The Euro Stoxx 50 ended the week 0.76% higher, after U.S. President Trump said he would give the European Union more time to negotiate a trade deal before 50% tariffs take effect. In the UK, services sector confidence fell to a two and a half year low in the three months to May, as a new employment tax and rising price expectations weighed on sentiment. Investment, hiring, and business volumes also declined. The FTSE 100 ended the week up 0.62%
Equity markets opened the week with strong gains after President Trump announced a delay in a newly proposed 50% tariff on EU imports until July 9 and pledged to fast-track negotiations. Stocks surged again midweek after the U.S. Court of International Trade ruled Trump lacked authority for most global tariffs imposed in his second term. However, a quick appeal and a temporary hold by a federal court allowed the tariffs to remain in place while it reviews the government’s filings, reversing some of the earlier market gains. Investor sentiment also weakened late in the week amid stalled U.S.-China trade talks and unverified claims from Trump that China had violated its preliminary trade deal. The week ended with the Nasdaq Composite leading the way, gaining 2.01%, followed by the S&P 500 Index (1.88%) and Dow Jones Industrial Average (1.60%).
The Bureau of Economic Analysis (BEA) reported that U.S. core PCE inflation, the Federal Reserve’s preferred gauge, rose 2.5% y/y in April, down from 2.7% in March and the lowest since 2021. While the slowdown is encouraging, inflation remains above the Fed’s 2% target, and markets largely expect the impact of tariffs to be felt later this summer. Meanwhile, minutes from the Fed’s May 6–7 meeting showed policymakers still see inflation risks as tilted to the upside, citing uncertainty around trade and other economic policies.
Japan’s stock markets rallied over the week, with the Nikkei 225 up 2.17%, driven by optimism over a potential U.S.-Japan trade deal. A reportedly constructive call between Prime Minister Shigeru Ishiba and President Trump on Thursday, ahead of the next round of talks, boosted sentiment. Trump’s support for Nippon Steel’s bid for U.S. Steel also fuelled hopes of a deal ahead of the G7 summit in mid-June, where the two leaders are expected to meet.
Mainland Chinese stocks declined as a quiet economic calendar and a pause in U.S.-related trade talks weighed on investor appetite. The Shanghai Composite slipped 0.23% while Hong Kong’s Hang Seng Index fell 1.33%.
On the commodity front, gold traded around $3288.58 per ounce on Friday, declining -2.05% over the week. Brent crude fell 3.57% to settle at $62.61 per barrel, as traders expected OPEC+ would decide on Saturday to boost oil output for July beyond previous forecasts.
Market Moves of the Week
On Thursday, the South African Reserve Bank’s (SARB) monetary policy committee reduced the benchmark interest rate by 25 basis points to 7.25%, marking the lowest level in over two years. The decision was not unanimous, with five members supporting the move and one advocating for a deeper 50bps cut. The central bank also lowered its inflation forecasts, citing the National Treasury’s decision to abandon a proposed VAT increase, a stronger exchange rate outlook, and declining global oil prices. Bonds rallied with the SARB arguing strongly in favour of a lower inflation target, which, Governor Lesetja Kganyago said, would lead to structurally lower interest rates.
South Africa’s draft mining bill has reignited policy uncertainty, drawing strong criticism from the mining industry and political partners. Confusion around BEE requirements for exploration, which the sector sees as harmful to investment, has highlighted concerns over the bill’s clarity and intent. While progress is being made with the rollout of a new mining cadastre, the bill’s potential to trigger legal battles and deter investors threatens to undermine efforts to grow the sector and create jobs.
The All-Share Index rose by 0.86% this week, held back by losses in Resources (-2.70%). The local currency weakened against the U.S. dollar, moving to R17.99/$ from last week’s R17.82/$ level. SA government bond yields moved lower on the week, dipping 0.07%.
Chart of the Week:
Bloomberg’s index of the Magnificent Seven tech platform groups has resumed its relentless outperformance, a trend that has endured ever since the launch of ChatGPT. The sharp reversal earlier this year now looks like a correction of post-election excess, combined with a fresh understanding after the DeepSeek shock in late January that the big US companies might not be invulnerable. Source: Bloomberg.
Credits: Strategiq
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