Weekly Market Recap & What's Ahead

19 May 2025 (recap 12 to 16 May 2025)

Market Recap

Headlines & Introduction

Markets rallied on significant easing of US-China tariffs but ended the week cautiously amid Moody's downgrade of US debt. Tech and luxury sectors initially surged, driven by AI developments and tariff optimism, but mixed macroeconomic data kept investor sentiment wary. Bitcoin maintained record-high levels despite volatility in crypto-related equities. Volatility indicators eased notably, signaling reduced immediate market anxiety despite looming economic uncertainties.

Equities

• US stocks surged sharply Monday (May 12) as US-China trade tensions eased, lifting the Nasdaq (+4.35%), S&P 500 (+3.26%), and Dow (+2.81%). Tesla (+6.8%), Amazon (+8.1%), and Apple (+6.2%) led gains (May 12). On Tuesday (May 13), chipmakers boosted the Nasdaq further, with Nvidia up 5.6%. Conversely, UnitedHealth plunged 17.8% due to CEO exit and guidance concerns. By Thursday (May 15), markets were mixed; GE rose 2.8% on Boeing deal optimism, while UnitedHealth fell another 11% on regulatory concerns.
• Europe rallied Monday (May 12), especially luxury brands like LVMH (+7.5%) and Kering (+6%). By Wednesday (May 14), luxury reversed sharply (LVMH -2.2%, L'Oreal -3.3%), amid tariff and macro concerns.
• UK equities had mixed results; FTSE 100 climbed notably on Friday (May 16) by +0.57%, supported by National Grid (+3%) and AstraZeneca despite weaker days earlier in the week due to corporate setbacks.
• Asia markets rose initially but ended weaker. Japan’s Nikkei declined on Friday (May 16) by -0.5%, impacted by weak GDP data (-0.7% YoY).

Volatility

VIX sharply declined throughout the week, marking lows unseen since early April, closing at 17.24 on May 16 (-3.3%). Short-term indicators (VIX1D, VIX9D) dropped significantly, reflecting decreased immediate fear despite Moody’s US debt downgrade.

Digital Assets

Bitcoin sustained high levels around $102,438 (May 16) despite volatility, reaching a record weekly close near $106,500. Ethereum followed Bitcoin closely but faced sharp pullbacks on May 16 due to Coinbase's (-7.2%) cyberattack news. Crypto stocks were mixed, yet Coinbase (+9%) and CIFR (+21.8%) outperformed significantly by week-end.

Fixed Income

US Treasury yields fluctuated, spiking early in the week as the 10-year reached the key psychological 4.50% on Tuesday (May 13). Moody’s downgrade of US debt triggered another surge late Friday, pushing the 30-year yield briefly to 5.0% again. German 10-year Bund yields closed at 2.59% (May 16) before weekend developments.

Commodities

Gold prices dropped early in the week amid decreased safe-haven demand but rebounded notably after Moody’s downgrade of US debt, settling around USD 3,200. Crude oil prices remained volatile yet largely range-bound, driven by geopolitical events and supply concerns, trading near USD 66 (May 13).

Currencies

The US dollar strengthened initially on tariff relief optimism but weakened significantly after the Moody’s downgrade. The Japanese yen gained strength notably, trading near 145.00 (USDJPY, May 16) following weak Japanese GDP data, signaling possible policy interventions.

Key Takeaways

• US-China tariff truce initially boosted equities but sentiment moderated post-Moody’s downgrade.
• VIX declined substantially despite ongoing macroeconomic uncertainties.
• Bitcoin maintained strong institutional support, achieving record-high weekly closes.
• US Treasury yields rose sharply on credit downgrade concerns, highlighting ongoing fiscal worries.
• Commodities exhibited mixed trends, with gold rallying post-downgrade and crude remaining volatile.

Looking Ahead (19 to 23 May 2025)

• Monday: US leading economic indicators; earnings from Trip.com, Ryanair; Fed Vice Chair Jefferson speaks.
• Tuesday: Earnings from Home Depot, Palo Alto Networks, Toll Brothers; multiple Fed speakers.
• Wednesday: Earnings from TJX, Lowe’s, Snowflake, Target; Fed Governor Bowman speaks.
• Thursday: Initial jobless claims, Existing home sales; Intuit, Ross Stores, Ralph Lauren report earnings.
• Friday: New home sales data; earnings from Booz Allen Hamilton.

Retail earnings and housing market data will provide critical insights into consumer and economic health, while Fed speakers will offer guidance amid interest rate policy scrutiny.