Oil prices continue to rise rapidly. The US and China have reached a preliminary trade agreement

The US stocks ended Wednesday lower, as investors took a breather after the recent rally, despite encouraging inflation data and a preliminary trade agreement between the US and China. At the end of the trading day, the Dow Jones (US30) Index rose by 0.02%. The S&P 500 (US500) Index fell by 0.25%. The Nasdaq (US100) Technology Index closed lower by 0.50%. The May Consumer Price Index rose by only 0.1% on a monthly basis, which was lower than expected, and core inflation was also lower, easing pressure on the Federal Reserve to raise interest rates. In the trade arena, US and Chinese negotiators reached a preliminary agreement that provides for China to supply rare earth metals and the US to ease visa restrictions on Chinese students. However, the agreement lacks clarity on tariffs and export controls, dampening investor optimism.

The Mexican peso rose to 19.10 per dollar, its strongest level in nearly ten months, amid a weakening dollar, easing trade tensions, and attractive domestic real yields, which are contributing to the currency’s appreciation. In the domestic market, Banxico’s determination to maintain its restrictive policy, backed by a jump in core inflation to 4.42% and headline inflation to 4.06%, the highest in 11 years, kept real rates attractive, attracting capital and supporting the peso’s appreciation.

European stock markets were mostly down yesterday. The German DAX (DE40) fell by 0.16%, the French CAC 40 (FR40) closed down 0.36%, the Spanish IBEX35 (ES35) lost 0.61%, and the British FTSE 100 (UK100) closed up 0.13%. European officials are not so optimistic about their own trade negotiations with the US, warning that the talks could drag on until July 9, and by that time only a preliminary deal may be reached.

WTI oil prices rose by 4.9% to $68.1 per barrel on Wednesday after President Donald Trump announced a preliminary trade deal with China, raising hopes for increased energy demand from the world’s two largest economies. Meanwhile, tensions with Iran remain high: Tehran is threatening US bases if nuclear talks fail, which continues to put pressure on supply.

Asian markets rose steadily yesterday. Japan’s Nikkei 225 (JP225) added 0. 55%, China’s FTSE China A50 (CHA50) rose by 0.84%, Hong Kong’s Hang Seng (HK50) increased by 0.84%, and Australia’s ASX 200 (AU200) showed a positive result of 0.06%.

On Thursday, the Australian dollar fell to $0.649, continuing its decline from the previous session amid declining risk sentiment due to new tariff threats from US President Donald Trump. On Wednesday, he announced plans to send official letters to major trading partners within the next week or two, setting out unilateral tariffs aimed at forcing countries to conclude trade deals. Additional pressure on the Australian dollar came from growing expectations of further interest rate cuts by the Reserve Bank of Australia. Markets estimate an 80% probability of a 25 basis point cut to 3.60% at the July 8 meeting, with a further decline to 3.10% expected by the end of the year.