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Last week was a decent one for global stock markets, with gains of c1%. US share markets were strong (rising by 1.1%) but the yellow jersey for last week went to Emerging market shares which rose by c1.4%.
Last week also saw the monthly release of the much-watched US jobs data. Although the pace of job creation is clearly slowing in the US, the data did come in better than expected, which gave a nice end of week boost to market sentiment.
This week is quiet as regards scheduled data, with US inflation on Wednesday likely the key data point for global markets.
Last week
- Global stock markets rose by 1% last week
- Emerging market shares led gains (thanks to Chinese equity markets)
- Q1 earnings season ended in the US. Companies grew their earnings at a much faster pace than had been expected.
- The European Central Bank cut interest rates to 2%
- US jobs data for May was better than expected and evidenced an economy which was still “growing but slowing”.
This week
- It is a quiet week as regards scheduled data. Key data points being:
- US inflation (CPI) on Wednesday and US Michigan Consumer Confidence index data on Friday.
- US / China trade talks resume in London this week.
- UK employment data tomorrow and UK growth data (for the 3 months to April) published on Thursday.
Source: Bloomberg
More details:
- Stock markets enjoyed a decent start to June, with global shares rising by about 1% on the week. Beneath that, Emerging markets led the gains (thanks to a 2% rally in Chinese shares), with US shares also continuing their strong recent run.
- At a sector level, it was US technology shares which performed best, with this area of the market up 2.5% on the week. Facebook parent Meta platforms rose by 7.3% on the week following news that it is entering a 20-year contract with Constellation Energy to power its AI operations. This appeared to help boost sentiment in this space and helped index heavyweight Nvidia post a 4.4% gain on the week.
- Q1 earnings season in the US has now finished. It was a very strong earnings season, with companies reporting earnings growth of 13.3% for Q1 2025 (as per Factset). This was much better than the 7.2% growth rate that had been expected at the end of March 2025. Attention now swiftly turns to Q2’s numbers and the rest of the calendar year. Importantly, we’d note that CY25 earnings have only been revised down by 3.5%. This is a bit larger than the average downward revision (the average downward revision over the last 10 years has been 2.3%) but is markedly better than downwards revisions that we’ve seen in previous times of crisis! For example, in Covid and the GFC earnings estimates for the year were cut by c25%!
- The European Central Bank cut interest rates by 0.25% last week. This takes rates to 2% and makes for 2% of interest rate cuts since July last year. Bond futures markets are expecting just one more interest rate cut from the ECB this year and this view was reinforced by ECB President Christine Lagarde who said they’d “nearly concluded” their policy cycle and that the current policy stance was in a “good place”. Growth has started to pick up in the Eurozone (albeit remains low), with GDP expanding by 0.6% in the first quarter (more than had been estimated) and inflation has dropped below 2% (May’s reading was 1.9% for headline CPI).
- Last week showed evidence of slowing in the US jobs market, but data came in a touch better than expected: this was welcomed by the markets. 139,000 jobs were seen to have been created in May (as per US Nonfarm Payroll data) which was more than the 126,000 that had been forecast (by economists surveyed by Bloomberg).
- UK government bonds rose by 0.4% last week, with UK Corporate bonds rising by 0.45%. UK 10-year government bond yields closed out the week at 4.64%.
The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.
The content of this article is not intended to be or does not constitute investment research as defined by the Financial Conduct Authority. The content should also not be relied upon when making investment decisions, and at no point should the information be treated as specific advice. The article has no regard for the specific investment objectives, financial situation or needs of any specific client, person, or entity.
