TL;DR

Trump doubles steel tariffs; oil volatile on OPEC+/Ukraine; ECB to cut rates; equities at highs.

Highlights

• Trump doubles US steel and aluminum tariffs to 50% (ex-UK), impacting Canada, Mexico, Brazil; Mexico to seek exemption as $2.1B in exports threatened111.
• Oil jumps over 4% (Brent $65.47, WTI $63.39) on OPEC+ output hike, Russia-Ukraine tensions, and Canada wildfires; prices later ease on inventory build and growth concerns2.
• ECB to cut rates 25bp to 2% as eurozone inflation falls to 1.9%; cautious outlook expected3.
• MSCI ACWI hits record high, S&P 500 nears all-time high, global equities up 5.5% in May10.
• Needham downgrades Apple to Hold on valuation and AI risks; shares fall 1%4.
• Circle upsizes IPO to $7.2B, BlackRock to take 10% stake; strong institutional demand, retail less certain9.
• Ukraine drone strikes destroy Russian aircraft; US envoy warns of escalation; US Defense Secretary skips key Ukraine aid meeting716.
• Iran rejects US nuclear proposal, maintains 60% uranium enrichment; EU considers sanctions snapback6.
• Pending US home sales down 6.3% in April, with Miami off 23%; South Florida flagged as housing weak spot17.
• Trump orders US shipbuilding revival amid China supply chain dominance; rare earths and pharma import risks persist12.
• Germany approves €46B corporate tax relief; DAX at record 24,346 (+21% YTD)20.

Commentary

US trade policy is in focus as the Trump administration doubles steel and aluminum tariffs to 50% for most trading partners, with Canada, Mexico, and Brazil notably impacted1. Mexico is set to formally request an exemption, with $2.1 billion in exports at risk11. This move raises the likelihood of supply chain disruption in US manufacturing and could trigger retaliatory measures, particularly in the auto and construction sectors111. The broader context includes ongoing US-China supply chain tensions, with new executive orders to revive US shipbuilding and continued risks in critical minerals and pharmaceuticals12.

Commodities are volatile. Oil initially surged over 4% on OPEC+ output hikes, Russia-Ukraine escalation, and Canadian wildfire disruptions, but gave back gains as global inventories rose and the OECD cut its global growth forecast to 2.9%2. Energy equities may see mixed action as traders weigh geopolitical risks against the potential for oversupply2.

In rates and FX, the ECB is expected to cut rates by 25bp as eurozone inflation falls below target3. This, alongside a weaker US dollar, is supporting global equities: the MSCI ACWI and Germany’s DAX are at record highs, and the S&P 500 is approaching its own peak1020. However, sector rotation is possible, as Needham’s downgrade of Apple on valuation and AI risks signals caution in big tech4.

Crypto and fintech remain active. Circle’s upsized $7.2B IPO, with BlackRock taking a 10% stake, highlights strong institutional demand for stablecoin infrastructure, though retail appetite is less clear9. Meanwhile, ongoing fiscal concerns and geopolitical risk continue to underpin institutional interest in Bitcoin15.

Traders should monitor for retaliatory trade moves, commodity price swings, and central bank guidance. Housing and consumer names may underperform given weak pending home sales, especially in South Florida17. Geopolitical developments (Ukraine, Iran) remain a risk for cross-asset sentiment76.