InvestMacro

At the end of Monday, the Dow Jones Industrial Average (US30) Index rose by 0.75%. The S&P 500 (US500) Index rose by 0.94%. The Nasdaq (US100) Technology Index closed higher by 1.42%. The US stocks rose on Monday as optimism about easing geopolitical tensions boosted investor sentiment, while attention shifted to the Federal Reserve’s decision on Wednesday, with markets widely expecting rates to remain unchanged. These reports reinforced hopes for an end to the Iran-Israel conflict, which led to lower oil prices and triggered a rise in risk appetite.

The US Federal Reserve will begin a two-day meeting on Tuesday, and interest rates are expected to remain unchanged at around 4.5% following the meeting on Wednesday. However, the main focus will be on whether the Central Bank will signal future rate cuts, especially given falling inflation in the US and signs of an economic slowdown. Until now, the Central Bank has largely maintained that interest rates will remain unchanged in the near term. However, weak inflation data in recent months, combined with signs of a cooling labor market and slowing economic growth, have fueled bets that the Fed may change its tone in the coming months.

The Mexican peso (MXN) strengthened to 18.90 per US dollar, its strongest level since August, amid a broad sell-off of the dollar and hawkish expectations regarding the Bank of Mexico. Domestically, an unexpected rise in core inflation to 4.42% in May prompted Bank of Mexico policymakers to advocate for a pause in the easing cycle, contingent on data, which bolstered support for the peso’s yield.

In June, the Canadian dollar (CAD) strengthened to 1.35 per US dollar, its strongest level in eight months, as a broad sell-off in the US dollar coincided with rising crude oil prices. The rise in oil prices directly increased Canada’s energy export revenues, which provided strong support for the loonie. Investors are also paying attention to the G7 summit, where coordinated measures will be taken to resolve global issues, from the Middle East and Ukraine to trade frictions, as well as a tense week of decisions by central banks.

European stock markets were mostly up on Monday. The German DAX (DE40) rose by 0.78%, the French CAC 40 (FR40) closed up 0.75%, the Spanish IBEX35 (ES35) jumped 1.44%, and the British FTSE 100 (UK100) closed positive 0.28%. European stocks closed with solid gains yesterday, ending five consecutive sessions of losses, as easing concerns that military action between Israel and Iran could disrupt the global economy lifted stocks around the world. Reports indicated that Tehran was ready to resume nuclear talks with the United States to demonstrate its willingness to de-escalate the exchange of blows with Israel, raising hopes that the conflict would not hamper global economic activity and energy prices. Markets also positioned themselves in anticipation of important monetary policy decisions this week, chief among them those of the Bank of England, the SNB, the Riksbank, Norges Bank, as well as the Fed and the Bank of Japan outside Europe.

On Monday, the Swiss government lowered its growth expectations for 2025 and 2026 as the export-oriented economy braces for the fallout from the global trade war. The Swiss economy, traditionally one of the most stable in Europe, is expected to grow by 1.3% in 2025, down from the government’s March expectations of 1.4%.

WTI oil prices fell by 1.7% to $71.80 per barrel on Monday, pausing a sharp 7% rise on Friday as reports emerged that Iran was seeking to ease tensions with Israel and resume nuclear talks. The decline followed an overnight surge to $77.49 after Israeli strikes on Iran’s South Pars gas field and an oil storage facility near Tehran. Despite the flare-up, market sentiment improved on hopes that the conflict would be contained and not cause significant damage to energy infrastructure or key shipping routes. Traffic through the Strait of Hormuz declined only slightly: 111 ships passed through on June 15, compared with 116 on June 12, indicating minimal disruption to oil supplies. Analysts expect the conflict to be short-lived and to help prevent further price spikes.

Asian markets mostly rose yesterday. Japan’s Nikkei 225 (JP225) rose by 1.26%, the Chinese FTSE China A50 (CHA50) gained 0.23%, the Hong Kong Hang Seng (HK50) added 0.70%, and the Australian ASX 200 (AU200) showed a positive result of 0.01%.

At its June meeting, the Bank of Japan left its key short-term interest rate unchanged at 0.5%, keeping it at its highest level since 2008, in line with market expectations. The unanimous decision underscored the Central Bank’s cautious stance amid escalating geopolitical risks and ongoing uncertainty over US tariff policy, which continues to pose a threat to global economic growth. Meanwhile, as part of its gradual policy normalization, the Bank of Japan confirmed its plan to reduce purchases of Japanese government bonds by 400 billion yen each quarter until March 2026.

The US stocks fell sharply on Friday amid weakening risk appetite after Iran condemned Israel’s airstrikes as a “declaration of war” and responded with missile strikes. The strikes targeted Iran’s nuclear and military facilities, significantly increasing geopolitical tensions and causing concern in global markets. At the end of Friday, the Dow Jones Index (US30) fell by 1.79% (-1.38% for the week). The S&P 500 (US500) Index fell by 1.13% (-0.46% for the week). The Nasdaq (US100) Technology Index closed lower by 1.29% (-0.68% for the week). Financial and technology companies led the losses: Nvidia fell by 2.1%, Apple declined by 1.4%, and Visa and Mastercard fell by more than 4%. Airline stocks also fell: American, Delta, and United declined by 4.5–5%. Meanwhile, energy and defense stocks did well as oil prices jumped nearly 7%. On the other hand, inflation expectations showed a noticeable improvement: inflation expectations for the year ahead fell sharply to 5.1% in June from 6.6% in May, while long-term inflation expectations fell for the second month in a row, dropping to 4.1% from 4.2%.

European stock markets were mostly down on Friday. The German DAX (DE40) fell by 1.07% (-3.03% for the week), the French CAC 40 (FR40) closed down 1.04% (-1.43% for the week), the Spanish IBEX35 (ES35) lost 1.27% (-2.23% for the week), and the British FTSE 100 (UK100) closed down 0.39% (+0.14% for the week). The Eurozone trade surplus in April 2025 fell to €9.9 billion from €13.6 billion a year earlier and was below market expectations of €18.2 billion. This also marked a sharp decline from March’s record high of €37.3 billion, with the decline mainly due to a sharp reduction in the chemical products surplus following the introduction of new US tariffs. European stock markets opened cautiously on Monday as investors monitored the escalating conflict between Israel and Iran, which risks escalating into a broader regional crisis. Military action continued over the weekend, with both countries striking energy infrastructure, causing oil prices to rise further. Iran also warned that it could block the Strait of Hormuz, a key bottleneck for global oil supplies.

The Swiss franc traded at around 0.81 per US dollar, close to its highest levels since 2011, amid a broad flight to safety triggered by escalating tensions in the Middle East. In addition to geopolitical risk, several other factors contributed to the strengthening of the franc, which has risen by about 10% this year. These include uncertainty over President Trump’s trade policy and a broad weakening of the dollar caused by lower inflation data and growing concerns about the US economic and fiscal outlook. Domestically, the Swiss National Bank (SNB) may soon reintroduce negative interest rates. Markets widely expect the SNB to cut its key rate this week.

WTI oil prices jumped by 7.2% on Friday and settled just below $73 per barrel on Friday. On Monday, oil prices continued to rise to $75 per barrel. Israel launched an attack on the giant South Pars gas field in the Persian Gulf over the weekend, forcing the production platform to shut down, following airstrikes on Iran’s nuclear facilities and military leadership last week. Although the strikes have not yet led to a halt in Iranian oil exports, markets fear the worst-case scenario, in which Tehran disrupts supplies through the Strait of Hormuz, a vital shipping route.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) fell 0.51%, China’s FTSE China A50 (CHA50) declined 0.29%, Hong Kong’s Hang Seng (HK50) fell 0.35%, and Australia’s ASX 200 (AU200) showed a positive result of 0.10% over the past week. Hong Kong stocks are down for the third consecutive session, despite strong economic data from China. Mainland retail sales in May grew at their fastest pace in 15 months, while industrial production grew at its slowest pace in six months, and the unemployment rate fell to a six-month low.

The US stocks closed mostly higher on Monday as trade talks between the US and China began in London, reviving hopes for a tariff truce. At the end of the trading day, the Dow Jones Index (US30) fell by 0.03%. The S&P 500 Index (US500) rose by 0.09%. The Nasdaq technology Index (US100) closed higher by 0.31%. The prospect of a breakthrough contributed to improved market sentiment: consumer, commodity, and technology stocks rose, while financial companies lagged behind.

The US consumer inflation expectations for the coming year fell to 3.2% in May 2025 from 3.6% in April, the lowest level in the last three months. At the same time, inflation expectations for the three-year horizon fell by 0.2% to 3.0%, and inflation expectations for the five-year horizon fell by 0.1% to 2.6%.

The Mexican peso rose to 19.10 per US dollar, its strongest level in the last nine months, thanks to the Bank of Mexico’s hawkish expectations and a softer US dollar. In May, core inflation rose to 4.42%, the highest level in six months, while headline inflation accelerated to 4.06%, an 11-year high, limiting the possibility of a rate cut in the near future.

European stock markets were mostly lower yesterday. The German DAX (DE40) fell by 0.54%, the French CAC 40 (FR40) closed down 0.17%, the Spanish IBEX35 (ES35) added 0.03%, and the British FTSE 100 (UK100) closed down 0.06%. In Europe, markets are preparing for a tense week, with the release of US inflation data and final CPI data for Germany, France, Spain, and Italy, which could influence expectations regarding Central Bank actions. In May 2025, UK retail sales rose by only 0.6% in comparable prices, significantly below market expectations of 2.7% growth, compared to April’s 6.8% increase. This is the slowest pace of growth in the last six months, as rising prices and higher monthly bills continue to put pressure on household budgets.

On Monday, WTI crude oil prices rose to $65 per barrel, the highest in two months, thanks to optimism about trade talks between the US and China and seasonal demand growth. The peak summer travel season is approaching, which typically increases fuel consumption and supports prices. Geopolitical tensions added pressure to prices as Russia launched major drone and missile strikes on Kyiv after Ukraine struck Russian air bases, increasing the risk of expanded sanctions on Russian energy exports.

Asian markets traded without a single trend yesterday. Japan’s Nikkei 225 (JP225) rose by 0.92%, China’s FTSE China A50 (CHA50) lost 0.17%, Hong Kong’s Hang Seng (HK50) added 1.63%, and the Australian ASX 200 (AU200) showed a negative result of 0.27%.

On Tuesday, the New Zealand dollar fell to 0.603 US dollars, reversing the previous session’s gains, as the US dollar regained strength on optimism about trade negotiations between the US and China. It is widely expected that the Reserve Bank of New Zealand (RBNZ) will slow the pace of rate cuts despite the deterioration in economic expectations. The policy decision in May signaled that the easing cycle may be coming to an end, and markets now expect the RBNZ to keep rates on hold in July and possibly make a final cut in August.

The NAB Business Confidence Index in Australia rose to 2 in May 2025 from negative 1 in April, turning positive for the first time since January and reaching its highest level in four months. Sentiment improved in most sectors, except for manufacturing, mining, and wholesale trade. However, business conditions deteriorated again (0 vs. 2 in April). The Westpac-Melbourne Institute’s Consumer Sentiment Index rose 0.5% month-on-month to 92.6 in June 2025, slowing sharply from 2.2% growth in May amid ongoing uncertainty over global trade. Nevertheless, this is the fourth increase this year, driven by the Reserve Bank’s May rate cut and signs of easing inflation.

The US stocks rose on Friday. This was helped by a stronger-than-expected employment report and renewed optimism about trade negotiations between the US and China. At the end of Friday, the Dow Jones Index (US30) rose by 1.05% (+1.30% for the week). The S&P 500 (US500) rose by 1.30% (+1.76% for the week). The Nasdaq (US100) technology Index closed higher by 0.99% (+2.31% for the week). The labor market added 139,000 jobs in May, exceeding forecasts and easing concerns about an imminent slowdown in growth. Meanwhile, Trump offered a glimmer of optimism on the trade front, announcing that US-China talks would resume next week in London. Nevertheless, President Donald Trump called on Fed Chairman Powell to cut interest rates by a full percentage point, calling it “rocket fuel” for the economy.

In May, only 8,800 jobs were added to the Canadian labor market, and the unemployment rate rose to 7%, the highest since late 2021, indicating that manufacturers are beginning to feel the impact of US tariffs on aluminum, steel, and automobiles. This tension in the labor market contrasts sharply with earlier signs of resilience, such as 2.2% GDP growth in the first quarter and a steady increase in retail sales, which prompted the Bank of Canada to keep its benchmark rate at 2.75% with no signs of an imminent cut.

European stock markets were mostly up on Friday. The German DAX (DE40) fell by 0.08% (+1.84% for the week), while the French CAC 40 (FR40) closed up 0.19% (+1.17% for the week), the Spanish IBEX35 (ES35) rose by 0.31% (+0.97% for the week), and the British FTSE 100 (UK100) closed 0.30% (+0.75% for the week). In Europe, the ECB cut rates as expected, but President Christine Lagarde signaled that the easing cycle may be nearing its end. Meanwhile, disappointing data on exports and industrial production from Germany weighed on sentiment.

WTI oil prices rose 1.9% to $64.60 per barrel on Friday, rising more than 6.5% for the first time in three weeks. The rally was fueled by renewed optimism after the resumption of trade talks between US President Donald Trump and Chinese President Xi Jinping, which raised hopes for stronger global demand. Sentiment also improved after news that Canada had also entered into direct trade talks with the US.

Asian markets rose last week. Japan’s Nikkei 225 (JP225) rose by 0.24%, China’s FTSE China A50 (CHA50) added 0.17%, Hong Kong’s Hang Seng (HK50) increased by 3.25%, and Australia’s ASX 200 (AU200) showed a positive result of 0.96% over the past week.

China’s trade surplus rose sharply to US$103.22 billion in May 2025, compared to US$81.74 billion in the same period a year earlier, exceeding market expectations of US$101.3 billion, as exports rose and imports fell more than expected. Exports rose 4.8% year-on-year to US$316.1 billion, slightly below market expectations of 5.0%, and down sharply from the 8. Meanwhile, imports fell to 3.4% y/y to US$212.9 billion, which was stronger than the expected decline of 0.9%, following a decline in April. Meanwhile, imports fell 3.4% y/y to US$212.9 billion, which was stronger than the expected decline of 0.9%, following a 0.2% decline in April.

The Australian dollar rose to $0.651 on Monday, continuing its rise from the previous week amid optimism about trade talks between the US and China. The talks come at a critical time for both economies, as China struggles with deflation and ongoing trade uncertainty continues to dampen business and consumer confidence in the US. In Australia, a leading economist called on the central bank to make a bold 35 basis point interest rate cut at its July meeting, exceeding the standard 25 basis point cut made in February and May. This recommendation came amid sluggish economic growth and low consumer spending, which are hindering a more robust recovery in the private sector.

Japan’s service sector business activity index rose to 44.4 in May 2025 from 42.6 in the previous month, exceeding market expectations of 43.9. Despite the increase, the overall decline has continued for the fifth consecutive month. The corporate trends index also declined, driven by weakness in the manufacturing sector. Meanwhile, the economic outlook index rose to 44.8 in May from 42.7 in April, supported by expectations of summer bonuses and wage increases.

Wall Street closed lower on Thursday as investors grappled with the public feud between President Trump and Elon Musk, renewed trade uncertainty between the US and China, and growing signs of weakness in the labor market. At the end of Thursday, the Dow Jones Industrial Average (US30) index fell by 0.25%. The S&P 500 (US500) Index fell by 0.53%. The Nasdaq (US100) technology index closed down 0.80%. Tesla shares fell by 14.3% after Trump criticized Musk for his disagreement with a major tax and spending bill, suggesting that he could revoke government contracts and subsidies for Musk’s companies. Meanwhile, the number of applications for unemployment benefits rose to 247,000 last week, the highest in eight months, heightening concerns about a slowdown in labor market growth. Economists expect the May employment report to show an increase of 125,000 jobs, which is lower than the previous month and will keep the three-month average at 162,000.

Stock markets in Europe traded without a single trend yesterday. The German DAX (DE40) rose by 0.19%, the French CAC 40 (FR40) closed down 0.18%, the Spanish IBEX35 (ES35) added 0.73%, and the British FTSE 100 (UK100) closed 0.11% on Thursday. European stocks rose on Thursday after the European Central Bank (ECB) cut interest rates for the eighth time this year. The ECB lowered borrowing costs by 25 basis points and revised its inflation forecasts for 2025 and 2026 downward. Although the rate cut was largely anticipated, the sharper-than-expected downward revision of the inflation forecast for 2026 took some market participants by surprise. ECB President Lagarde acknowledged that the inflation outlook remains more uncertain than usual.

WTI crude oil prices traded around $63 per barrel on Friday, targeting a weekly gain of 4% — the first in three years — thanks to optimism about peak seasonal demand despite lingering concerns about oversupply. However, the bullish momentum weakened after Saudi Arabia signaled the need for a significant increase in production, calling on OPEC+ to raise output by at least 411,000 barrels per day in August and possibly in September to meet summer demand.

Silver prices (XAG/USD) held steady at around $36 per ounce on Friday, trading at their highest levels since February 2012, as weak US economic data and the Federal Reserve’s “dovish” outlook continued to stimulate demand for safe-haven assets. Expectations for a Fed rate cut in September have intensified after a series of disappointing indicators. The latest data showed an increase in jobless claims, a decline in private sector employment, and an unexpected slowdown in service sector activity, all pointing to signs of a softening labor market. Investors will now turn their attention to the upcoming non-farm payrolls report for further clarity on the economic outlook.

Asian markets traded without a clear trend yesterday. Japan’s Nikkei 225 (JP225) fell by 0.51%, China’s FTSE China A50 (CHA50) jumped 0.17%, Hong Kong’s Hang Seng (HK50) added 1.07%, and Australia’s ASX 200 (AU200) showed a negative result of 0.03% on Thursday.

On Friday, the New Zealand dollar held onto its recent gains, reaching $0.604 and remaining close to an eight-month high, thanks to renewed optimism about easing trade tensions, which reduced risks for the export-dependent currency. A telephone conversation between US President Donald Trump and Chinese President Xi Jinping, during which the two leaders agreed to resume trade talks, contributed to the positive sentiment. Domestically, markets expect the RBNZ to hold rates steady in July, while the probability of a rate cut in August is around 70%, potentially the last cut in this easing cycle.

Vietnam’s annual inflation rate rose to 3.24% in May 2025, a four-month high, from 3.12% in April. Meanwhile, core inflation, which excludes volatile items, rose to 3.33% from 3.14%, the highest since October 2023.

The Reserve Bank of India (RBI) unexpectedly cut its key repo rate by 50 basis points to 5.50% at its May meeting — more than the market had expected, which was anticipating a 25-basis-point cut — and shifted its policy stance from accommodative to neutral. As a result of Friday’s meeting, the total rate cut since February amounted to 100 basis points, bringing borrowing costs to their lowest level since August 2022. This decision was driven by lower inflation and ongoing uncertainty regarding global trade tensions.

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.22%. The S&P 500 Index (US500) rose by 0.01%. The Nasdaq (US100) Tech Index closed up 0.32%. Investors digested a sharp slowdown in private sector employment growth, as the ADP report showed only 37,000 new jobs in May, significantly below expectations and the lowest figure in two years. This data cast a shadow over the upcoming nonfarm payrolls report, raising concerns that trade policy uncertainty is putting pressure on the labor market. Activity in the services sector also declined in May, further heightening concerns about the broader economic outlook. Meanwhile, President Trump doubled tariffs on steel and aluminum imports to 50% and lashed out at Fed Chairman Powell, renewing pressure for interest rate cuts. Hopes for a resolution to trade relations between the US and China dimmed as Trump called Xi Jinping “extremely difficult to work with.”

The Bank of Canada unexpectedly left its base interest rate unchanged at 2.75% in its June 2025 decision (more than 60% of correspondents expected a 0.25% rate cut), which was the second rate hold after a 2.25% point cut in seven consecutive decisions. The Governing Council noted that the ongoing increase and decrease in various US tariffs, combined with the highly uncertain outcome of bilateral trade negotiations and tariff rates remaining significantly above early 2025 levels, create risks of slower growth and raise inflation expectations, which requires caution regarding the continuation of monetary policy easing. The Canadian dollar strengthened to $1.37 per US dollar, its highest level in nearly eight months.

European stock markets traded without a single trend yesterday. The German DAX (DE40) rose by 0.77%, the French CAC 40 (FR40) closed up 0.53%, the Spanish IBEX35 (ES35) lost 0.19%, and the British FTSE 100 (UK100) closed positive 0.16%. European stocks rose on Wednesday, thanks to new tax stimulus measures and progress in trade negotiations between the EU and the US. The German DAX Index rose to a new record high after the government approved a €46 billion tax relief package for the period 2025–2029, aimed at supporting businesses and reviving economic growth. In corporate news, Airbus shares soared more than 4% after reports that Chinese airlines are considering ordering up to 300 aircraft, with a potential deal likely to be concluded as early as next month during a planned visit by European leaders to Beijing.

Silver prices held steady at around $34.50 per ounce on Thursday, reaching their highest level in seven months, as a wave of disappointing economic data from the US put pressure on the dollar and increased demand for safe-haven assets.

WTI oil prices fell more than 1% to below $63 per barrel as Saudi Arabia said it may demand a significant increase in production, heightening concerns about oversupply in the global oil market. The kingdom is reportedly seeking for OPEC+ to increase production by at least 411,000 barrels per day in August and possibly September, seeking to capture market share during peak summer demand. This comes after an increase in production for July was announced over the weekend.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) rose by 0.80%, China’s FTSE China A50 (CHA50) added 0.11%, Hong Kong’s Hang Seng (HK50) increased by 0. 60%, and Australia’s ASX 200 (AU200) showed a positive result of 0.89%.

Nominal wages in Japan rose 2.3% year-on-year in April 2025, in line with the pace seen in March but below market expectations of 2.6% growth. Meanwhile, real wages, adjusted for inflation and a key indicator of consumer purchasing power, fell by 1.8%, marking the fourth consecutive month of decline. The weak real wage data underscores the ongoing problem of persistent inflation, which continues to outpace wage growth.

Australia’s trade surplus narrowed to 5.41 billion Australian dollars compared to a slightly revised figure of 6.89 billion Australian dollars in the previous month and below market expectations of 5.90 billion Australian dollars, as exports declined and imports rose. Exports fell 2.4% from the previous month to 44.08 billion Australian dollars. Meanwhile, imports rose by 1.1% to 38.66 billion Australian dollars, recovering from a revised 2.4% decline in the previous month.