Risk aversion sentiment has risen again to support gold prices, Trump increases tariff rates for 14 countries, and the reciprocal tariff suspension period is extended

Basic news

On Tuesday (July 8, Beijing time), spot gold trading was around $3,337.44 per ounce. Trump not only extended the so-called "reciprocal tariff" suspension period, but also postponed the implementation time from July 9 to August 1. Moreover, the increase in tariff rates on 14 countries has triggered a resurgence of market risk aversion; U.S. crude oil trading was around $67.80 per barrel, and oil prices rose more than 2% on Monday as signs of strong demand offset concerns that OPEC+'s production increase in August exceeded expectations and that U.S. tariffs may have new impacts.

Stock Market

Major U.S. stock indexes closed sharply lower on Monday after U.S. President Trump announced high tariffs on Japan, South Korea and other trading partners; Tesla's stock price plummeted as CEO Musk said it would set up a new U.S. party.

The stock index decline further widened after Trump announced that tariffs on imported goods from Japan and South Korea would take effect on August 1. Stocks were turbulent late in the afternoon when he announced he would impose heavy taxes on Malaysia, Kazakhstan, South Africa, Laos and Myanmar.

Last week, the Nasdaq and S&P 500 hit record closes in three trading days. The latest record closing high came after Thursday's strong jobs report was released.

Emily Roland, co-chief investment strategist at Manulife John Hancock Investments, said previous signals from the market indicate that the worst tariff risks have passed, but now the tariff issues have become the focus again, causing some tensions.Sentiment, investors were originally in a stage of high market sentiment, but we are now taking a slight step back.

She said investors may still have a glimmer of hope, believing that these tariff measures are not permanent policies: "Our model has always been to announce punitive tariffs first and then ease. This back-and-forth negotiation rhythm is likely to be the next stage."

The Dow Jones Industrial Average fell 0.94% to 44,406.36 points; the S&P 500 fell 0.79% to 6,229.98 points; and the Nasdaq fell 0.91% to 20,412.52 points.

The biggest drag on the S&P 500 www.xmhouses.comes from electric car maker Tesla, whose share price plummeted 6.8%, after CEO Musk announced the establishment of a new party called the "American Party", further escalating his grudges with Trump. This is Tesla's largest single-day decline since June 5 and the lowest closing price since the trading day.

On Monday, nine of the 11 major industry sectors of the S&P 500 fell. The largest decline was non-discrete consumer groups, down 1.25%; the energy sector fell 1.04%. Only defensive industries rose, with utilities rising 0.17% and consumer essentials rising 0.11%.

Trump's tariff policy has exacerbated inflation concerns and further www.xmhouses.complicated the Fed's path to cut interest rates. The minutes of the Federal Reserve's June meeting, scheduled to be released on Wednesday, will provide more clues to the policy outlook.

According to CME’s FedWatch tool, traders bet that the probability of keeping interest rates unchanged in July is about 95%, while the probability of a rate cut in September is close to 60%.

Another focus of investors is Trump's signing of the U.S. tax cuts and spending plan that came into effect last weekend. These plans are expected to expand the national deficit by more than $3 trillion over the next decade. Gold prices narrowed earlier declines on Monday after U.S. President Donald Trump announced a 25% tariff on goods in Japan and South Korea starting August 1, sparking some risk-averse interest, but the stronger dollar continued to put pressure on gold.

Affected by the strengthening of the US dollar, spot gold fell by more than 1% earlier, and spot gold was $3332.62 per ounce, down 0.1%. US gold futures have not changed much, closing at $3342.8.

The dollar strengthened, up 0.4% against a basket of other major currencies, making gold priced in USD more expensive for buyers using other currencies.

Independent metals trader TaiWong said: "The rise in gold is a reaction to Trump's 25% tariff on South Korea and Japan."

The minutes of the Fed's latest policy meeting will be released this week, and several Fed officials have spoken to further understand the Fed's policy path.

In other precious metals, spot silver fell 0.5% to US$36.72 per ounceplatinum fell 1.9% to $1,365.56; palladium fell 2.5% to $1,106.96. Oil market

Oil prices rose nearly 2% on Monday as signs of strong demand offset concerns about the August increase in OPEC+ and the potential new impact of U.S. tariffs.

Brent crude oil futures closed up 1.9% at $69.58. U.S. crude oil closed up 1.4% to $67.93. At the beginning of the session, Brent crude oil fell to $67.22, and the lowest intraday price of U.S. crude oil was $65.40. "Supply looks certainly rising, however, strong demand is still higher than expected," said Dennis Kissler, senior vice president of trading at BOK Financial. "Tourism statistics released last week showed that the number of Americans traveling on roads and airlines during the National Day holiday hit an all-time high.

On Saturday, the Organization of Petroleum Exporting Countries and OPEC+ allies agreed to increase production by 548,000 barrels per day in August, surpassing the 411,000 barrels increase in the previous three months.

Goldman Sachs analysts expect OPEC+ to announce a final increase of 550,000 barrels per day in September at its next meeting on August 3.

The oil is under pressure as U.S. officials said they would postpone the start of tariff collection but failed to provide details of the change in tariff rates. Investors are concerned that higher tariffs may slow economic activity and oil demand.

Foreign exchange market

The dollar rose sharply against other major currencies on Monday after U.S. President Trump announced that he would impose new tariffs on a range of countries, including Japan and South Korea, on August 1.

Trump posted a letter to leaders of multiple countries on his social media platform, saying that he would impose a 25% tariff on Japan and South Korea. He also wrote letters to leaders of countries such as Malaysia, Kazakhstan, Myanmar, South Africa and Laos, all of which were close to the levels previously announced in April.

The US dollar rose the most significantly against the yen, up 1.09% at 146.130 in the late trading.

The US dollar rose 0.38% against the Swiss franc on Monday to 0.798. Brad Bechtel, global foreign exchange director at Furui, said there are some country-specific factors that have long put these currencies at a disadvantage, but it is obvious that the U.S. news about Trump and tariffs this morning did have an impact on currencies other than the US dollar, which is rare.

The euro fell 0.57% to $1.172 and has rebounded more than 13% so far this year. Investors are worried that Brussels may not be able to reach a deal with Washington by the deadline, as the deal is slow despite multiple rounds of negotiations with the EU.

This Wednesday, the 90-day moratorium on reciprocal tariffs for US President Trump ended, and most U.S. trading partners will face higher tariff prospects.

Starting from the early morning of the 8th Beijing time, Trump has successively announced his tariff letters to many countries on social media, and he has issued the latest tariff rate threats to 14 countries. Among them, Japan, South Korea, Kazakhstan, Malaysia and Tunisia face a tariff rate of 25%; South Africa and Bosnia are 30%; Indonesia is 32%; Bangladesh and Serbia are 35%; Thailand and Cambodia are 36%; Laos and Myanmar are 40%. The above tariffs will www.xmhouses.come into effect on August 1.

The dollar index, which measures the dollar against six major currencies, rose 0.51% to 97.467, a week high. The index continued last week's rally, when data showing resilience in the labor market delayed expectations for the Fed's imminent easing monetary policy.

However, the index is still close to a three-and-a-half trough, with investors questioning the safe-haven position of the U.S. currency and reassessing previous expectations that the U.S. could survive a global economic slowdown, the index is still close to a three-and-a-half trough, and has fallen 10% so far this year.

The pound fell 0.26% to $1.362, but is still close to its strongest level since October 2021. Currencies that are positively correlated with risk appetite, such as the Australian dollar and the New York dollar, fell 0.79% and 0.74% respectively, as both countries will make monetary policy decisions in the next two days.

The RBA is widely expected to lower the cash rate by another 25 basis points on Tuesday, while the New Zealand Fed is expected to keep interest rates stable on Wednesday.

The impact of uncertainty in U.S. policy on the dollar is "not as strong as it was in early April, but we think this correlation is still important."

International News

Trump Advisor: The Federal Reserve Board should consider overturning Powell's opinion

According to the US CBS, White House trade adviser Navarro said that the Federal Reserve Board should consider overturning Chairman Powell's opinion and lowering interest rates. Navarro said: "My suggestion is that at the www.xmhouses.committee meeting from July 29 to 30, if Powell continues to refuse to cut interest rates when data shows that interest rates should be cut, then other members of the board of directors should vote to decide what they should do, that is, cut interest rates."

The United States plans to extend the so-called reciprocal tariff suspension period

White House spokesman Levitt confirmed at a regular press conference on July 7 local time that US President Trump plans to sign an executive order to extend the 90-day suspension period of so-called "reciprocal tariffs" and postpone the implementation time from July 9 to August 1. On the same day, Trump publicly sent letters to leaders of 13 countries on raising tariffs on their social platform "Real Social", announcing that it would impose a 25% to 40% tariff on imported products from Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos, Myanmar, Indonesia, Bosnia and Herzegovina, Bangladesh, Serbia, Cambodia and Thailand from August 1.Tax. Trump announced on April 2 that he would impose so-called "reciprocal tariffs", which caused a plummeting US financial market. Under pressure from multiple parties, Trump announced on April 9 that he would suspend the imposition of high "reciprocal tariffs" on some trade targets for 90 days, but maintain a 10% "benchmark tariff."

A list of the latest tariff rates faced by Trump's letters 14 countries

Starting from the early morning of the 8th Beijing time, Trump has successively announced his tariff letters to many countries on social media, and he has issued the latest tariff rate threat to 14 countries. Among them, Japan, South Korea, Kazakhstan, Malaysia and Tunisia face a tariff rate of 25%; South Africa and Bosnia are 30%; Indonesia is 32%; Bangladesh and Serbia are 35%; Thailand and Cambodia are 36%; Laos and Myanmar are 40%. The above tariffs will www.xmhouses.come into effect on August 1.

The EU strives to reach a framework trade agreement with the United States this week

The EU seeks to reach a preliminary trade agreement with the United States this week so that the two sides can negotiate a long-term agreement, and the EU can lock in a 10% tariff rate after the August 1 deadline. The EU is seeking to exclude certain key products from the 10% tariff, including aircraft, aircraft parts, and wine and spirits, people familiar with the matter said. Principle agreements are expected to cover some form of exemption. The European www.xmhouses.commission, which is responsible for EU trade affairs, informed member states on Monday about the progress of negotiations. A spokesman for the European www.xmhouses.commission declined to www.xmhouses.comment on the ongoing negotiations.

The Brazilian Central Bank has lowered its inflation expectations for 2025 for six consecutive weeks

On July 7, local time, the Brazilian Central Bank released the latest "Focus Report", lowering the inflation rate forecast for 2025 from the previous 5.20% to 5.18%, which is the sixth consecutive week of lowering the indicator. According to the Brazilian National Monetary www.xmhouses.commission, the country's inflation control target for 2025 is 3%, allowing up and down to float by 1.5 percentage points. Although inflation expectations have fallen, they are still above the target range upper limit, and the market generally believes that achieving inflation control targets still face challenges. In response to inflationary pressure, the Brazilian central bank has raised its benchmark interest rate seven times in a row since last year and is currently at a high of 15.0%. The Brazilian Central Bank said it will continue to evaluate the effectiveness of monetary policy transmission and does not rule out the possibility of further interest rate hikes if necessary. The report shows that the growth rate of GDP in 2025 is expected to be raised from 2.21% to 2.23%. At the same time, exchange rate expectations remain stable, and the market expects the US dollar to exchange rate against the Brazilian real at the end of 2025 to be 5.70. Currently, the market is generally cautiously optimistic about the prospects for Brazil's economic growth. The Brazilian Central Bank regularly releases the "Focus Report" every week, and through surveys of more than 100 financial institutions, it predicts the situation and trends of domestic important economic data.

Iranian President: Being open to negotiations with the United States is just hard to trust Washington

Iranian President Pezekichiyan is interviewed by Tucker CarlsonIran is still willing to engage in dialogue with the United States, but it is difficult to trust Washington again given the attacks last month. Carlson's nearly 30-minute video interview with Pezeshkian aired on Monday. The Iranian president said: "I believe that we can easily resolve differences and conflicts with the United States through dialogue and negotiations." Pezeshiziyang claimed that the Trump administration approved Israeli attacks on Iran since June 13, followed by the United States' air strikes on Iran's nuclear facilities on June 22. He said the Israeli bombing was directly targeting him and several colleagues, who were in a meeting at the time, but the attack failed. It did not disclose any further details.

The Federal Reserve Research Report warns: The economic outlook is unknown or the risk of zero interest rates will reappear.

The latest research report jointly released by the New York Fed and the San Francisco Fed pointed out that although the current short-term borrowing costs are at a relatively high level, the possibility that the Federal Reserve's short-term interest rate target will approach zero again in the next few years. The report written by New York Fed Chairman Williams shows that the medium- and long-term risk of the Fed's interest rate target returning to ultra-low levels is "currently at the low end of the observation range over the past fifteen years." But the possibility of returning to near-zero interest rates in the medium to long term is "still significant" due to the recent climb in uncertainty.

The gap between Russian oil production and OPEC+ quota in June has widened, and output discipline has increased significantly. Data shows that Russia's average daily crude oil production in June was 9.022 million barrels, 28,000 barrels lower than the country's June production target that the country needs to www.xmhouses.comply with. This is the biggest gap between Russia's actual output and quota this year. As a country tied with Saudi Arabia to lead OPEC+, Russia has improved its implementation of the production cut agreement in recent years, after it has been criticized for its long-term failure to fulfill its quota. According to statistics, Russia's actual production has been lower than the prescribed level for most of this year. This shift also reflects Russia's emphasis on production discipline, especially after being criticized by Saudi Arabia.

Domestic News

National Development and Reform www.xmhouses.commission: my country has allocated 10 billion yuan of central investment in labor-for-relief

From the National Development and Reform www.xmhouses.commission, we learned that my country has recently allocated 10 billion yuan of central budget investment, and carried out actions to increase employment and income for key groups to increase employment and income for key groups, and help key groups stabilize employment and promote income. According to reports, this investment will implement 1,975 projects, and it is expected to attract and drive 310,000 key groups to find employment nearby, including people who have been lifted out of poverty and monitoring targets for preventing poverty and poverty, migrant workers returning home, and other rural laborers. This batch of 10 billion yuan investment will issue labor remuneration of 4.59 billion yuan, accounting for 45.9%, further increasing the proportion of labor remuneration to central investment.

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