Financial Markets 03/06/2025
May ended with significant rises in the main stock market indices (S&P 500 +5.35% m/m) and relatively close to yearly highs (the Ibex 35 and the DAX 40 have already surpassed them). Of note this week was the intraday volatility generated by the judicial decisions in the US regarding the legality of the tariffs imposed by its president (specifically the legal form used for their application). The second relevant news of the week was the confirmation by OPEC+ of a new production increase starting in July of 441,000 barrels per day (some houses expected a larger increase), which should be very positive for China, India and Europe since, being highly dependent on crude imports, a lower price (beware of geopolitical risks) will allow for a downward adjustment in inflation.
Throughout the week, stock markets rose across the board, this time more sharply in the United States because if the tariffs are repealed or at least significantly reduced, US economic activity could be reactivated and therefore once again generate expectations of solid growth in the future. Another thing is to know how the government will react and what potential measures it will take to control the current public deficit, since the tax cut proposal is taking shape from the legislative point of view and all that remains to be known is the item that will finance this lower tax revenue (if the tariffs are repealed/cancelled).
The S&P 500 was up +1.88% to 5,911 points, the Nasdaq 100 was up +2.03% to end at 21,340 points. In Europe the gains were much more moderate, the Euro Stoxx 50 closed at 5,365.25 points or +0.73% up and the Ibex 35 finished at 14,146.60 points or +0.30%. After the spectacular return so far this year (+22%), the Spanish index should surpass the annual highs to think about further solid gains.
The calmness brought by the courts was also passed on to the bond markets. Long-term government bonds saw their yields fall across the board. In the US, the 10-year Treasury yield fell to 4.40%, down 11 bps from the previous week, the Bund fell by 7 bps to 2.50% and the Bono by 10 bps to close at 3.10%.
The ‘relative’ calm in the markets led to corrections in the price of gold, which fell 2.38% to close at 3,313.54 USD/Onz, and if the truce in the markets is confirmed we could see further falls. On the other hand, Brent received the news of OPEC+, dropping 2.40% in the week to end at 62.67 USD/b. In both cases, it is very likely that the volatility of the EUR/USD will accelerate or slow down the movements in the commodity.
On the macroeconomic front, the PCE figure was particularly noteworthy, surprisingly falling to 2.1%, two tenths of a point lower than the previous month and one tenth better than estimated. At the underlying level it also fell, in this case to the 2.5% that the market was expecting, its best figure in more than four years. Also contributing to the rise in equities was the good US consumer confidence data, both from The Conference Board and the University of Michigan, which were well above analysts’ expectations.
For the current week, the first week of June, macroeconomic data in the US will focus on employment data (the unemployment rate is expected to remain at 4.2%). In Europe, meanwhile, we will see CPI data, the unemployment rate, May retail sales and the ECB’s monetary policy decision for which a further 25 bps cut is expected, leaving the deposit facility at 2%.
Quote of the week:
And we leave with the following quote from Sister Sally Koch, communications director of the Sisters of St. Joseph of Carondelet: «The big opportunities to help others rarely come, but the small ones are all around us every day.
Summary of the performance of the main financial assets (2/6/2025)
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