Big Week for Trade and Inflation

Global Market Recap: Weekly Trends & Insights

A review of last week’s global market performance, highlighting the major equity indices and the macroeconomic backdrop.

Strong Weekly Performance in US Markets

Global equity markets ended last week on a strong note, buoyed by encouraging US employment data and renewed optimism over US-China trade relations. The major US indices posted solid gains, with the Nasdaq Composite climbing 1.2% to 19,530, the Dow Jones Industrial Average rising 1.1% to 42,762.9, and the S&P 500 closing up 1% at 6,000.4 – marking its first finish above that threshold since February. All sectors ended in positive territory, led by energy and communication services. Sentiment was further lifted by a better-than-expected increase of 139,000 nonfarm payrolls in May, underscoring the labour market’s resilience despite broader economic uncertainties. The unemployment rate held steady at 4.2%, in line with expectations, while recent data revisions and a dip in labour force participation hinted at a more nuanced jobs picture.

Forward Market Outlook

Looking ahead, markets enter the summer with strong momentum but face several critical tests that could fuel bouts of volatility. Trade developments remain in focus as self-imposed deadlines on tariff pauses approach, and a new round of bilateral negotiations unfolds. The Federal Reserve is widely expected to remain on hold at its June meeting, though September is increasingly seen as a likely window for a potential rate cut, especially if economic data begin to soften. Meanwhile, fiscal debates in Washington, particularly those concerning the debt ceiling and proposed tax reforms, could create further uncertainty. Still, solid corporate earnings, improving global equity breadth, and relatively subdued inflation offer a constructive backdrop for risk assets. A balanced approach between growth and value equities remains advisable, as markets weigh near-term noise against longer-term opportunities.

Latest Market and Economic Update

An overview of recent economic data and market sentiment across global regions, with emphasis on U.S., Asia, and Europe.

Asia Market Developments

Most Asian markets rose on Monday, buoyed by optimism over upcoming U.S.-China trade talks despite weak Chinese inflation data highlighting ongoing economic strain. Gains were led by tech shares and South Korea’s KOSPI while Japan’s Nikkei rose on a smaller GDP contraction, and Australian markets were closed for a public holiday.

U.S. Market Focus and Economic Events

US equity futures were steady overnight as investors braced for a busy week featuring key economic data and renewed US-China trade talks in London. Markets are also focused on Apple’s Worldwide Developers Conference and upcoming inflation figures, which could shape expectations for monetary policy.

European Market Performance

European shares edged up on Friday, with the STOXX 50 and STOXX 600 both closing 0.2% higher, supported by positive sentiment from global trade developments and resilient US labour data. UBS was among the top gainers after Switzerland proposed stricter capital requirements, while Adidas and Puma declined as Lululemon’s profit downgrade weighed on the sportswear sector.

Currency and Oil Market Moves

The US dollar index slipped to around 99 on Monday, softening against major peers as investors awaited key economic data and trade developments. The euro strengthened to 1.1416, reflecting pressure on the dollar amid renewed hopes for US-China trade progress and expectations for softer inflation readings later in the week.

Oil prices were steady in Asian trading as investors awaited key U.S.-China trade talks in London and a batch of Chinese economic data, including inflation and trade figures. Despite a strong gain last week, crude markets remained cautious amid global economic uncertainty, ongoing OPEC+ output increases, and concerns over weak demand in China.

China Trade and Economic Conditions

China’s trade surplus rose to $103.22 billion in May, surpassing expectations, as exports grew modestly and imports fell sharply amid weak domestic demand and ongoing economic uncertainty. While exports to destinations outside the U.S. remained solid, high U.S. tariffs continued to weigh on overall growth, and trade talks between the two countries are set to resume in London.

Political Developments Impacting Markets

Donald Trump confirmed on Saturday that his relationship with Elon Musk is effectively over, warning of “serious consequences” if Musk funds Democrats opposing his flagship tax and spending bill. The feud follows Musk’s strong criticism of the legislation, which narrowly passed the House and is now under Senate review, with Trump still confident it will pass by Independence Day.

President Trump sharply criticised Federal Reserve Chair Jerome Powell, demanding an urgent full percentage point rate cut and branding him “Too Late” at the Fed. He warned that maintaining current rates is driving up government borrowing costs and threatening the economy, even as officials plan to keep rates steady amid ongoing uncertainty.

Equities on the Move

Key company-specific developments influencing equity movements, analyst actions, and market sentiment shifts.

Major Investment Moves and Risks

Meta Platforms is reportedly in discussions to invest over $10 billion in Scale AI, a data-labelling startup already backed by Nvidia, Amazon, and Meta itself, according to Bloomberg. While the terms are not yet final, such a deal would significantly deepen Meta’s involvement in artificial intelligence development.

Regulatory risks for Google are rising as a US antitrust decision is expected by late July, with remedies possibly starting in October. Barclays flagged the potential loss of key deals that could cut up to 20% of global profit and noted increased chances of a forced sale of Chrome amid uncertainty over AI’s impact on search.

UBS and Regulatory Proposals

The Swiss government proposed stricter capital rules for UBS after its Credit Suisse takeover, potentially adding $26 billion to its core capital and fully capitalising foreign units within six to eight years. UBS criticised the plan as “extreme,” warning it could hurt competitiveness and force a business model review, including possible asset sales or relocation.

TikTok and Trade Tensions

President Trump is expected to sign an executive order delaying the enforcement of a law that could ban or force the sale of TikTok, as ongoing trade negotiations with China continue to unfold. This would mark the third extension since January, with a proposed deal to allow U.S. investors to take ownership of TikTok now unlikely to proceed until tensions with Beijing are significantly eased.

Tesla and Robotaxi Outlook

Gene Munster believes the Musk-Trump conflict may pressure Tesla’s shares short-term but won’t affect the long-term potential of its robotaxi service, launching a small pilot in Austin on June 12. He also noted risks to Tesla’s tax credits and brand, predicting Tesla and Waymo as key competitors in ride-sharing over the next decade.

Analyst Upgrades and Downgrades

Wells Fargo named Shopify its signature pick, raising the price target to $125 due to its strong AI integration and potential in the growing “agentic commerce” market. It also favoured Citigroup, citing restructuring efforts expected to improve efficiency and reduce costs through 2026, supported by a more flexible regulatory outlook.

Bernstein downgraded CrowdStrike to Market-Perform from Outperform, citing its stretched valuation despite strong fundamentals and continued revenue growth. The firm believes CrowdStrike’s current share price leaves little room for upside and suggests Palo Alto Networks may offer better value and over 15% potential upside in the increasingly expensive cybersecurity sector.

Morgan Stanley upgraded Applied Materials to Equal-Weight, noting a derisked outlook for China and ICAPS but concerns over weakness in logic and DRAM for fiscal 2026. While valuation is attractive, potential U.S. export restrictions on China pose downside risks, though increased investment from Intel and Samsung could offer upside.

Deutsche Bank downgraded Allianz to “hold,” citing limited upside potential despite the company’s solid operations, strong market position, and consistent financial results. While Allianz remains a stable player in the European insurance sector, analysts believe its current valuation is less attractive than other insurers, prompting a cautious outlook on its near-term growth and shareholder returns.

Citi Research downgraded Airbus SE to “neutral” from “buy,” lowering its target price to €183 from €209 due to the euro’s recent strength against the U.S. dollar. The appreciation of the euro increases Airbus’s costs, given its euro-based expenses and dollar-denominated sales, significantly impacting the company’s valuation despite its currency hedging.

Upcoming Data and Events

This week’s economic calendar features critical macroeconomic releases that could guide market sentiment and policy expectations.

This week, market attention will centre on key inflation data, including US CPI and PPI reports, alongside the University of Michigan’s consumer sentiment survey. Globally, notable releases include China’s trade and inflation figures, UK GDP and labour market data, and inflation readings from emerging markets such as Mexico, Brazil, Russia, and India.

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