Market Quick Take – 2 June 2025

Market drivers and catalysts

• Equities: US May rally; tariffs whipsaw sentiment; EU outperforms; UK resilient; earnings drive moves
• Volatility: VIX drifts lower; hedges rolled; risk appetite steady; macro catalysts ahead
• Digital assets: BTC dips; ETH soft; IBIT/ETHA inflows strong; adoption headlines; crypto stocks weak
• Fixed Income: US long treasury yields remain at lower end of recent range
• Currencies: US dollar weaker, particularly against the Japanese yen
• Commodities: Strong rebound after latest slump being led by crude oil, copper and gold
• Macro events: US May ISM Manufacturing, US Fed Chair Powell to speak

Macro data and headlines

• U.S. National Economic Council Director Kevin Hassett stated that President Trump and Chinese President Xi Jinping might discuss trade this week, focusing on the Geneva agreement, and yet China accused the US of violating the terms of the consensus the two sides agreed to in Geneva Switzerland in May and said it would take steps to defend its interests, rejecting US claims that China had violated the terms, throwing into doubt whether any talks might take place.
• Pro-Trump nationalist Karol Nawrocki won Poland’s run-off election for president, taking 50.9% of the vote. Poland’s currency, the zloty, dropped about 0.5% on the news on fears that his policies could jeopardize EU funding to the country.
• US President Trump announced that he will increase US steel and aluminium tariffs from 25% to 50% starting June 4th to safeguard the US industry.
• April's US Core PCE inflation met expectations with month-on-month at 0.1% and year-on-year at 2.5%. Headline inflation was slightly cooler at 2.1% year-on-year. Personal income rose to 0.8%, driven by Social Security payments. Weaker consumer spending suggests potential Q2 forecast risks.
• Ukrainian drones hit many Russian airfields on Sunday, as both sides prepare for peace talks in Turkey today.
• China's Manufacturing PMI rose to 49.5 in May 2025, still contracting but matching expectations. Output rebounded, while new orders, foreign sales, and employment declined slower. Prices dropped sharply, and business confidence improved from April's low.

Macro calendar highlights (times in GMT)

0715-0800 Eurozone Final May Manufacturing PMI
1400 – US May ISM Manufacturing
1700 – US Fed Chair Powell to speak

Earnings events

• Tuesday: Crowdstrike, Ferguson Enterprises, Hewlett Packard Enterprise
• Thursday: Broadcom, Lululemon, Samsara

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• US: US equities ended May with their strongest monthly performance since November 2023 - S&P 500 +6.2%, Nasdaq +9.6%. Friday saw volatile trading: the S&P 500 ended flat (-0.01%), the Nasdaq fell 0.3%, and the Dow rose 0.13%. Persistent tariff headlines (Trump accusing China of deal violations, courts wavering on tariff legality) kept sentiment choppy. Earnings helped select stocks: Ulta Beauty surged 11.8% on raised guidance, while Gap dropped 20% on weak sales. Consumer spending slowed, but easing inflation offered relief. Hopes for Trump-Xi talks are offset by legal and trade policy uncertainty.
• Europe: European equities ended May sharply higher, STOXX 600 up 4%, DAX +7.1%—best since January. Friday’s session was up 0.5%, led by oil & gas and healthcare. Positive inflation data (Germany, Italy, Spain) boosted ECB rate cut hopes. CAC 40 lagged (-0.36%) on Sanofi (-4.4%) and Carrefour (-6%) losses. French and German stocks were cautious on trade risks as US tariff legal reversals dominated headlines. The ECB is expected to cut rates this week.
• UK: The FTSE 100 closed up 0.64% Friday and had its best month in four. Gains were led by M&G (+5.5%) on a new Dai-ichi Life deal, GlaxoSmithKline (+3.8%), and Unite Group (+3.2%). Economic data remained mixed: vehicle production slumped, but inflation expectations eased. Investors shrugged off lingering US trade uncertainty, focusing on robust earnings and optimism over a limited UK-US trade agreement.
• Asia: Hang Seng dropped 1.2% Friday, tracking fresh US-China tariff tensions and profit-taking after a strong previous session. Auto stocks sold off on price war concerns (BYD -3.6%). Broader Asian sentiment was cautious as China vowed retaliation over renewed US tariffs and official talks appeared “stalled.” Region-wide, tech and exporters remain sensitive to further escalation in trade friction.

Volatility

Market volatility calmed down as June began. The VIX, which measures expected market swings, dipped to 18.6 and has been holding steady in a narrow range. Investors seem less worried about sudden shocks, with fewer people rushing to buy protection in the options market. However, some caution remains ahead of this week’s big events, like US inflation data, jobs numbers, and the European Central Bank’s meeting. For now, markets look more stable, but many are still waiting to see what happens next.

Digital Assets

Crypto prices slipped a bit after a strong May. Bitcoin fell slightly to $104,900 and Ethereum also edged down to $2,493. Even as prices cooled, there’s still strong interest from big investors: BlackRock’s Bitcoin fund took in $409 million last week, and its total size hit $72 billion. A similar fund for Ethereum is also growing fast. Headlines from a major crypto conference showed governments and companies getting more involved, with Pakistan starting a national Bitcoin reserve and US and UK officials talking about friendlier crypto rules. Some crypto-related stocks lagged behind as traders took profits.

Fixed Income

• US treasury yields remained near the low end of the recent range, with the 10-year near 4.40% and the 30-year benchmark still below the pivotal 5.00% level, if only barely so at 4.95%. This week sees key US data releases from the US, capped by Friday’s May US jobs report.
• Risk sentiment in the US high yield corporate bond space stumbled slightly on Friday, as the Bloomberg measure we track of the high yield credit spread to US treasuries widened some 4 basis points to 315 basis points.

Commodities

• The Bloomberg Commodity Index fell 2.6% last week, reducing the year-to-date gain to just 3%, with all sectors and most commodities recording losses, only to bounce back strongly in early Monday trading, with gains being led by copper, crude oil, natural gas, and gold.
• Crude prices recovered most of last week’s losses overnight after another bumper 0.41 million b/d production increase from eight OPEC+ producers, announced at the weekend, was being offset by increased geopolitical tensions following Ukraine attacks deep inside Russia, as well as a softer US dollar, and Trump’s tough stance on Iran.
• HG copper futures trade sharply higher after Trump doubled import tariffs on steel and aluminium to 50%, raising speculation that a bigger-than-expected tariff could be applied to copper soon. The NY premium over London trades back above 12%, with supply issues at the world's second-largest mine in Congo also adding some support, offsetting short-term trade tensions-related demand concerns.
• Gold trades back above USD 3,300 after falling by 2% last week—as an increase in geopolitical and trade tensions, and a softer US dollar revive demand. A downward-sloping trendline from the April high, which was challenged and rejected several times last week, is currently offering resistance at USD 3,330, with a break potentially attracting fresh upside momentum.

Currencies

• The US dollar weakened late last week and softened a bit further overnight, but has yet to challenge the lows for the cycle, as EURUSD trades 1.1362 after last week’s challenge slightly above 1.1400, and USDJPY Trades near 143.60 after pushing as low as 142.12 last week before the news that the Bank of Japan would tweak the size of its long-dated JGB auctions to avoid excess supply relative to demand, which briefly sent USDJPY above 146.00 at one point during the week.

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