Weekly market recap & what's ahead

26 May 2025 (recap 19 to 23 May 2025)

Market recap

Headlines & introduction

Markets were gripped by renewed trade tensions, spiking volatility, and fiscal fears, with US tariff threats on EU goods, Moody’s credit downgrade, and Trump’s new tax bill dominating headlines. Tech stocks and crypto outperformed at times, but late-week tariff uncertainty and bond yield surges triggered sharp selloffs before a slight rebound on tariff postponement.

Equities

US stocks started strong but reversed on Wednesday and Friday as Trump’s tariff threats escalated and Moody’s cut the US credit rating (May 20, 23). Tech stocks led volatility: Apple -3% on Friday after fresh tariff threats, while Alphabet and Nvidia slumped midweek (May 21, 23). Europe tracked US losses, hit by auto, luxury, and bank declines (STOXX 50 -1.9%, DAX -1.54% Friday). UK and Asian markets mirrored global moves, with Japan’s Nikkei holding up (+0.6% Friday), while China outperformed on stimulus optimism.

Volatility

The VIX surged midweek, peaking at 20.87 on Wednesday (May 22) amid fiscal and tariff worries, before settling at 22.29 Friday after an intraday high of 25.53. Short-term indices (VIX1D, VIX9D) reflected heavy hedging demand, but by Friday, options activity signaled normalization, not panic. Volatility remains elevated on trade risk and upcoming mega-cap earnings.

Digital assets

Bitcoin hit a fresh all-time high above $111,800 midweek, consolidating near $110,600 on Friday as BlackRock’s IBIT ETF saw record inflows and zero outflows since April (May 22, 23). Ethereum and Solana also advanced, while crypto stocks like Coinbase (+5% Thursday) and Marathon Digital swung with risk sentiment. Regulatory optimism and corporate treasury interest added support.

Fixed income

US Treasury yields surged to cycle highs after weak 20-year auctions, with the 30-year hitting 5.15% intraday before easing to 5.05% Friday. The 10-year yield held just above 4.50%. Eurozone and Japanese yields climbed on fiscal and trade uncertainty. High-yield credit spreads widened to a two-week high (May 23).

Commodities

Gold rallied to a monthly high above $3,300 midweek on US deficit and trade fears, then pulled back as haven demand faded. Platinum outperformed (up 11.5% for the week), while crude oil slipped as OPEC+ weighed more output and US/EU tensions whipsawed prices. Agricultural commodities rallied on weather and supply worries (May 23).

Currencies

The USD weakened broadly, with EURUSD breaking above 1.1400 Friday on tariff postponement. The JPY remained soft despite bond volatility, while the Norwegian krone topped G10 FX. The AUD hit 2025 highs, buoyed by USDCNH moves and China’s stimulus signals.

Key takeaways

• Tariff threats and fiscal policy spurred sharp swings and elevated volatility
• Tech and crypto outperformed on sector flows and ETF demand
• Yields surged on US deficit and weak bond auctions; credit spreads widened
• Gold, platinum, and grains outperformed; crude range-bound
• USD retreated; EUR, AUD, NOK advanced on trade and rate signals

Looking ahead (27 to 31 May 2025)

The upcoming week is packed with high-impact events likely to shape sentiment after the recent spike in volatility. Nvidia’s earnings on Wednesday take center stage, with investors watching for signals on AI demand and tech leadership after its meteoric rally. Other tech heavyweights reporting include Salesforce, Marvell Technologies, Dell, and HP—all key for assessing the strength of the sector.

Retail focus will shift to Costco’s earnings at the end of the week, following a strong April sales update and anticipation of tariff impacts on consumer behavior. Data-wise, Friday’s release of the PCE inflation report—the Fed’s preferred inflation gauge—will be pivotal for the interest rate outlook. Updates to first-quarter GDP, the US trade balance, and consumer confidence surveys will also help investors gauge the health of the economy.

The Fed calendar is busy: Gov. Waller, NY Fed’s Williams, and other policymakers are scheduled to speak, and the FOMC minutes on Wednesday may shed light on the central bank’s thinking amid fiscal and trade turmoil. With US and UK markets closed Monday, the shortened week could see thin liquidity, amplifying market moves as new data and earnings hit. Geopolitical risks and tariff headlines remain potential sources of volatility, making risk management essential.

Conclusion

Markets ended the week on edge, whipsawed by tariffs, fiscal policy, and credit warnings. With a new wave of tech earnings, key inflation data, and central bank signals ahead, investors should brace for further swings. Staying focused on fundamentals and policy guidance will be crucial in navigating the uncertainty.