The week got off to a strong start as investors welcomed news that the Trump administration would delay imposing a new 50% tariff on European Union exports until 9 July. Later, the US Court of International Trade ruled that President Trump did not have the authority to impose his “Liberation Day” tariffs, pushing US stocks higher late on Wednesday. However, by Thursday afternoon gains were pared, with the administration appealing the ruling and a federal court temporarily stayed the ruling. The week ended with further uncertainty as President Trump announced on Friday that he would double the tariff on steel imports.
Despite the pullback towards the end of the week, US equity indices recorded gains in a holiday-shortened week. Overall, the S&P 500 rose 1.9%, the Dow Jones Industrial Average added 1.6% and the tech-heavy Nasdaq Composite was up 2%. Indeed, the S&P 500 and Nasdaq notched monthly gains of 6.2% and 9.6% respectively, in their best performance since November 2023. In other news, chipmaker Nvidia delivered better-than-expected results, seeing a 69% year-on-year rise in second quarter revenue, providing an uptick to tech stocks. Meanwhile the personal consumption expenditures price index eased more than expected in April, with Treasury yields moving lower.
European stocks made gains, breathing a sigh of relief that the proposed tariffs on EU imports would be delayed, allowing time for negotiations. Defence stocks also got a boost on Tuesday with Trump threatening additional sanctions on Russia. For the week the pan-European STOXX 600 was up 0.7% and adding around 4% for the month of May. Easing inflation in major European economies boosted expectations that the European Central Bank will cut rates when it meets this week, with markets currently expecting a quarter percentage point cut.
In Japan, the Nikkei 225 advanced 2.2% and the broader Topix index was up 2.4%. There were renewed hopes for a trade agreement between Japan and the US, with Prime Minister Ishiba said to have held a constructive phone call with President Trump ahead of the next round of talks. Furthermore, Trump also hailed a “blockbuster agreement” between Nippon Steel and US Steel, although he has yet to approve a final deal. Bucking the wider positive trend, Chinese equities saw slight weekly losses. The Shanghai Composite ended marginally below the flatline while the Hang Seng lost 1.3%. There were fresh trade worries on Friday, after Trump accused China of violating the trade truce, in a possible sign of reignited tensions.