The United States and Taiwan have reached an agreement on the first part of their "21st Century" trade initiative, focusing on customs and border procedures, regulatory practises, and small businesses. The deal, hailed as historically significant, aims to strengthen economic ties between the two countries and increase Taiwan's resilience against economic coercion from China. The new trade deal was opposed by China back in June last year, but actions have not been taken. Meanwhile, the United States and other G7 nations are set to unveil new sanctions and export controls targeting Russia over its ongoing war against Ukraine as part of their continued efforts to support Ukraine and put pressure on Moscow.
U.S. stocks closed higher for the second consecutive day as optimism grew. The S&P 500 rebounded after news that a deal to raise or suspend the debt ceiling could be reached soon. Economic data showed a decline in jobless claims, suggesting a tight labour market and potentially another rate hike. The biggest winner today is Take-Two Interactive Software, which also beat estimates for quarterly adjusted sales, leading to an increase in its stock.
Gold prices were muted on Friday after falling below key levels due to improving sentiment over a U.S. debt deal and hawkish comments from Fed officials that drove the dollar higher. The focus is now on signals from the Federal Reserve's monetary policy, with market indicators suggesting a pause in rate hikes by June but not by a huge margin. Gold may rise if economic conditions worsen and the Fed pauses its rate-hiking spree.
Oil prices fell slightly in early Asian trade due to optimism over a U.S. debt deal conflicting with persistent inflation and hawkish central bank comments. Data shows that Saudi Arabia's oil exports increased slightly to 7.52 million bpd in February. Both Saudi Arabia and Russia ramped up exports in April before production cuts. Russian crude exports also hit 8.3 million bpd, the highest since the Ukraine invasion. Despite production cuts, exports may not decrease significantly, especially for Russia, which beats sanctions through deals with Asian countries.
Investors have been puzzled by the recent 2% bounce in the dollar, despite expectations of its decline. Factors such as potential rate hikes and technical aspects also contribute to the dollar's rebound. China's managed yuan has dropped to multi-month lows against the dollar as a result, and doubts about China's economic recovery support further weakness.