Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
š¤ US-China tariffs ease
- The worldās two largest economies have temporarily agreed to reduce tariffs for 90 days while they work on a broader trade agreement. US levies on China fell from 145% to 30%, while Chinaās reciprocal tariffs dropped from 125% to just 10%.
š UK growth surprises
- GDP rose 0.7% in Q1 quarter-on-quarter, exceeding expectations thanks to the service sector.
š US inflation falls
- Aprilās annual inflation rate fell to a below forecast 2.3%, led by big drops in energy costs.
āļø UK unemployment edges higher
- The unemployment rate rose to 4.5% in March as both short and long-term unemployment increased.
šŖ Crypto goes mainstream
- Coinbase is set to join the S&P 500, marking a significant step in the increasing popularity of digital assets.
What this means for financial advisers and clients
The dramatic climbdown on tariffs between the US and China were well received by markets, who see trade relations improving and the chance of recession falling. Markets in both countries have largely recovered the majority of recent losses - or even gained ground - since āLiberation dayā in April.
Although billed as just a temporary agreement, the hope is that the agreement becomes permanent or is at least continuously extended. Still, recent experience with other trading partners like Canada and Mexico remind us that nothing is guaranteed when it comes to US trade policy - and the risk of re-escalation remains on the table.
Chart of the week - tourism troubles?
Source: Apollo; Bureau of Economic Analysis, May 2025
The chart above highlights the historical contribution of travel and tourism to US GDP. Here, tourism-related output includes the direct output from tourist spending, but also the wider economic ripple effects captured through input-output multipliers.
Why this matters
While stock markets rebounded quickly - to near pre-April highs thanks to signs of tariff climbdown between the US and China - foreign confidence might be slower to rebound. Tourism revenue in particular, which historically made up about 10% of US GDP, is predicted to fall by over 20% this year. Steep declines are already being seen by Europeans and Canadians as political tensions and anti-Trump sentiment weigh on travel decisions.
This is not something likely to change over the shorter term and could end up hindering the USās broader growth prospects.
Market recap
US markets soar on tariff relief
- Both the S&P 500 and NASDAQ saw big upwards moves as markets were buoyed by tariff optimism following the US-China agreement. Later in the week, gains were led by value sectors such as utilities and consumer staples.
UK climbs
- UK markets followed suit, lifted by improving global sentiment and strong earnings result from companies like Shell and NatWest.
Modest growth in Asia
- Asian markets also benefitted from easing US trade tensions. The Hang Seng benefitted from strong performance in the Chinese tech sector and the Nikkei saw a boost from outperforming Japanese semiconductor and electronic-component stocks.
Commodities ā a mixed picture
- Oil ended the week in positive territory after small swings and down tracking progress on Iran nuclear talks. Easing trade tensions were also key to a drop in the gold price amid optimism on improving economic conditions.
| ā | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.18% | 7.54% |
| FTSE 250 | 1.77% | 2.50% |
| S&P 500 | 4.78% | -4.67% |
| NASDAQ | 6.59% | -3.98% |
| MSCI Europe ex UK | 1.35% | 13.14% |
| Hang Seng | 0.70% | 9.67% |
| Nikkei 225 | 0.15% | -3.99% |
| Brent Crude | 0.75% | -13.37% |
| Gold Spot | -3.39% | 23.32% |
| UK 10yr Gilt yield | +15bps | +9bps |
| US 10yr Treasury yield | +59bps | -15bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 8th May 2025.
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
