World economic news morning of May 31: Mr. Trump is no longer kind to China on trade, Nvidia stock price drops sharply

Trump's statement causes some market turmoil

World gold prices last night recovered somewhat from the lowest level on the night of May 30. The main reason came from President Trump's new social media post about trade relations with China, along with an important US inflation report that did not cause much concern.

Specifically, President Trump just posted a message saying that he will no longer be "nice" to China on trade issues. This statement caused the stock market to fluctuate slightly, with stock indexes falling slightly.

Currently, gold for August delivery fell $22.30 to $3,322.00 an ounce, while silver for July delivery fell $0.123 to $33.30 an ounce.

Nvidia shares fall sharply

The US stock market saw a decline in technology stocks on Friday (US time), with the NASDAQ Composite index falling as much as 0.9%. In contrast, the Dow Jones Industrial Average (DJIA) only edged up, showing that investors were cautiously focused on the technology and export sectors.

Market sentiment deteriorated after US President Donald Trump criticized China amid ongoing trade negotiations. He tweeted that China had “totally violated the agreement,” without providing any evidence. The controversial statement raised concerns about a possible re-escalation of tensions.

Marvell Technology (MRVL) shares fell nearly 8% in trading yesterday after the company reported its first-quarter earnings. The company beat Wall Street expectations with adjusted earnings per share higher by 1 cent and revenue of $1.9 billion, $16 million higher than forecast.

However, the market was less enthusiastic about Marvell’s second-quarter outlook, despite the results in line with expectations. Investors were hoping for clearer signs of growth from the company. Analysts say that semiconductor stocks tend to shrink in valuations due to competitive pressures and the technology cycle without breakthrough news.

Against that backdrop, analyst firm Needham lowered its price target on MRVL shares to $85 from $100, reflecting a more cautious investor sentiment.

Nvidia (NVDA), another big name in the semiconductor industry, also fell 1.6%, becoming the worst-performing stock in the Dow Jones index at the time, suggesting that sentiment across the industry is under pressure in the short term.

In another development, the US Court of Appeals for the Federal Circuit has temporarily suspended a ruling from the Court of International Trade that had blocked Trump’s broad tariff powers. As a result, the existing tariffs will remain in place until a higher court makes a final ruling on the legality of the President’s unilateral actions.

PCE inflation report leaves no surprises

The Federal Reserve's preferred inflation gauge, the core PCE, was in line with market expectations in April, rising 0.1% month-over-month and 2.5% year-over-year. However, the March figure was revised up by 0.1%, suggesting that inflation has yet to cool significantly.

On a positive note, personal income rose a strong 0.8% in April, beating the forecast of 0.3%. Meanwhile, a survey from the University of Michigan showed that consumer sentiment and inflation expectations both improved in May compared to the previous month.

However, the economic picture is not entirely bright as the Chicago PMI, regional manufacturing activity, fell sharply to 40.5 from 44.6 in April. This level is also lower than the expectation of 45.0, showing that the manufacturing sector here is facing a significant decline.

Germany wants to tax Big Tech

On the international front, investors were cautious as the German government announced plans to impose a 10% tax on tech giants such as Alphabet (Google) and Meta.

The policy is similar to the digital tax already in place in Austria, which taxes revenue rather than profits. The move could strain the global tax environment and impact tech stocks.

Gold open interest hits historic low, strong summer bullish signal

Open interest in the gold market is falling to a record low, despite bullish macro factors. This is one of those rare times when the gold market is giving investors a “gift,” according to Daniel Ghali, senior commodity strategist at TD Securities (TDS).

TDS believes that the market is currently viewing gold as an “overbought but under-owned” asset. This means that despite the strong price increase, the number of investors participating in the market is still small. According to Ghali, the open interest on CME Gold is approaching 425,000 contracts, which is usually the bottom of the gold price cycle. This is contrary to the current macro context, where the US dollar is gradually losing its role as a safe store of value.

TDS said the current gold rally is not driven by physical demand but is largely driven by sentiment and confidence. They expect that algorithmic exchange-traded funds (CTAs) will start buying gold next week, regardless of economic data. This buying could increase to 4% of the maximum portfolio size in this session, and even up to 30% when the US National Employment Report (NFP) is released next week.

In addition, with macro funds still holding their positions in gold, ETF inflows no longer being strong, along with technical signals from historically low open interest, TDS believes that gold is being “repositioned”. If there is another positive reversal in the market, this could spur another strong wave of buying this summer.

Quoc Duong