Since Donald Trump took office, the markets and news cycles over weekends have become increasingly active. As a result, many traders who traditionally operated on a “five-days-on, two-days-off” basis are now paying attention to the markets around the clock. This past weekend was no exception, with two hot topics emerging: the civil unrest in Los Angeles and the first meeting of the U.S.-China economic and trade consultation mechanism. These represent a clash of potential bearish and bullish factors. After several weeks of consolidation, many assets may finally see a clear direction this week, helped by these breaking developments.
Judging from Monday’s opening, the market is currently taking a relatively calm approach toward these two news events, as there has been no significant gap in prices. Nevertheless, both the development of these stories and the market’s reaction will require time to be fully digested. The market itself also needs a catalyst to break away from its sluggish pace.
According to official reports, He Lifeng, a member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, will visit the United Kingdom from June 8 to 13. During this period, he will participate in the first meeting of the U.S.-China economic and trade consultation mechanism. Clearly, this is the sort of meeting where “no news is bad news;” or if the talks bring about little or no progress, it may turn potential bullishness into a bearish outcome. Since the timeline spans the entire week, any change in developments could immediately impact intraday market movements. From a fundamental perspective, we can expect the results to be ambiguous—seemingly positive but not genuinely so, with communication that is hollow or inconclusive. However, the underlying issues between China and the United States are unlikely to be resolved. If this assumption holds, risk assets are likely to dip initially in response to the news, then rebound afterward.
Meanwhile, the deployment of the National Guard without a request from the state governor—something not seen in the U.S. since 1965—has been described by Xinhua News Agency as “the beginning of a civil war in America.” In the short term, there is a risk that escalating tensions could trigger larger-scale conflict, though the risk remains limited for now. On the other hand, following last week’s “breakup” between Elon Musk and Trump, America’s internal divisions appear even more pronounced. In other words, the friction between supporters of the Democratic Party, the Republican Party, and even a potential future “Musk Party,” is becoming harder and harder to reconcile. While America’s domestic troubles are unlikely to leave global financial markets unaffected, this is an issue to be addressed later.
Back to the markets themselves, several interesting assets are worth mentioning. Firstly, silver has surged to a new rebound high even as gold remains weak, and this has brought the gold-silver ratio back below 92, in line with our expectations. It is important to note that historically, such a catch-up rally in silver has increased the risk of a major top in the precious metals market. However, now that the gold-silver ratio has returned to a reasonable level, both are expected to perform more normally in the near term.
Secondly, Bitcoin (BTC) last week briefly fell toward the 100,000 mark, while Ethereum maintained relative stability. As leading indicators in the first half of the year, the performance of these cryptocurrencies is critical. Both have been consolidating for some time, and whether they can break out in a clear direction this week will be key.
Finally, looking at the crude oil market, bulls are currently attempting a rebound after a prior breakdown. For further progress, a completed double-bottom formation is needed. Since crude oil is also a key risk asset, a breakout in oil prices could mean further upside for U.S. equities and other risk assets. However, if prices remain suppressed by resistance around $65 and fall back below $60, the likelihood of a “risk-off” scenario increases significantly.
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