Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia.
Key market events
🎯 European inflation below target – the European Central Bank (ECB) cut interest rates to 2% as falling energy prices and a stronger Euro contributed to inflation softening to 1.9%.
📉 Trump vs Musk fallout hits stocks – the wider market dropped as Tesla shares tumbled in response to the public spat between CEO Elon Musk and US President Donald Trump.
⬆️ US jobless claims rise – weekly first-time unemployment claims crept higher to 247,000 ahead of today’s key US employment report.
🤝 NATO set to strengthen – the North Atlantic Treaty Organisation (NATO) member states are nearing agreement to significantly boost defense spending to 5% of GDP.
☎️ US and China trade talks back on – after a direct phone call between US President Trump and Chinse President Xi Jinping, trade negotiations between the two nations are back on the table.
What this means for financial advisers and clients
Uncertainty remains in the air, with tariff outcomes top of the agenda. The personal phone call between the US and Chinese leaders highlights the importance of a resolution for their respective economies - but there is still a great deal of distance to travel before they are likely to find common ground.
All eyes are on today’s US non-farm payrolls report. A weaker result could give more weight to US President Trump’s “Big Beautiful Bill”. But it faces hurdles to clear passage in the Senate, with reservations raised over the impact on the national debt vocally highlighted by Elon Musk.
The European Central Bank (ECB) is eyeing the inflationary impact of tariffs, indicating that they’re nearing the end of their rate-cutting cycle. Markets have subsequently assigned just a 20% probability of a further rate cut in July.
Meanwhile, concerns over fiscal deficits - not just in the US but also in European nations who may spend more on defense in the coming years - is pushing up the term premium on government bonds.
For now, economies and stocks are generally holding up, but the impact of tariffs are yet to be felt, and the urgency for a resolution mounts.
Chart of the week - US debt servicing costs
Source: PGIM
Why this matters
The chart above compares the rate of expansion of the US economy (in red), versus the average interest rate paid on US government debt (in blue). In recent years we can see the average interest rate rising as GDP growth slows.
This highlights the importance of economic growth if the US wishes to continue to fund large fiscal deficits such as that proposed by the “Big Beautiful Bill”. Without it, the debt burden only gets harder to carry.
Market recap
UK momentum builds: the FTSE 100 posted its fourth straight weekly gain, led by homebuilders. Fintech company Wise also rose after announcing plans to transfer its primary listing to the US.
Europe climbs higher: European stocks were boosted by the interest rate cut and calming inflation, despite ongoing trade concerns.
Hang Seng rallies on: optimism following the trade call between US President Trump and Chinese President Xi Jinping lifted Hong Kong-listed shares. Tech stocks led the way.
Oil jumps: brent crude prices spiked higher after confirmation of the Organisation of the Petroleum Exporting Countries (OPEC+) supply increases being lower than previously feared.
Gold advance continues: investor demand for the safe-haven asset increased this week following an escalation of hostilities between Ukraine and Russia, and ongoing fears over fiscal spending and trade disputes.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.48% | 9.97% |
| FTSE 250 | 0.34% | 3.89% |
| S&P 500 | 0.31% | -6.58% |
| NASDAQ | 0.19% | -5.32% |
| MSCI Europe ex UK | 0.92% | 13.84% |
| Hang Seng | 1.84% | 10.57% |
| Nikkei 225 | -1.30% | -4.38% |
| Brent Crude | 3.24% | -19.63% |
| Gold Spot | 1.65% | 19.39% |
| UK 10yr Gilt yield | -3bps | +4bps |
| US 10yr Treasury yield | -1bps | -18bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 5th June 2025.
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