Bitcoin and Copper Surge on Trade Policy Developments

In a week marked by trade policy changes and signs of economic strains, Bitcoin and copper prices show notable movements as the markets gear up for the reporting of US earnings.

US Trade Tariff Delays Affect Global Markets

Trade Policies and Tariff Delays Unfold: Last week saw the US extend the timeline for implementing reciprocal tariffs, delaying them from July 9 to August 1. This notification affected 23 countries, with the market response appearing relatively muted overall. Notably, Brazil now contends with a heavy 50% tariff, almost entirely influenced by political considerations rather than trade metrics. Meanwhile, Canada faces a significant 35% levy, leading the Brazilian real to falter by 3.1% before it partially recovered.

Copper and Pharmaceutical Tariffs Impact Prices

Sector-Specific Tariffs Reshape Copper Markets: Adding to the trade uncertainty, the US is set to enforce a 50% tariff on copper imports beginning on August 1. This news pushed US copper futures up dramatically by 17% to $5.88 per pound, although it settled lower at $5.59 eventually. The differential between COMEX and LME prices reached unprecedented margins, undermining the feasibility of arbitrage transfers for traders. Pharmaceutical goods are also under scrutiny, with potential levies soaring as high as 200%.

Persistent Deflationary Pressures in China

China Struggles with Deflation: Over in China, the consumer price index managed to scrape back to a paltry +0.1% year-on-year after enduring four months of dip. Regrettably, the producer price index took a 3.6% tumble YoY, which is the sharpest decline recorded since June 2023. This downturn reflects dismal domestic and external demand. Factors like ongoing trade tensions and a weak property sector compound these deflationary pressures, raising concerns about real economic resilience moving forward.

Investor Sentiment Turns Cautious as Earnings Season Approaches

Equities Consolidate as Earnings Season Looms: The US stock market seems to be treading water just below record highs as collective sentiment awaits corporate earnings news. Despite the looming furor over tariff announcements, investors have kept a cautious eye on market movements. In fact, major indices like the Nasdaq 100 and Dow Jones retreated slightly, down by 0.4% and 1.0% respectively. The upcoming earnings reports, including significant corporations such as Netflix and Johnson & Johnson, are expected to be pivotal in determining market direction in July.

Bitcoin’s Record Performance Amid Regulatory Discussions

Bitcoin Heads Towards New Highs: In the realm of cryptocurrencies, Bitcoin has once again surged past the $118,000 mark, thanks in part to the anticipated discussions surrounding the proposed GENIUS Act in Congress. This act could potentially formalise regulations surrounding stablecoins for the first time in the US. Last week, Bitcoin rose by about 8% before experiencing a minor retracement. The momentum indicators are revealing a potential shift, implying the corrective phase may have concluded, which leads to fresh price predictions of $121,439 as a possible new high.

Key Economic Indicators to Monitor This Week

Upcoming Economic Evaluations to Watch: As we dive into the week ahead, all eyes will be on the big-picture events, particularly China’s Q2 GDP assessment which is crucial for gauging the economy’s health amidst ongoing trade skirmishes. China previously recorded a notably robust 5.4% growth YoY in Q1, distinctively buoyed by strong industrial performance and retail sales. Yet, the uncertainty from the US-China tariff conflict could heavily influence submitted PMI figures and impact overall economic growth predictions. Expectations are now for Q2 GDP growth to taper down to 5.2%. Additionally, essential inflation indicators from the US, UK, and Japan will shed light on the current monetary policy landscape as we strive to determine if the trade barriers are starting to bite.

Last week’s developments highlighted significant movements in copper and cryptocurrency markets mainly driven by trade policies. China’s ongoing deflationary issues continue to trouble investors, while the US stock market holds steady just shy of record highs. This week stands firmly focused on upcoming GDP data and corporate earnings, which could swing market sentiment in either direction. The gripping nature of tariffs and evolving economic indicators will certainly dictate market sentiment in the forthcoming sessions. Keep an eye on these pivotal economic events as they unfold in the next week.