Weekly Overview 2. – 8. Jun 2025

The content of this post does not constitute financial advice. It is intended for information and education purposes only.

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The Week in Global Markets

FINANCIAL MARKETS SUMMARY:

– EUROPE: European stocks ended this week higher as euro area inflation declines below the target level and the ECB cuts its policy rates again by 25bp. Christina Lagarde commented that this policy cycle has nearly concluded, with a policy stance in a good place. Markets are pricing in one more likely cut in September this year. Inflation projections have been revised downward, by 0.3pp for both 2025 and 2026, mainly reflecting lower assumptions for energy prices and a stronger euro. Therefore, core inflation is expected to average 2.4% in 2025 and 1.9% in 2026 and 2027. Real GDP growth is expected to average 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027. Basically, the ECB sees two offsetting impacts: tariffs hitting business investment and exports, while in the near term, government investment in defence and infrastructure will support growth. But the bank also warned that a further escalation of trade tensions over the coming months would result in growth and inflation being below the baseline projections. The actual real GDP growth increased by double the Eurostat estimate for Q1 (0.6% QoQ), driven by a strong growth figure out of Ireland and a higher estimate for Germany. Nevertheless, the industrial output numbers for April were rather disappointing – German industrial production declined by 1.4% MoM (while factory orders for April were up 0.6% MoM) and in France by the same magnitude (with a 0.6% decline in manufacturing). In the UK, the S&P Global PMI data showed that output and new orders both fell at the slowest pace since January, while growth projections for the year ahead improved again. However, job cuts accelerated. Due to a slowdown in demand, the downturn in residential construction accelerated, but the overall downturn in the construction sector eased in May. The Nationwide index showed a marginal increase in the annual rate of house price growth in May and a significant jump in residential property transactions in March. Both the euro and the pound appreciated against the US dollar during the week.

– UNITED STATES: The main US stock indices kept rising this week, with tech stocks outperforming as a result of positive earnings releases and positive AI-related news. There is also optimism related to the new upcoming meeting between representatives of the US government and China, which is supposed to settle some of the disagreements expressed by both sides last week and ease trade once again. Tesla stock did take a significant hit due to the escalating feud between Elon Musk and Donald Trump, which also played out in the open on social media. The most important macro release this week was probably regarding the labor market, where the cooling continued but at a slower pace, as NFP data showed 139k jobs were added in May (less than in April but more than expected). Unemployment was unchanged, while private payrolls rose by 37k according to the ADP report, the smallest increase since March 2023, and much lower than consensus expectations. The manufacturing data from the ISM report showed an ongoing contraction that continued in May, accompanied by rising prices at a rate close to the June 2022 rate. Services activity also contracted and prices also rose, with new orders falling significantly. Nevertheless, employment figures are still sound. Treasury yields continued to rise across tenors on the labor market data.

– ASIA-PACIFIC: The major Japanese stock indices dropped this week as trade talks with the US yielded no real result yet. JGB 10y yield fell a bit, and the yen moved very little compared to last Friday’s level. BoJ Governor Ueda indicated that markets had a positive assessment of the central bank’s tapering of bond purchases, but there were reports that the pace may be reduced in 2026. Real wages and household spending are both down, with inflation still rising more than wage increases. In China, the major equity indices increased week-on-week, likely driven by some weakness in the macro data, which raised hopes for more stimulus. According to PMIs, the manufacturing sector has taken a hit as a result of US tariff policy, which may be the biggest since September 2022.

– BITCOIN: After dropping toward the $100k mark at the end of the workweek, BTC recovered against the USD by Sunday, once again hovering above the $105k level. Analysts point to a potential short squeeze as a result of shifts in liquidity depth, which is likely to lead to higher volatility in the days ahead. Strategy CEO Michael Saylor shared a post on social media likely hinting that the company is about to purchase more BTC, which would mark the ninth week in a row of making purchases. The company already holds 580,955 Bitcoin, which are valued at approximately $61.4bn at the moment.