U.S. oil approaches $60 per barrel mark, U.S. may impose tariffs on drugs, gold prices rise to two-week highs, demand and geopolitical support

Basic news

On Wednesday (May 7, Beijing time), spot gold trading was around 3391, gold prices rose nearly 3% on Tuesday, returning to around 3400, rising to a two-week high, supported by market purchases after the holidays and concerns about the possible imposition of tariffs on imported drugs by the United States, while investors were waiting for the results of the Federal Reserve's policy meeting; U.S. crude oil trading was around 59.50 US dollars per barrel, and oil prices rose more than 3% on Tuesday, as there were signs that demand in Europe increased, U.S. production fell, and the situation in the Middle East was tense.

Stock Market

U.S. stocks fell for the second straight trading day on Tuesday as speeches by U.S. President Trump and Treasury Secretary Becente barely provided a clear timetable for any trade deal.

Trump said he and senior administration officials will review potential trade deals in the next two weeks to decide which ones to accept. In addition, Trump also met with Canadian Prime Minister Carney for the first time, but did not immediately achieve results.

Trump's speech is somewhat contrary to Becente's previous statement, and Becente said that the administration may announce some trade agreements as early as this week. Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York, said, "The market is xmmarkets.cnpletely swayed by the news of tariff negotiations. Trump's speech seems to be determined to win; in fact, as long as he can win more equal trade terms, he should be satisfied. I don't think the EU will easily make concessions, and Canada is the same."

The Dow Jones Industrial Average fell 0.95% to 40,829.00 points; the S&P 500 fell 0.77% to 5606.90 points; the Nasdaq fell 0.87% to 17,689.66 points.

The U.S. trade deficit hit a record $140.5 billion in March as xmmarkets.cnpanies increased imports of goods before the tariffs were announced. Later on Monday, Trump said he would announce tariffs on drugs in the next two weeks.

Healthcare stocks fell 2.8%, the worst performance among the 11 major sectors of the S&P 500, with Eli Lilly falling 5.6% and Moderna falling 12.3%, the biggest drag on the index.

Stock markets have fluctuated since Trump announced the first round of tariffs on April 2, with the S&P 500 initially falling nearly 15%, before stabilizing and briefly recovering to pre-tariff levels.

The uncertainty of tariffs has led to worsening consumer confidence data, and many xmmarkets.cnpanies have withdrawn their financial forecasts. Remarks from Fed officials, including Fed Chairman Powell, show that the Fed will remain patient until the impact of tariffs is reflected in economic data before deciding whether and how to adjust monetary policy. The Fed began a two-day meeting on Tuesday, and the market generally expects the Fed to keep interest rates unchanged on Wednesday.

The market is currently expecting a close to 80% chance of a rate cut by at least 25 basis points at its July meeting, according to data xmmarkets.cnpiled by the London Stock Exchange Group (LSEG). Gold prices rose to a two-week high on Tuesday, supported by concerns about the possible U.S. tariffs on imported drugs, while investors awaited the results of the Fed's policy meeting.

Spot gold rose 2.4% to $3413.29 per ounce, its highest level since its record high of $3500.05 per ounce on April 22. U.S. gold futures settlement price rose 3% to $3,422.8. "What drives gold prices to rise is the recent gold investment boom in Asian powers, coupled with central banks continuing to cut investment in U.S. assets, especially the U.S. dollar," Adrian Ash, head of research at BullionVault, said in a report. "The U.S. dollar is in trouble as investors' hopes for a U.S. trade deal begin to fade, and U.S. President Trump said on Monday that he plans to announce new tariffs on drugs in the next two weeks. Earlier on Sunday, he announced a 100% tariff on films produced overseas.

Investors are closely following the Fed's upcoming policy decision on Wednesday, and Chairman Powell's speech is expected to provide clues to the timing of a rate cut.

Spot silver rose 1.9% to $33.1 per ounce; platinum rose about 2.4% to $982.52; palladium rose 3.1% to $971.27.

Oil market

Oil prices climbed about 3% on Tuesday as signs of increased demand in Europe, decline in U.S. production, tensions in the Middle East, and buying on the day after oil prices fell to four-year lowsHome.

Brent crude oil futures rose 3.2% to close at $62.15 a barrel; U.S. crude oil rose 3.4% to close at $59.09.

The crude oil contracts of these two indicators have entered a technical oversold area. The day before, due to OPEC+'s decision to increase production, the lowest settlement price since February 2021.

Analysts at energy consulting firm Ritterbuschand Associates said: "The market may have seen some bottom-buying behavior, and a large number of shorts have taken profits, which is the main reason for the rebound in oil prices today." Allies such as the Organization of the Petroleum Exporting Countries (OPEC) and Russia decided to accelerate oil production growth for the second consecutive month last weekend. "After evaluating the latest moves to accelerate the removal of production cuts, market participants are focusing on the development of trade and the possibility of a trade deal," said Tamas Varga, an analyst at PVM, a brokerage and consulting firm of TPICAP. "Varga also noted that the premium of geopolitical risk in the Middle East has risen as Israel cracked down on Iran-backed Houthi targets in Yemen as retaliation for attacks on Ben Gurion Airport.

Asian major consumers increased their consumption during the May Day holiday, and market participants also returned to the market after the five-day holiday, which also provided support for prices.

The dollar fell to a weekly low against a basket of currencies as investors increasingly lose confidence in hopes of reaching a trade deal. The weakening of the dollar has made oil priced in the U.S. dollar lower for buyers using other currencies.

Foreign market

The dollar fell generally on Tuesday on fears that a trade deal advocated by U.S. President Trump has not yet reached, while the euro has expanded its gains after the German parliament elected Conservative leader Merz as prime minister. Investors are awaiting details of what the Trump administration says is being negotiated with other countries. Trump said Sunday that some agreements will be announced this week.

Eugene Epstein, director of North American structural at Moneycorp, said, "The market has begun to get tense because since the 90-day tariff retardation has been announced, there is no substantive news, and there is a lot of good sentiment, but due to the obvious lack of formal substantial progress I have seen, I think the market is starting to be uneasy again."

The US dollar fell 0.86% against the yen to 142.445 yen at the end of the trading session. Canadian Prime Minister Carney bluntly told Trump during his visit to the White House on Tuesday that Canada would never sell and the Canadian dollar has strengthened since then. The Canadian dollar rose 0.39% against the US dollar to 1.38 Canadian dollars.

After Merz got the votes needed to become the German Chancellor, the euro expanded its gains, rising 0.50% at $1.1371 in late trading.

The U.S. trade deficit widened by 14% in March to a record $140.5 billion as businesses settled on Trump's expropriationIncrease imports before tax.

The US dollar reversed its earlier gains against the Swiss franc, down 0.09% to 0.82145 Swiss francs. Swiss National Bank Governor Martin Schlegel said the Swiss National Bank is ready to intervene in the foreign exchange market and even lower interest rates below zero to prevent inflation from falling below price stability targets. The market is paying attention to the Fed's policy decision announced on Wednesday, and the Fed is expected to keep interest rates unchanged at the meeting.

Feder Chairman Powell is unlikely to provide clear guidance on how the Fed plans to deal with U.S. tariffs, Macquarie analysts led by Thierry Wizman wrote in an investor note. "If traders naively believe that the Fed will take action to save the world tomorrow, using a clear 'doodle' signal to alleviate the recent rise in policy and political uncertainty, then they should think about it again." The market expects the Bank of England to cut interest rates by 25 basis points on Thursday. The pound rose 0.61% to $1.33,780.

International News

Decline in the U.S. 2-year Treasury yield fell, and the impact of the market refocused the economic pressure that could bring to the global trade war. The 2-year yield, which is more sensitive to Fed rate decisions, fell by nearly 4 basis points. Traders currently expect the central bank to cut three interest rates this year, with the first rate cut expected to arrive in September. "Investors are worried that even if bad news xmmarkets.cnes from the economy, Trump will not adjust his policies and the Federal Reserve will not implement monetary easing," said Bob Savage, head of market macro strategy at BNY. "The current positive news is not enough to offset concerns about economic growth and inflation. The market is still unclear and risk preferences generally cool down."

The Foreign Policy xmmarkets.cnmittee of Ukraine's Supreme Lada approved the draft mineral agreement

On May 6, local time, the Foreign Policy xmmarkets.cnmittee of Ukraine's Supreme Lada (Parliament) approved the draft mineral agreement reached with the United States. Subsequently, Ukraine's Supreme Lada will hold a plenary meeting on the 8th to vote on the draft.

Kazakhstan considers the option to fulfill its OPEC+ production cut obligations

Kazakhstan is reportedly considering the option to xmmarkets.cnply with the country's OPEC+ production cut obligations after Saudi Arabia reiterated that quota cheaters xmmarkets.cnply with regulations. “Kazakhstan has been xmmarkets.cnmitted to the OPEC+ agreement,” the country’s Ministry of Energy said. The largest oil producer in Central Asia is “considering all possible options to fulfill its xmmarkets.cnmitments”. Oil prices have fallen since OPEC+ decided to increase production beyond expectations on May 3, and investment banks including Goldman Sachs have lowered their oil price expectations. OPEC leader Saudi Arabia warned at the meeting that the group's overproduction member states should take action or face further increase in production.

The second round of voting passed Merz officially elected the new German Prime Minister

Friedrich, the candidate for the prime minister of the German Union Party.Merz was elected Prime Minister in the second round of votes in the German Bundestag held on the afternoon of the 6th.

U.S. exports declined across the board, agricultural products suffered a heavy blow

Latest supply chain data show that the trade shrinkage caused by Trump's tariff policy has dropped sharply from the initial import orders to a large export decline almost across the United States, among which major agricultural products such as soybeans, corn and beef suffered the most severely. According to an analysis of the export container bookings for the United States for five weeks before and after the so-called "reciprocal tariffs" were implemented by trade tracking agency Vizion, a decline in exports to Asia and even the world since January has now affected most U.S. ports. The US agricultural sector continues to issue a "crisis" warning, and port data further confirms the sharp decline in agricultural product transportation capacity. "There is no doubt that almost all export categories in the United States have been hit."

Under the shadow of Trump's tariff war, Britain and India have reached a trade agreement

In India and the United Kingdom have reached a trade agreement aimed at strengthening the economic ties between the world's fifth and sixth largest economies. "The conclusion of a balanced, fair and ambitious free trade agreement covering trade in goods and services is expected to significantly strengthen bilateral trade, create new jobs, improve living standards and improve the overall well-being of citizens of both countries," the Indian government said in a statement on Tuesday. "This will also unlock new potential for the two countries to jointly develop products and services for the global market." This agreement is crucial for British Prime Minister Stamer and Indian Prime Minister Modi, as countries around the world xmmarkets.cnpete to protect themselves from the Trump tariff war. For India, the deal boosted its reputation as an emerging investment destination and attracted investors looking to diversify.

British Prime Minister's spokesman: Britain will not withdraw winter fuel subsidies cuts

A spokesman for British Prime Minister Stamer said on Tuesday that the British government will not withdraw winter fuel and welfare spending cuts. Previously, the party suffered a series of defeats in local elections. Labor politicians said the party’s poor performance in the election was partly due to dissatisfaction with the government’s cuts in fuel and disability subsidies. A spokesman for Starmer said: "The government has formulated policies and explained the reasons behind these policies. The government's policies have not changed and will not change."

Oman's Foreign Ministry: The United States and Yemen reached an agreement not to attack each other's ships

Oman's Foreign Ministry spokesman said on the 6th that discussions and agreements have been reached with the United States and relevant Yemeni authorities. According to the agreement, both parties shall not attack each other's ships in the Red Sea and the Mande Strait, thereby maintaining freedom of navigation and ensuring unimpeded international merchant ships. Oman expressed appreciation for the constructive attitudes and positive results achieved by both sides, hoping that this progress can pave the way for further resolution of regional issues and promote the xmmarkets.cnmon goal of regional peace and prosperity.

British media: Britain and the United States will reach a trade agreement to reduce tariffs on automobiles and steel

According to the Financial Times, UK and US officials say the UK and the US are about to reach a trade agreement that will provide lower tariff quotas for UK steel and automobile exports. The agreement, to be signed this week, will protect some British exports from the full impact of Trump's additional 25% tariffs on steel and automobile imports in February and March. A senior British official said the negotiations were still "going quickly" and warned that there were still differences on the drug issue. Britain's proposals include concessions to Washington on digital service tax, cutting tariffs on U.S. car exports, and reducing tariffs on U.S. agricultural products.

Domestic News

China Logistics Industry Prosperity Index announced in April. Business demand continued to expand overall.

China Federation of Logistics and Procurement announced the China Logistics Industry Prosperity Index in April today (7th). Overall, the demand for logistics business generally maintains an expansion trend, and the upstream and downstream of the supply chain maintains a coordinated recovery. From a regional perspective, the western region has rebounded significantly. In April, China's logistics industry prosperity index was 51.1%, down 0.4 percentage points month-on-month. In the sub-index, the total business volume index, new order index, inventory turnover index, etc., all remain in the expansion range of more than 50%.

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