The Morning Edge: US-China Trade Talks Resume Amid Slumping Chinese Exports

QUICK SNAPSHOT
Global Sentiment: Risk-on
Factors: US-China Trade Talks

TODAY’S WATCHLIST
- EIA short-term energy outlook
- AMFI May Data 

THE BIG STORY
As top US and Chinese economic officials regroup in London for a second day of tense negotiations, the stakes have never been higher. The talks, aimed at salvaging a fragile truce and calming market jitters, come against a backdrop of steeply falling Chinese exports and escalating fears of global supply chain disruptions. What began as a dispute over tariffs has morphed into a broader conflict over critical mineral access particularly rare earth, threatening the industrial backbone of economies from Asia to the West.

President Donald Trump, maintaining a cautiously optimistic tone, told reporters on Monday that he’s receiving “only good reports” from his team on the ground. But the hard data tells a more sobering story. China's exports to the US plunged 34.5% year-on-year in May, it is the sharpest drop since the onset of the COVID-19 pandemic—as US tariffs bite harder and global demand softens. With overall export growth missing expectations and factory-gate deflation deepening, Beijing faces mounting pressure at home even as it spars with Washington abroad.

DATA
Americans grew less anxious about inflation in May and expressed greater confidence in their personal finances, according to the New York Federal Reserve’s latest Survey of Consumer Expectations. Inflation expectations declined across all time horizons tracked by the survey. Respondents now see inflation at 3.2% a year from now, down from 3.6% in April, and at 3% in three years, compared to 3.2% previously. Five-year expectations also eased slightly to 2.6% from 2.7%. The report highlighted moderating inflation expectations for gas, rent, medical care, and college, though food costs are still seen rising at a 5.5% pace over the next year, the highest since October 2023. House price expectations also edged down, with respondents anticipating a 3% rise in the year ahead, compared to 3.3% in April.

WHAT HAPPENED OVERNIGHT
US stocks ended slightly higher on Monday, supported by gains in Amazon and Alphabet, as investors closely monitored renewed US-China negotiations aimed at reviving a preliminary trade agreement that had previously eased tensions. Amazon and Google parent Alphabet each rose more than 1%, helping to keep the broader index in positive territory. Amazon also announced plans to invest at least $20 billion in Pennsylvania to expand its data centre infrastructure, reinforcing its commitment to scaling artificial intelligence capabilities.

US Treasury yields edged lower on Monday as investors turned their attention to trade negotiations between Washington and Beijing underway. The yield on the benchmark 10-year note slipped 2.6 basis points to 4.482%, while the 2-year yield fell nearly 4 basis points to 4.005%. The yield curve steepened for the first time in five sessions, with the 2- and 3-year maturities both declining by around 4 basis points, signalling a cautious but hopeful outlook ahead of any developments from the high-stakes talks.

The US dollar weakened against most major currencies on Monday, trading within narrow ranges as investors consolidated gains from Friday’s stronger-than-expected jobs report and turned their attention to high-stakes US-China trade talks underway in London. The dollar edged 0.2% lower against the yen to 144.55, following two consecutive weeks of gains. The euro strengthened 0.3% to $1.1427 as markets continued digesting the European Central Bank’s recent signal that it may be nearing the end of its easing cycle. The dollar index dipped 0.2% to 98.942.

Brent crude oil prices climbed to multi-week highs on Monday, supported by a weaker U.S. dollar and optimism around potential progress in US-China trade talks taking place in London. Hopes that a deal could revive global economic momentum and strengthen demand for energy helped lift sentiment. Brent crude futures settled 57 cents, or 0.9%, higher at $67.04 a barrel, after touching $67.12 during the session—the highest level since April 28.

Day’s Ledger

Economic Data:

• AMFI May data
• UK unemployment data for May
• US retail sales 

Corporate Actions:

• Jan-Mar earnings:  Accretion Pharmaceuticals, Borana Weaves, PG Foils, Supreme Infrastructure India
• BEML to consider dividend
• CEAT to consider raising of fund
• IIFL Finance to consider raising of fund
• Sprayking to consider stock split and raising of funds

Policy Events

• EIA short-term energy outlook
• ECB Buch speaks
• ECB Donnery speaks
• German Buba Vice President Buch speaks  

TICKERS

• ACME SOLAR appointed Gopalji Mehrotra as group CHRO, replacing Ravi Parmeshwar immediately, strengthening HR leadership amid ongoing business growth.
• APOLLO HOSPITALS plans to add 7–8 Apollo Cradle centres in five years; exploring ₹10–12 billion sale of children’s hospital division.
• ASONS PHARMA resolution plan for Astral Steritech approved by NCLT; will pay ₹834 million against ₹2.67 billion creditor claims.
• ASTRAZENECA PHARMA INDIA named Praveen Rao as MD from July 1, replacing Sanjeev Kumar Panchal who moves to global role.
• CAPRI GLOBAL CAPITAL launched QIP at ₹153.93 floor price, 15% below last close; shares surged 19.3% on listing day.
• CENTRAL BANK OF INDIA bonds upgraded by ICRA due to better solvency, asset quality; outlook stable despite elevated gross NPAs.
• GENSOL EV Lease NCLT reversed insolvency ex-parte order, granting time to respond; further hearings scheduled.
• JINDAL SAW to invest $118 million in UAE and Saudi pipe projects, expanding Middle East footprint with manufacturing and JV plans.
• JUPITER ELECTRIC MOBILITY opened its first showroom in Bengaluru, marking the start of a national rollout for electric commercial vehicles.
• KOTAK MAHINDRA BANK appointed Srishti Sethi as Group Chief Risk Officer starting July 1, succeeding retiring Paul Parambi.
• MOTILAL OSWAL fined ₹300,000 by SEBI for authorised person violations; no client complaints reported, penalty moderate due to corrective actions.
• OBEROI REALTY CEO Pankaj Gupta resigned from commercial real estate business, effective immediately, signalling leadership change.
• OLECTRA GREENTECH CMD K. V. Pradeep resigned for personal reasons; effective date yet to be announced.
• IRB INFRASTRUCTURE posted 9% YoY toll revenue growth in May at ₹5.81 billion, driven by vacation season and increased vehicle numbers.
• Three months after Panda's exit, IRDAI chairperson post remains vacant
• ZEE ENTERTAINMENT partnered with Bullet to launch AI-driven micro-drama app targeting young viewers, planning to invest or acquire a stake.

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