Anndy Lian
Musk, markets, and money: Trade risks meet crypto rewards
The world is watching as the July 9 deadline for trade deals approaches, casting a shadow of uncertainty over global markets. Meanwhile, a mix of economic data, policy decisions, and influential voices, like that of Elon Musk, are shaping a complex narrative.
Let’s explore what’s happening in the market right now, weaving together the threads of trade tensions, market performances, and emerging trends in crypto, all while offering my perspective on what these developments might mean for investors and the global economy.
Global risk sentiment and the trade deadline
The global risk sentiment is palpably tentative as the July 9 deadline for trade negotiations looms. This date marks the end of a 90-day tariff pause, a period during which the United States and its trading partners have been working to finalise agreements.
On July 7, President Donald Trump announced that the first 12 letters would be sent to these partners, signalling that new tariff rates potentially ranging from 10 per cent to 70 per cent could take effect as early as August 1 if no deals are reached. This wide range of possible tariffs introduces significant uncertainty, as the final rates will depend on the outcomes of these negotiations, which remain fluid and unpredictable.
The threat of tariffs could pressure trading partners into concessions, potentially strengthening the US position in global trade. On the other hand, the prospect of higher tariffs risks disrupting supply chains, increasing costs for consumers, and slowing economic growth, particularly for export-dependent economies.
Markets hate uncertainty, and the lack of clarity around these tariffs is keeping investors on edge, contributing to a cautious global mood. As the deadline nears, every statement from the White House and every response from trading partners will be scrutinised for hints of what’s to come.
US markets: A pre-holiday boost
Turning to the US, equity markets were closed on July 4 for Independence Day, but their performance prior to the holiday offers a glimpse into investor sentiment. On July 3, Wall Street ended in the green, with the S&P 500 rising 0.8 per cent , the Nasdaq climbing one per cent, and the Dow Jones Industrial Average also advancing 0.8 per cent.
This uptick was driven by a stronger-than-expected employment report, which likely bolstered confidence in the US economy’s resilience. Robust job growth suggests that consumer spending, a key driver of economic activity, remains robust, providing a buffer against external pressures, such as trade tensions.
However, the holiday closure meant that US investors couldn’t immediately react to subsequent developments, such as Trump’s trade letter announcement or moves in Asian markets. US equity index futures have since pointed to a lower opening, suggesting that these global uncertainties may temper the optimism sparked by the employment data.
In my view, the US market’s pre-holiday strength is a positive signal, but it’s not immune to the broader risk-off tone emerging elsewhere. Investors will likely reassess their positions as trading resumes, weighing domestic economic health against international risks.
Asian markets: A risk-off tone prevails
Closer to home in Asia, the mood is decidedly more cautious. Major equity indices have posted declines, reflecting a risk-off sentiment among investors. South Korea’s KOSPI fell 1.99 per cent, Taiwan’s TWSE dropped 0.73 per cent, Thailand’s SET declined 0.64 per cent, and Hong Kong’s HSI also shed 0.64 per cent.
These markets, heavily tied to global trade, are particularly vulnerable to the spectre of US tariffs. For instance, South Korea and Taiwan rely heavily on exports of electronics and semiconductors. At the same time, Hong Kong serves as a financial hub that is sensitive to shifts in global capital flows.
Commodities: OPEC+ shakes up oil markets
In the commodities space, oil markets are grappling with their own set of dynamics. Over the weekend, OPEC+, the alliance of oil-producing nations, agreed to boost production by 548,000 barrels per day starting next month, a move that exceeded market expectations.
As a result, Brent crude prices dipped 0.6 per cent to settle at US$71 per barrel. This increase in supply comes at a time when demand uncertainties, fuelled by trade tensions, are already in play.
This production hike is a strategic play by OPEC+ to maintain market share, but it’s a gamble. If global growth slows due to tariffs, the additional supply could outstrip demand, pushing oil prices lower and squeezing revenues for producers. Conversely, if trade talks resolve favourably and economic activity picks up, this move could stabilise prices and prevent a supply crunch.
For now, the drop in Brent crude signals bearish sentiment, and it’s a development that bears watching. Lower oil prices could ease inflation pressures but might also signal broader economic weakness.
Cryptocurrency: Bitcoin bounces back
Shifting gears to the cryptocurrency market, Bitcoin has staged a notable recovery, gaining nearly five per cent. The rally is partly attributed to a weakening of selling pressure from Grayscale, a major institutional player whose actions often sway the market. Beyond Bitcoin, optimism is spreading to smaller cryptocurrencies and crypto-related stocks, with Coinbase shares rising nearly three per cent and MicroStrategy jumping nine per cent.
I see this divergence between US and Asian markets as a telling sign of regional fault lines. While the US benefits from a domestic economy that can weather some external shocks, Asia’s export-driven growth model leaves it more exposed to trade disruptions. The sharp declines in these indices suggest that investors are bracing for a worst-case scenario, higher tariffs, and a potential slowdown in global demand. If trade talks falter, the risk-off tone could deepen, with ripple effects across emerging markets.
What’s driving this resurgence? I’d argue it’s a combination of market-specific factors and broader catalysts. The Grayscale reprieve is a technical boost, but the bigger story is the anticipation surrounding “Crypto Week” in the US Congress, set for July 14 to 18.
Lawmakers are poised to debate several pivotal bills, including the Clarity Act, which aims to define rules for crypto trading and investment, and the Stablecoin Bill (also known as the Genius Act), intended to regulate dollar-backed stablecoins. There’s also the Anti-CBDC Surveillance State Act, which seeks to block government digital currencies that could encroach on privacy.
In my opinion, “Crypto Week” could be a game-changer. Clear regulations have long been the missing piece for institutional adoption of crypto. If these bills pass, they could unlock fresh capital inflows, legitimising the asset class in the eyes of traditional finance.
The recent US$5 trillion debt ceiling increase adds fuel to this fire; more liquidity in the system historically lifts risk assets like Bitcoin. I’m cautiously optimistic that these developments could spark a breakout, especially if the sideways price action we’ve seen lately is indeed a prelude to a larger move.
Elon Musk and the America Party
No market analysis would be complete without mentioning Elon Musk, whose influence continues to ripple across financial landscapes. Musk recently declared that his newly formed America Party will fully support Bitcoin, doubling down with a statement on X that “Fiat is hopeless.”
This follows a public feud with Donald Trump and the launch of his political entity, born from a poll where 80 per cent of his followers backed the idea of a centrist party. Musk’s pro-Bitcoin stance isn’t new, but tying it to a political platform amplifies its reach.
I find Musk’s move fascinating and polarising. His sway over markets, as evidenced by Tesla stock surges or Dogecoin’s pump, is undeniable, and a Bitcoin-friendly party could galvanise retail and institutional interest alike. However, the America Party’s broader impact hinges on its ability to gain traction beyond Musk’s fan base.
If it remains a niche player, its influence on crypto might be more symbolic than substantive. Still, in a market hungry for narratives, Musk’s endorsement is a tailwind that could bolster sentiment, especially alongside regulatory tailwinds from Congress.
Stay nimble! The coming weeks could bring clarity or chaos to this intricate market puzzle.
Source: https://e27.co/musk-markets-and-money-trade-risks-meet-crypto-rewards-20250707/
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