China’s Caixin manufacturing PMI climbed to 50.8 on Monday, marking its strongest expansion in three months and exceeding expectations. Since last October, the private-sector PMI has consistently stayed above the 50-point threshold that distinguishes growth from contraction.
The survey showed that new export orders increased at their fastest pace since April, suggesting rising demand from overseas buyers. This uptick in foreign interest may be linked to U.S. importers rushing to secure Chinese goods ahead of both potential and actual tariff hikes imposed by the US. On Tuesday, President Trump imposed a further 10% levy on Chinese goods.
On Tuesday, the Trump administration implemented hefty 25% tariffs on Canada and Mexico, a move that some economists warn could ignite a global trade war. This concern grew as Canada swiftly retaliated with its own tariffs, and there is speculation that Mexico will announce similar measures by Sunday. The U.S. decision triggered a short period of market turbulence, heightening investor fears about potential economic fallout. As a result, the dollar weakened as investors sought refuge in safe-haven treasuries, driving yields down.
Following a highly tense meeting between President Zelensky and Trump last week, Trump halted all military aid to Ukraine while communication between the two leaders stalled. However, on Tuesday, Trump revealed that Zelensky reached out to him to confirm that Ukraine is ready to reinstate the minerals agreement and, subsequently, the restoration of U.S. aid to Ukraine. Market participants have closely followed the current situation with curiosity, but it has had little impact on the markets. While the suspension of aid to Ukraine drove European defence stocks higher, reinforcing expectations of increased defence spending and expedited support for Ukraine, traders appear more focused on concerns over tariffs.