Market Outlook
Last Updated: 6 Jun 25 5 min read
Global stocks and bonds rose over the week. During the week we saw disappointing US services and manufacturing data along with mixed US labour market data. We also saw the European Central Bank cut interest rates again while US President Trump and China President Xi held a phone call to discuss ongoing tensions between the two superpowers.
The week started off with a weak manufacturing print where The Institute for Supply Management (ISM) US Manufacturing Purchasing Managers’ Index (PMI) came in at 48.5 which was below expectations of a 49.5 print. The reading marked the third consecutive month of contraction in the manufacturing sector, highlighting mounting economic uncertainty and costs pressures in part due to volatile trade policies under the Trump administration. The ISM US Services PMI also came in at 49.9 which is the first decline for the industry since June last year and below expectations of a reading of 52. No surprise on the reason once again: growing tariff uncertainty.
The US labour market was more mixed, with US job openings coming in strong as openings rose to 7.4 million and above expectations of 7.1 million. However, the employment change shows the US added 37,000 workers in May 2025, the lowest level since March 2023. The overall weak ISM and ADP data meant bond yields fell as investors anticipated the Federal Reserve will cut interest rates by September.
Meanwhile it was reported that China President Xi and US President Trump talked on the phone to reduce tensions between their respective countries. Trump noted that the conversation was focused entirely on trade but didn’t specify whether Beijing had agreed to speed up export licenses on magnets crucial to a wide range of critical US products. The talks led the S&P 500 to briefly enter a technical bull market – meaning it was 20% up from the lows in April.
However, the US market lost steam late on Thursday after a war of words between President Trump and Elon Musk. They traded insults over a range of topics: the pending spending legislation, why Musk left the White House and how Trump may owe the fact he’s there at all to Musk’s millions. Things escalated as Trump threatened Musk’s government contracts while the Tesla CEO even suggested Trump should be impeached for a third time. The feud weighed on risk assets with Tesla down -14.26% on the day.
The economic environment has been resilient so far. The recent stumbling blocks posed to tariff implementation on the scale initially laid out, has offered a temporary reprieve for world leaders and policymakers. We expect markets to remain volatile as the legality of tariff imposition moves into the spotlight, meaning nations may pause or pivot on their efforts to strike trade deals with the US.
Equities |
1 Week |
YTD |
1 Year |
|---|---|---|---|
S&P 500 |
0.49% |
1.56% |
12.45% |
FTSE 100 |
0.65% |
10.15% |
10.49% |
Euro Stoxx 50 |
0.66% |
12.39% |
9.14% |
MSCI Asia Pacific ex Japan |
2.39% |
10.55% |
13.60% |
MSCI China |
2.89% |
16.40% |
27.23% |
Source: Bloomberg as at 8:36am on 6.6.25
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