a week ago, Bitcoin hit a fresh all-time high just a touch below $112,000. It then pulled back, but appears to have found some support around $103,000 to $104,000. The lack of significant movement in the broader crypto space signals a pause following a strong run.

The Volatility Index for June pushed up a touch to around 20.50. While not signalling outright panic, the elevated level suggests traders are increasingly wary of headline risk. The recent uptick in global tensions - from trade wars to military action - has seen volatility markets begin to price in the potential for sharper moves ahead.

Monday’s economic calendar is relatively light, although today’s focus will be on the US ISM Manufacturing PMI, which is due this afternoon. The data may provide some insight into industrial momentum amid broader uncertainty. In addition, Federal Reserve Chair Jerome Powell is scheduled to speak early this evening.

The re-emergence of the US-China trade conflict has reshuffled the market landscape to start the week. Investors are responding with caution, paring back risk and rotating into havens like gold and the yen.

Meanwhile, the dollar’s retreat and Bitcoin’s resilience show mixed positioning across asset classes. The tone is defensive but not panicked. Markets remain headline-driven and data-sensitive.