TL;DR

China rare earth halt strains global autos; U.S. doubles steel tariffs; gold tops $3,500/oz.

Highlights

• China’s rare earth export halt since April 4 is straining global auto, EV, defense, and tech supply chains; Trump-Xi talks expected1.
• Trump administration doubles U.S. steel and aluminum tariffs to 50%, temporarily exempting the UK; manufacturers warn of higher costs2.
• France and Belgium block EU Russian LNG ban by 2027, keeping major flows intact; Spain and Netherlands support the ban3.
• China mulls order for up to 500 Airbus jets, boosting Airbus and Rolls-Royce shares; Boeing excluded from new Chinese deliveries4.
• RBI expected to cut repo rate by 25bps to 5.75% on June 6 as inflation cools; Indian equities and banks in focus7.
• Germany approves €46B corporate tax relief, DAX hits record 24,346; corporate tax rate set to fall to 10% by 20328.
• Ukraine claims drone strikes destroyed 41 Russian aircraft, including strategic bombers; further attacks hit Crimea bridge6.
• Spot gold rises above $3,500/oz (+2.5%) on haven demand; central banks, including Poland and China, continue buying18.
• OECD cuts global growth forecast to 2.9% for 2025–26, citing Trump tariffs; U.S. growth seen at 1.6%, inflation risks rising17.
• Volkswagen to cut 35,000 German jobs by 2030, shift Golf production to Mexico, and transition Wolfsburg to EVs15.
• Dutch government collapses over immigration policy ahead of NATO summit, adding to EU political uncertainty10.
• Bulgaria set to join the euro area on Jan 1, 2026, pending EU approval; domestic opposition remains11.

Commentary

Trade tensions are intensifying, with China’s rare earth export halt and the U.S. doubling steel and aluminum tariffs sharply raising input cost and supply chain risk for global manufacturers12. The rare earth squeeze is already pressuring automakers in the U.S., Europe, and India, with inventories dwindling and warnings of imminent production halts1. The upcoming Trump-Xi talks are a critical watchpoint for any sign of easing or escalation, particularly for industrials, autos, and tech1.

In Europe, policy divergence is evident. Germany’s €46 billion corporate tax relief has lifted the DAX to record highs, supporting sentiment for European equities, while Volkswagen ’s restructuring underscores sector cost pressures and the ongoing EV transition815. Meanwhile, the EU’s plan to ban Russian LNG is stalled by France and Belgium, ensuring continued Russian gas flows and tempering immediate energy price volatility3. The Dutch government’s collapse ahead of the NATO summit adds political risk to the region, while Bulgaria’s euro adoption is likely to proceed despite domestic resistance1011.

Asia presents mixed signals. India’s expected rate cut, coupled with strong growth and moderating inflation, is supportive for local equities and fixed income7. In China, auto sector overcapacity and price wars persist, but a potential mega-order for Airbus jets highlights Beijing’s strategic leverage in global supply chains and ongoing trade realignment away from U.S. suppliers like Boeing414.

Geopolitical risk remains elevated. Ukraine’s drone strikes on Russian airbases and infrastructure mark a significant escalation, raising risk premiums in the region6. Gold ’s surge above $3,500/oz reflects persistent haven demand, with central banks continuing to accumulate reserves18. The OECD’s global growth downgrade and higher U.S. inflation risks point to continued volatility in rates and FX, with the dollar supported by trade tensions but select EM currencies (notably INR) buoyed by domestic policy actions17.