The shadow of tariffs lingers, U.S. stocks fluctuate lower in pre-market trading, European stocks decline, while U.S. Treasury bonds and the dollar rise

U.S. stock futures fluctuated lower, European stock markets fell, and U.S. Treasury yields and the dollar rose. The market faces trade uncertainties and weak economic data, and investors need to prepare for volatility. S&P 500 futures fell by 0.5%, while Chinese concept stocks performed well. Economic data indicates that the U.S. is facing weakness, with job vacancies expected to drop to their lowest level since 2020. Global economic growth expectations have been revised down to 2.9%

On Tuesday, June 3rd, U.S. stock futures continued the alternating pattern of ups and downs seen in recent days. European stock markets also declined, while U.S. Treasury bonds rose due to safe-haven demand, and demand for Japan's 10-year government bond auction was strong. The U.S. dollar index strengthened slightly by 0.2%.

The current market is at a critical crossroads: trade uncertainties continue to fester, signs of economic data weakness are frequent, and policymakers' room for maneuver is increasingly limited. Investors need to prepare for more volatility.

In pre-market trading, S&P 500 futures fell 0.5% on Tuesday, with most Chinese concept stocks rising. Li Auto rose about 6%, Nio rose about 1%, and Alibaba rose about 1%. Credo surged nearly 13%, as the company's first-quarter performance exceeded expectations.

The Stoxx Europe 600 index widened its decline to 0.5%, hitting a new daily low. The German DAX index rose 0.4%, the UK FTSE 100 index rose 0.3%, and the French CAC 40 index rose 0.3%.

The U.S. dollar spot index rose 0.2%.

The euro against the dollar fell slightly in the short term, currently at 1.1408. The yen against the dollar showed slight changes, reported at 142.78.

The yield on 10-year U.S. Treasury bonds fell 3 basis points to 4.41%.

The yield on 10-year German government bonds fell 3 basis points to 2.50%.

Bitcoin rose 0.1% to $105,039.26.

Brent crude oil rose 0.4% to $64.91 per barrel.

Spot gold fell 0.6% to $3,361.81 per ounce.

Frequent Signals of Economic Soft Landing, Employment Data Becomes Key

The U.S. economy is showing signs of moderate but widespread weakness. The OECD on Tuesday again lowered its global economic growth forecast, expecting growth rates of 2.9% for both this year and next. The U.S. is among the countries most severely impacted.

The upcoming U.S. April job openings report is expected to show vacancies falling to their lowest level since 2020, reflecting increasing corporate focus on cost-saving efforts for consumers. The non-farm payroll data set to be released on Friday may show a slowdown in hiring. Gilles Guibout, head of European equities at AXA Investment Managers in Paris, stated:

“Market trading prices are higher than on April 2, but earnings expectations have been downgraded, as has global growth. Are we really in a better position? The answer is 'no.'”

Fiscal Pressure Mounts, Tax Legislation Raises New Concerns

Meanwhile, Trump attempted on social media on Monday to persuade opponents within the Republican Party to support his multi-trillion-dollar tax legislation. Investors and traders are concerned that this legislation could worsen the ever-expanding budget deficit and the scale of U.S. debt. Against the backdrop of trade shocks impacting economic growth, large-scale tax cuts could further strain government finances, laying hidden risks for financial market stability Massimiliano Bondurri, founder and CEO of SGMC Capital in Singapore, stated:

"We are clearly seeing a lot of volatility, and investors are craving more visibility. It is normal for the market to oscillate back and forth."

Inflation data better than expected, is an ECB rate cut imminent?

The Eurozone's May harmonized CPI year-on-year preliminary value is 1.9%, slightly lower than the expected 2%. After the data was released, the euro fell slightly against the dollar, currently reported at 1.1408.

The money market is almost certain that the European Central Bank will cut rates by 25 basis points in Thursday's policy decision, and expects at least one more additional rate cut later this year.

Continuously updated...

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