Trump mentioned that there will be flexibility on tariffs, indicating a willingness to negotiate. He acknowledged the possibility of discussions with China to prevent a trade war, mentioning a potential summit with Xi in mid-June.
In the stock market, the S&P 500 reduced its decline to 18 points, while the Nasdaq experienced a minor drop of 0.1%.
In foreign exchange, there are early signs of a reversal in the weakness of commodity currencies, coupled with a strengthening of the US dollar.
Shift In Tone
Trump’s remarks suggest a shift in tone, one that leaves room for adjustments rather than rigid enforcement. This alone has been enough to rekindle speculation about policy direction, reinforcing expectations that trade discussions may not be as hostile as feared. A mid-June summit with Xi adds weight to that idea. If both sides engage in constructive talks, markets will interpret that as a step towards de-escalation. Should negotiations falter, however, prior concerns around tariffs will resurface, likely amplifying volatility across multiple asset classes.
Markets reacted with measured caution. The S&P 500 trimmed its earlier losses, a sign that some traders are reassessing immediate downside risks. Meanwhile, the Nasdaq’s more modest retreat gives weight to the argument that this sector may be less exposed to fluctuations in trade sentiment. Uncertainty lingers, but price movements thus far indicate restraint rather than panic. If positive developments emerge from Washington or Beijing, equities could find room to recover further.
Foreign exchange markets tell their own story. After an extended period of pressure, commodity-linked currencies are exhibiting early signs of stabilisation. That coincides with renewed firmness in the US dollar. Whether this is a brief reaction or the beginning of a more durable shift depends on upcoming headlines. If confidence in global economic conditions improves, demand for commodity-backed currencies could rise. At the same time, a stronger dollar suggests positioning that anticipates fewer disruptions ahead.
Market Reactions
Traders now face decisions in an environment where political discourse is dictating much of the movement. Until firmer commitments emerge, short-term swings remain likely. Keeping a close watch on official statements and structural shifts in market sentiment will be necessary in the coming sessions.
