President Trump shared his views on recent survey data, arguing it is outdated and biased. He highlighted changes since he took office, noting that stock prices have risen and energy costs have fallen. Gasoline prices are at $2.40, and OPEC+ is increasing drilling activities. He also mentioned positive developments internationally, with countries like Japan, Indonesia, Vietnam, and Korea opening up to investment. U.S. stocks had a slight uptick, with the NASDAQ up 94 points and the S&P up 17.5 points. Trump talked about tariffs, stating that the EU would face tariffs if investments are not made. A 15% reduction would apply if investments are made. He mentioned a $600 billion agreement with the EU. Stock prices dipped slightly during his discussion about tariffs. He plans tariffs on chips and pharmaceuticals, with pharma tariffs possibly increasing to 150-250% within a year. Trump downplayed worries about oil prices but pointed out that inflation has peaked under the Biden administration. Tariffs on Russian oil for India were set to increase, as current tariffs are seen as excessive.

Upcoming Sino-American Trade Talks

Trump mentioned that Xi Jinping wants to meet. He described a positive relationship with China and acknowledged their dependence on the U.S. A potential trade deal with China is close to completion, with a meeting scheduled by the end of the year. Traders should closely watch Federal Reserve policy as a new chair announcement is expected soon. The uncertainty surrounding a new leader is causing short-term market volatility, a trend we’ve seen during past Fed changes. Options traders should be cautious about sudden shifts in bond futures and interest-rate-sensitive stocks until more clarity emerges. The energy sector shows potential, but there are risks. The national average for gasoline has dropped to around $2.45 a gallon, down from $3.20 earlier this year. This decrease follows a recent OPEC+ report indicating a modest production increase of 500,000 barrels per day, which may help keep prices low. Ongoing uncertainty in European trade calls for a careful approach. Conflicting messages about a major investment deal and new tariffs suggest volatility in European stocks and the EUR/USD currency pair. Recent German factory orders showed a surprising 1.2% decline last month, indicating frailty in the region’s largest economy.

Disruptions in the Semiconductor Industry

Traders should prepare for instability in the semiconductor industry. The announcement of new tariffs on chips is likely to disrupt supply chains and impact valuations for major tech companies in the NASDAQ 100. With the U.S. importing over $60 billion in semiconductors last year, mostly from Asia, these tariffs could lead to significant price changes in the SOXX semiconductor ETF. The pharmaceutical sector now faces a serious threat. A plan to impose a small tariff that rises sharply within a year could harm companies in the Health Care Select Sector SPDR Fund (XLV). The U.S. imported over $190 billion in pharmaceutical products in 2024, making these proposed tariffs a considerable challenge for the sector. While the talk of an imminent trade deal with China is encouraging, we should expect market fluctuations. We recall the market volatility during the 2018-2019 trade discussions, where rumors and tweets could cause major index shifts in a single day. With bilateral trade exceeding $550 billion last year, traders should consider using options to guard against unexpected breakdowns in talks or sharp rallies from a successful deal. Create your live VT Markets account and start trading now.

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