Daily Fundamental Analysis: US-China Trade Talks Resume as Chinese Exports to the US Plunge

China’s May exports fell short of expectations, with U.S. shipments are down 34.5% year-over-year. Analysts expect improvement following the US-China trade negotiations.

Overall exports grew 4.8% versus last year, below the expected 5%. Imports fell 3.4%, worse than the forecast 0.9% decline. However, exports to Southeast Asia, EU, and Africa rose significantly, helping offset U.S. declines.

After April’s 145% U.S. tariffs and China’s retaliation, both sides reached a Geneva deal reducing rates to 51.1% and 32.6% respectively.

Trade representatives He Lifeng and Scott Bessent meet in London today amid renewed tensions over critical minerals, student visas, and chip restrictions.

Additionally, China’s consumer prices fell for a fourth consecutive month in May as Beijing’s stimulus measures failed to boost consumption. The consumer price index dropped 0.1% year-over-year, while core inflation rose 0.6%. Producer prices fell 3.3%, led by declining coal and energy costs. Auto sector price wars and weak property markets have contributed to deflationary pressures.

In response, China’s central bank has cut interest rates and reserve requirements. The U.S.-China trade situation has also improved, with both sides reducing tariffs significantly after reaching a Geneva deal in May.

Markets await potential further monetary easing and policy announcements at the upcoming Lujiazui forum in Shanghai. May trade data is expected to show 5% export growth and a 0.9% import decline.

Markets rose across Asia on Monday: China’s CSI 300 gained 0.16%, Hong Kong’s Hang Seng 1%, and Japan’s Nikkei up 1% as well.

U.S. futures declined in early trading, following Friday’s rally on strong jobs data – payrolls rose by 139,000 in May.

Wall Street indices surged Friday: Dow Jones gained 1.08% to 42,762, S&P 500 was up 1% reaching the psychological level of 6,000  and Nasdaq was up 1.20% to 19,529.95.

Gold fell sharply on Friday. The precious metal’s losses intensified in early trading on Monday as the ounce price fell below the critical level $3,300

The US dollar began this week on a decline as it fell against major currencies. EURUSD gained 20 points so far to 1.1427, and GBPUSD gained 24 points to 1.3560