The Mexican peso rose to a nine-month high. WTI crude oil is trading above $65 per barrel

The US stocks closed mostly higher on Monday as trade talks between the US and China began in London, reviving hopes for a tariff truce. At the end of the trading day, the Dow Jones Index (US30) fell by 0.03%. The S&P 500 Index (US500) rose by 0.09%. The Nasdaq technology Index (US100) closed higher by 0.31%. The prospect of a breakthrough contributed to improved market sentiment: consumer, commodity, and technology stocks rose, while financial companies lagged behind.

The US consumer inflation expectations for the coming year fell to 3.2% in May 2025 from 3.6% in April, the lowest level in the last three months. At the same time, inflation expectations for the three-year horizon fell by 0.2% to 3.0%, and inflation expectations for the five-year horizon fell by 0.1% to 2.6%.

The Mexican peso rose to 19.10 per US dollar, its strongest level in the last nine months, thanks to the Bank of Mexico’s hawkish expectations and a softer US dollar. In May, core inflation rose to 4.42%, the highest level in six months, while headline inflation accelerated to 4.06%, an 11-year high, limiting the possibility of a rate cut in the near future.

European stock markets were mostly lower yesterday. The German DAX (DE40) fell by 0.54%, the French CAC 40 (FR40) closed down 0.17%, the Spanish IBEX35 (ES35) added 0.03%, and the British FTSE 100 (UK100) closed down 0.06%. In Europe, markets are preparing for a tense week, with the release of US inflation data and final CPI data for Germany, France, Spain, and Italy, which could influence expectations regarding Central Bank actions. In May 2025, UK retail sales rose by only 0.6% in comparable prices, significantly below market expectations of 2.7% growth, compared to April’s 6.8% increase. This is the slowest pace of growth in the last six months, as rising prices and higher monthly bills continue to put pressure on household budgets.

On Monday, WTI crude oil prices rose to $65 per barrel, the highest in two months, thanks to optimism about trade talks between the US and China and seasonal demand growth. The peak summer travel season is approaching, which typically increases fuel consumption and supports prices. Geopolitical tensions added pressure to prices as Russia launched major drone and missile strikes on Kyiv after Ukraine struck Russian air bases, increasing the risk of expanded sanctions on Russian energy exports.

Asian markets traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) rose by 0.92%, China’s FTSE China A50 (CHA50) lost 0.17%, Hong Kong’s Hang Seng (HK50) added 1.63%, and the Australian ASX 200 (AU200) showed a negative result of 0.27%.

On Tuesday, the New Zealand dollar fell to 0.603 US dollars, reversing the previous session’s gains, as the US dollar regained strength on optimism about trade negotiations between the US and China. It is widely expected that the Reserve Bank of New Zealand (RBNZ) will slow the pace of rate cuts despite the deterioration in economic expectations. The policy decision in May signaled that the easing cycle may be coming to an end, and markets now expect the RBNZ to keep rates on hold in July and possibly make a final cut in August.

The NAB Business Confidence Index in Australia rose to 2 in May 2025 from negative 1 in April, turning positive for the first time since January and reaching its highest level in four months. Sentiment improved in most sectors, except for manufacturing, mining, and wholesale trade. However, business conditions deteriorated again (0 vs. 2 in April). The Westpac-Melbourne Institute’s Consumer Sentiment Index rose 0.5% month-on-month to 92.6 in June 2025, slowing sharply from 2.2% growth in May amid ongoing uncertainty over global trade. Nevertheless, this is the fourth increase this year, driven by the Reserve Bank’s May rate cut and signs of easing inflation.