The European Central Bank (ECB) voted through its eighth interest cut in a little over a year last week, with President Christine Lagarde stating that the central bank is approaching the end of its monetary policy cycle[1]. The 25 basis point reduction dropped its base rate to 2.0% in the latest attempt to stimulate weak growth across the Continent, and the ECB has been much more aggressive during its policy easing path so far, with borrowing costs now significantly below where they are in the US (4.25-4.50%) and the UK (4.25%). Financial markets are currently expecting an additional cut later in the year[2], in part reflective of benign inflation conditions; headline CPI declined to 1.9% during May[3] and is forecast to retreat further later in the year. European equities have enjoyed a strong 2025 so far, the MSCI Europe ex UK index rising by +10.0% in local currency terms having added a further +1.1% last week, with the region a big beneficiary of the redistribution of capital from the US.
As for the US, equities rose for a second straight month with outperformance seen in the technology sector on the back of several strong earnings reports. The NASDAQ and S&P 500 rose by +2.2% and +1.5% respectively (local currency) with small-cap stocks also seeing strong positive momentum. Returning to Europe, the FTSE 100 recorded a +0.8% advance as it continued to push back towards the record level it set earlier in the year. In Asia, Chinese equities posted a +1.1% gain despite several disappointing macro indicators whilst in Japan, the Nikkei 225 declined by -0.6%.
Moving to commodities, oil posted a solid week of gains on the back of US imposed sanctions on major oil exporters Venezuela and Iran. Concerns over future supply helped brent crude to climb by +4.1% to $66.53 a barrel with additional support coming from rising optimism around a possible trade deal between China and the US after the two nation’s presidents held direct talks. Gold edged +1.2% higher to $3,324 an ounce.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | China | CPI Inflation YoY | May | -0.20% | -0.10% |
| China | Exports YoY | May | 5.00% | 8.10% | |
| China | Imports YoY | May | -0.90% | -0.20% | |
| China | PPI Inflation YoY | May | -3.20% | -2.70% | |
| Japan | Revised GDP QoQ | Q1'25 | -0.20% | -0.20% | |
| Tuesday | UK | Average Wages YoY | April | 5.50% | 5.50% |
| UK | Unemployment Rate | April | 4.60% | 4.50% | |
| Wednesday | US | CPI Inflation YoY | May | 2.50% | 2.30% |
| Thursday | UK | Revised GDP QoQ | Q1'25 | 0.70% | 0.70% |
| US | PPI Inflation YoY | May | 2.60% | 2.40% | |
| Friday | Europe | Industrial Production YoY | April | 1.40% | 3.60% |
Source: Workspace DataStream, 09/06/25
[1] European Central Bank – Monetary Policy Statement Press Conference, 05/06/2025
[2] T. Rowe Price – Global Markets Weekly Update 06/06/2025
[3] Eurostat – CPI Inflation May 2025
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