China hits back as U.S. Tariff War escalates 06/03/2025

HOT stories for today

US market wrap:
 

• Markets saw another volatile session as tariffs, economic data, and earnings reports drove trading action. Big tech stocks rebounded, helping fuel a broad market rally—with the exception of the energy sector. Major U.S. stock indexes surged on Wednesday after news that automakers received a one-month exemption from tariffs, raising hopes that trade tensions might ease. White House Press Secretary Karoline Leavitt also stated that Trump is open to granting additional tariff exemptions.
• Investors viewed this as a sign that the administration is willing to respond to market pressures. However, uncertainty persisted after Trump criticized Canada’s fentanyl response in a conversation with Prime Minister Justin Trudeau. Meanwhile, the Federal Reserve’s Beige Book indicated that economic activity grew slightly, though inflation concerns remained elevated.

China hits back as U.S. Tariff War escalates 

• China vowed to fight U.S. tariffs “until the end” as tensions escalate. In response to Trump’s latest 10% tariff hike, Beijing imposed up to 15% tariffs on U.S. goods starting March 10 and restricted exports to key U.S. entities. China dismissed Trump’s fentanyl-related justification for the tariffs as a “flimsy excuse”, while U.S. Defense Secretary Peter Hegseth stated the U.S. is “prepared” for any challenges.
• Targeting U.S. agriculture, China slapped new duties on soybeans, aiming to pressure Trump politically. With the Chinese economy slowing, Beijing signaled it may boost monetary and fiscal stimulus to offset trade losses. Meanwhile, China’s National People’s Congress announced a 7.2% increase in defense spending, reinforcing its stance amid rising geopolitical tensions.

 
Stocks on the move: 
      

• Marvell Technology (MRVL) — Shares of the semiconductor firm tumbled 13% despite reporting better-than-expected fiscal fourth-quarter results. The company posted adjusted earnings of $0.60 per share on $1.82 billion in revenue, narrowly surpassing analyst expectations of $0.59 per share on $1.80 billion in revenue, according to LSEG. However, its first-quarter guidance only slightly exceeded estimates, weighing on investor sentiment.
• MongoDB (MDB) — The database software provider saw its stock plunge nearly 18% after its full-year guidance for fiscal 2026 underwhelmed Wall Street. The company projected adjusted earnings between $2.44 and $2.62 per share, well below the $3.38 per share consensus forecast from FactSet analysts.
• Grindr (GRND) — The LGBTQ+ dating app company dropped 12% after reporting a full-year net loss of $131 million, significantly wider than the $55.8 million loss recorded the previous year.
• Zscaler (ZS) — The cloud security firm jumped 4% following strong fiscal second-quarter earnings. The company delivered adjusted earnings of $0.78 per share on $648 million in revenue, exceeding expectations and boosting investor confidence.

Today’s action

• Asian markets traded mostly higher on Thursday after Wall Street rebounded overnight, buoyed by President Donald Trump’s decision to postpone tariffs on certain automakers. Japan’s Nikkei 225 climbed 1%, while South Korea’s Kospi gained 0.9%. Hong Kong’s Hang Seng Index jumped 2.47% at the open, and China’s CSI 300 edged up 0.6% following Beijing’s announcement to raise its fiscal deficit to around 4% of GDP, signaling a major policy shift. European markets are poised for a higher open, with investors awaiting the European Central Bank’s rate decision, where a rate cut is widely expected. 
• U.S. stock futures were little changed early Thursday after the S&P 500 rebounded on optimism over potential trade concessions. Dow Jones and S&P 500 futures remained flat, while Nasdaq 100 futures dipped 0.1%. On the economic front, weekly jobless claims will be closely watched on Thursday, while February’s payroll report—a key indicator for market direction—will be released on Friday. Several major companies are set to report earnings, including Macy’s, Broadcom, Costco Wholesale, and Hewlett Packard Enterprise.

Wahtclist: MDB, TSLA, GM, COST, ZS, MRVL, M, AVGO, KR

Bitcoin

• Bitcoin surged past $90,000, gaining 3.7% in 24 hours, after Donald Trump’s tariff delay helped ease investor concerns. The broader crypto market followed suit, with bitcoin cash (BCH), Chainlink (LINK), and Aptos (APT) posting double-digit gains.
• Traders are also reacting to shifting Fed rate expectations, with markets now pricing in more rate cuts in 2025, supporting bitcoin’s appeal as a store of value. Despite recent price swings, Swissblock’s Bitcoin Fundamental Index, which tracks network health, remained stable—suggesting strong underlying support for BTC even amid volatility.
  Watchlist: Bitcoin: 80 000-100 000, Ethereum:2000-2600, Solana: 120-176

Forex

• EUR/USD remains stable around 1.0790 on Thursday after three straight sessions of gains, as traders await the European Central Bank’s (ECB) interest rate decision. The ECB is expected to cut rates by 25 basis points, bringing the Main Refinancing Operations Rate to 2.65% and the Deposit Facility Rate to 2.5%. Meanwhile, the U.S. dollar remains under pressure after disappointing private payroll data heightened concerns over slowing economic growth.
• The Japanese yen remains under pressure against the U.S. dollar in Thursday’s Asian session, though BoJ rate hike bets help limit losses. Concerns over Trump potentially imposing new tariffs on Japan, coupled with a rebound in U.S. Treasury yields and a positive risk tone, weigh on the safe-haven JPY. However, expectations that the Bank of Japan may continue raising rates prevent aggressive selling of the currency.
  Watchlist: EUR/USD: 1.0200-1.0820, USD/JPY: 149-158.80

Basic Materials

• Gold prices remain steady near a one-week high on Thursday, though bullish momentum lacks conviction. Concerns over President Donald Trump's tariff policies, a weaker U.S. dollar, and growing expectations for a Federal Reserve rate cut continue to support the XAU/USD pair. However, a positive risk tone in broader markets is limiting upside ahead of the U.S. Non-Farm Payrolls (NFP) report on Friday.
• West Texas Intermediate (WTI) crude remains under pressure around $66.45 in Thursday’s early session, hitting its lowest level since December 2021. The latest EIA report showed U.S. crude oil inventories surged by 3.614 million barrels, exceeding expectations and raising concerns about weakening demand. Fears that Trump’s trade war could slow economic activity and curb global crude demand continue to weigh on oil prices.
  Watchlist: GOLD 2600-2945, US Oil: 67.50-79.00

Key Economic Events Today:

EST time
08:30 am: USD Unemployment Change
08:30 am: USD Trade Balance
08:45 am: USD FOMC Member Harker speaks
03:30 pm: USD FOMC Member Waller speaks

Earnings

BMO (Before the US Market opens)
JD          JD.com
KR          Kroger Company
VG          Venture Global
M            Macy’s Inc

AMC (After the US Market closes): AVGO, COST, IOT, HPE

The TEFS Analyst team wishes you a successful day!