May was a mixed month for global stocks. The main indices dropped in the final part of the month as shown below. The reason for this decline is that Donald Trump restarted his trade war with China. The chart below shows the performance of the Dow, S&P 500, Nikkei, and EU Stoxx.
As the global stocks declined, the so-called safe havens rose. The chart below shows the performance of gold, Japanese yen, and Swiss Franc.
This month, investors will focus on the developments on trade. On this, they will pay attention to the following.
First, they will continue to focus on whether the US will reach a deal with China. Over the weekend, China retaliated against the US by coming up with a list of American companies that could be blacklisted. The first company to be put on focus was FedEx, which is a major player in the logistics industry. In all this, traders will be focusing on the G20 meeting that will take part in Osaka, Japan at the end of the month. In the meeting, Trump is expected to meet with Xi and there is a likelihood that a deal will be reached.
Second, they will watch out for the emerging tensions between United States and Mexico. This after Donald Trump announced that he will add new tariffs on Mexican goods because of the broken immigration system. The new 5% tariffs are expected to take effect later this week. Traders will want to know whether the tariffs will go on or whether there will be a deal.
Third, they will watch out for the tensions between the US and European Union. Last week, it was reported that Trump was considering adding tariffs on European automobiles. This has been rejected by American automakers like General Motors and Ford. It would also lead to the biggest trade clash between the US and EU. It also brings to focus the tensions between France and Germany. France has rejected adding agriculture sector into the negotiation as it tries to protect its farmers. Germany has shown interest in having agriculture in the talks.
Traders will also watch out the upcoming OPEC meeting. The half-year meeting will take place in Vienna, Austria on 25th and 26th June. It will come at a time when the price of crude oil has fallen by more than 12% in the past few weeks. OPEC is widely expected to continue with the supply cuts as it tries to boost the prices.
Central banks will be on focus this month. Today, the RBA became the first central bank to cut rates, with the goal of supporting the economy. On Thursday, the ECB is expected to leave rates unchanged. Investors are likely to watch out for the language the bank will use on its statement. The SNB and BOC will deliver their rate decision on June 10 and June 13 respectively It will be followed by the Fed, BCB, BOJ, and BOE, which will release their interest rates decision on June 19, June 19, June 20, and June 20 respectively.