President Trump’s tariff driven trade policy continued to dominate the newswires last week with a change in tact towards the European Union (EU), a court ruling on the legality of the overall policy and a subsequent appeal all taking place before the close of play on Friday. Regarding the first point, equity markets started the week with positive momentum after the President announced a delay in the introduction of 50.0% tariffs on the EU with negotiations between the two parties set to be fast tracked. The market was buoyed further by the US Court of International Trade which on Wednesday, ruled that the President had exceeded his authority in imposing sweeping levies. That proved to be short lived however after unsurprisingly, the White House immediately appealed the decision which led to stocks paring some of their gains on Thursday and Friday.
Overall, equity markets on the whole delivered positive returns last week although that did mask notable volatility underneath. The S&P 500 added +1.9% (local currency) with the tech centric NASDAQ faring modestly better with a +2.0% weekly return. In the bond market, treasuries rose throughout the early part of the week with yields, which move inversely to the price, falling; the closely monitored 10-year security saw its yield decline by 12 basis points (bps) to 4.38%. Across the Atlantic, the MSCI Europe ex UK climbed by +0.7% whilst the FTSE 100 and FTSE 250 advanced by +0.6% and +1.5% respectively. Data showing slower inflation across several key European countries including France, Spain and Italy was also well received by investors. Moving to Asia, the Nikkei 225 in Japan rose by +2.2% with optimism surrounding a possible trade deal with the US a major positive contributor. The Shanghai Composite in China was little changed whilst the Hang Seng index in Hong Kong retreated by -1.3% (local currency).
Regarding commodities, oil prices recorded another weekly decline with Brent Crude shedding a further -1.4% to $63.92 a barrel. Concerns around the global growth outlook amid US tariffs have been a major headwind over the past few months with growing expectations of an OPEC production boost adding to the negative momentum last week. As for gold, the precious metal, which has been on a tear over the past three months, slipped by -2.2% to $3,285 an ounce.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | UK | Bank of England Money & Credit Report | April | - | - |
| US | ISM Manufacturing PMI | May | 49.50 | 48.70 | |
| Tuesday | China | Caixin Manufacturing PMI | May | 50.60 | 50.40 |
| Europe | CPI Inlfation YoY | May | 2.00% | 2.20% | |
| Europe | Unemployment Rate | May | 6.20% | 6.20% | |
| Wednesday | Europe | Final Composite PMI | May | 49.50 | 49.50 |
| UK | Final Composite PMI | May | 49.40 | 49.40 | |
| Thursday | China | Caixin Services PMI | May | - | 50.70 |
| Europe | European Central Bank Monetary Policy Meeting | June | - | - | |
| Europe | Producer Price Inflation YoY | April | 1.20% | 1.90% | |
| Friday | Europe | Retail Sales YoY | April | 1.40% | 1.50% |
| Europe | Revised GDP QoQ | Q1'25 | 0.40% | 0.30% | |
| US | Average Wages YoY | May | 3.70% | 3.80% | |
| US | Non-Farm Payrolls | May | 130K | 177K | |
| US | Unemployment Rate | May | 4.20% | 4.20% |
Source: Workspace DataStream, 02/06/25
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