Markets Today: Sentiment Takes a Hit on Trump's Latest Tariffs, Gold Rises, DAX Slips

[Redator]

Asian Market Wrap

Most Read: A Week Ahead: May NFP, Bank of Canada and ECB Rate Decisions

Markets are on the backfoot this morning as US tariffs and trade tensions are once again in focus, denting risk appetite.

The Asian session reflected this with risk assets struggling while haven flows have returned with a bang. Gold is up as much as $60 from Friday's close, trading around $3350 an ounce at the time of writing.

Tariffs are back in the spotlight after recent legal debates about Trump-era tariffs, which are at record-high levels. Investors worry these tariffs could push the US into a recession. At the same time, uncertainties around US trade policies and talks with countries like China are adding to the tension.

On top of this, a major tax plan is being watched closely, as it could significantly increase the US deficit.

In Asia, Steel and Aluminum stocks fell sharply following President Trump's plans to raise tariffs from 50% to 250%.

Elsewhere, US Equity futures were trading lower with the S&P 500 down about 0.5% and European indices looking weak heading into the European Open.

The US Dollar index remains under pressure while the safe haven Yen rose on haven demand. Crude Oil prices were also higher overnight as OPEC+ expanded production less than expected.

Currency Power Balance

/media/images/2025-06-02_08_33_20-Currency_Power_Balance___.width-1400.png

Source: OANDA Labs

On the data front, Asia's factory activity slowed down in May due to weak demand in China and the effects of U.S. tariffs, according to private surveys. This points to a worsening outlook for the region, which used to grow quickly and heavily reliant on exports.

The European Open

European shares enjoyed a positive month of May but have opened lower this morning.

The European STOXX 600 index dropped by 0.2% early in the day. Steel companies like ArcelorMittal and Thyssenkrupp saw their shares fall by 1% and 1.1%, respectively. Tariffs affecting cars also hit automakers hard, causing their sector to drop by 1.2%.

On the data front, Swiss GDP was released a short while ago and showed the Swiss economy grew by 0.5% in the first quarter of 2025 compared to the previous quarter, which had slower growth of 0.3%. However, this growth was less than the earlier estimate of 0.7%.

Economic Data Releases and Final Thoughts

Looking at the economic calendar, and PMI data will be in focus today as a host of countries report their final numbers.

Following the drop off in Asia, it will be intriguing to see how the numbers shake up but there could be discrepancies as many companies sought to beat tariffs and upped their manufacturing activity in recent weeks.

Beyond that markets will be hoping that risk appetite is restored as the day progresses at least on the tariff front. China continues to talk diplomacy on the tariff front but did face accusations from US President Trump on Friday of not following through on its promise to scale back tariffs. The Chinese responded that they had maintained communication on trade with the United States

Developments in this regard is likely to be the major driving force for risk sentiment today and for the first half of the week.

/media/images/2025-06-02_09_12_31-MarketPulse_-_Economic_Ca.width-1400.png

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - DAX Index

From a technical standpoint, the DAX had printed a fresh high last week around the 24387 but continues to struggle to hold convincingly above the 24000 handle.

The index is down around 0.8% at the time of writing with the 20-day MA currently providing support at the 23786 handle.

A break of this level could potentially open up further downside as risk appetite remains under pressure with support resting at 23500, 23200 and the 50 day MA around 22711.

If sentiment does improve, a move higher back toward the 24000 handle could materialize but this is dependent on developments around the US-China situation once more as well tariffs on steel and aluminum proposed by US President Donald Trump.

/media/images/DE30EUR_2025-06-02_09-12-01.width-1400.png

Source: TradingView.com (click to enlarge)

Trade safe!

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© {CURRENT_YEAR} OANDA Business Information & Services Inc.