HL commentary as it happens

Oil stabilises on China tariff hopes

Brent crude oil hovered around $66 per barrel in early trading, steadying after a nearly 2% drop as investors weighed the potential for accelerated OPEC+ output against shifting trade dynamics. Several OPEC+ members are reportedly eyeing a second straight month of increased production in June, while Kazakhstan signalled it won’t scale back output at key fields. At the same time, signs of progress in US-China trade talks lent some support to prices, with reports hinting the White House could ease tariffs on China to help negotiations along.

US markets rise as risk appetite improves

US markets caught a tailwind yesterday, with the S&P 500 climbing 1.67% as investors found reasons to cheer across the board - from upbeat corporate earnings and resilient economic data to signs of a cooling tone in Trump’s domestic and foreign rhetoric. Gold lost some of its shine as traders dipped a toe back into riskier assets, though gains in equities faded slightly into the close on lighter volumes and are expected to open a touch lower after a few comments from the White House that, big surprise, clouded the picture.

UK flat at the open as investors digest more mixed messages

UK and European markets are taking a breather this morning, with the FTSE 100 flat at the open after a strong showing yesterday. The investing world is back to hanging onto every word out of the White House, but with such a confusing, and often contradictory, stance on tariffs, volatility is all we can really guarantee.

Brent Crude rises amid hopes for slightly higher energy demand

Brent Crude has made further gains, with the benchmark pushing above $68 a barrel amid the improving sentiment with hopes that lower tariffs will be less onerous on the global economy. Fresh US sanctions on an Iranian energy tycoon Seyed Asadoollah Emamjomeh has led to expectations that there could be a further curb on Iranian exports. Traders are awaiting official US data on crude stockpiles with industry figures indicating a sharp fall in inventories, indicating demand has been higher than expected.

Gold retreats from record highs after Trump indicates he’ll negotiate

Hopes for respite in the tariff war have tempered the demand for safe-haven assets like gold. It’s retreated from Tuesday’s record highs, as some investors have repositioned, and equities look more attractive. Nevertheless, it’s still up more than 28% year to date. Nervousness about how the tariff war will play out, and concerns about geo-political risk have kept up demand for the precious metal.

Part of the appeal of gold is as a hedge against inflation, which threatens to stay stubborn in the US, amid concerns that trade policy could push up consumer prices further. With no long-term resolution in sight for conflicts around the world, particularly in Ukraine and Gaza, it’s also adding to the appeal, and there are also concerns about the risk that geo-political tensions escalate as opportunities in the Arctic are eyed by the US and Russia.

Investors considering investing in gold should do so as part of a diversified portfolio and they shouldn’t put all their eggs in a golden basket. It’s still important that you invest in other assets like bonds and shares, given that gold offers no return, like dividends or interest. It can perform well in environments when both equities and bonds suffer, most obviously during times of crisis or heightened geopolitical tension.

Short term speculating can backfire even though there will be a temptation to hang onto the coattails of the record run upwards. As we’ve seen historically, the metal can dip sharply if geopolitical tensions ease. Gold shot up after the terror attacks of 9/11, then lost significant ground in the years that followed.

FTSE 100 gains in early trade amid hopes for a reprieve in trade war

Hopes for a reprieve in the trade war are leading to a small swell of investor confidence, with European markets riding a wave of gains in early trade. While there’s been no concrete decisions to hang the hat of optimism on, Trump has indicated that he is in a mood for negotiation, saying that eventual tariffs on China won’t be as onerous as 145% threatened.

US Treasury Secretary Scott Bessent says he’s also expecting a de-escalation in the trade war with China. While there had already been expectations of a recalibration, these comments have helped wash away some more pessimistic vibes. Worries about Trump wanting to meddle in monetary policy, following his comments about Fed chair Jerome Powell at the weekend appear to be ebbing away, after the President said he had no indication of removing him from office.

US stocks look set to add to gains later with Wall Street set for a higher open. Financial markets are adjusting to Trump’s modus operandi which is to speak and act impulsively, and then retract some moves later. Just how much of the damage will linger remains to be seen and markets are likely to stay volatile as trade negotiations play out.

UK government borrowing figures make difficult reading for Chancellor

Fresh from the disappointing analysis from the International Monetary Fund which noted a sharp growth slowdown for the UK this year, the latest public sector borrowing costs make difficult reading for the UK government. It was forced to go into the red more than forecast for the year to the end of March. UK borrowing rose to 151.9 billion, £14.6 billion more than expected. With growth this year expected to slow to 1.1% according to the IMF, down from 1.6%, tax receipts will also be lower. Rachel Reeves is between a rock and a hard place, as the tariff turmoil takes its toll, and some businesses become more cautious about investing following the rise to payroll costs introduced in the Budget. While Reeves keeps deflecting rumours about tax rises, something will have to give, to enable to her to meet her fiscal rules.