On Thursday, Presidents Trump and Xi held a ‘positive’ phone call, with high level trade talks due to resume. While that pointed to a potential thawing in relations between the two sides, the same could not be said for Trump and Elon Musk. Thursday saw a very public spat between the pair after Musk took aim at the President’s ‘big, beautiful bill’. Tesla shares slumped 14% in response, weighing on indices, before recovering around 5% the following session.
Despite the feud Wall Street posted another positive week. The S&P 500 added 1.5%, closing above the 6,000 mark for the first time since February. Meanwhile the tech-heavy Nasdaq rose 2.2%, the Dow Jones Industrial Average was up 1.2% and the small-cap Russell 2000 rose 3.2%. Stocks got a boost on Friday from the monthly jobs report. The economy added a better-than-expected 139,000 jobs in May, alleviating some recessions fears. This pushed US Treasury yields higher, with the 10-year yield ending at 4.51%.
European markets made gains over the week with the STOXX 600 rising 0.6% overall, in its second consecutive weekly rise, with regional indices also moving higher. One area which limited gains was the automotive sector, falling 1.8% as the doubling of tariffs on steel and aluminium into the US took effect. The European Central Bank cut rates as expected by a quarter percentage point on Thursday. Stocks initially moved higher, however subsequently tempered the rise following more hawkish than expected comments from President Christine Lagarde. She indicated that the current policy cycle had nearly concluded, with markets currently expecting one more rate cut.
The Shanghai Composite was up 1.1% for the week while Hong Kong’s Hang Seng rose 2.2%. The Caixin manufacturing Purchasing Managers’ Index (PMI) unexpectedly slipped into contraction in May, in a sign that tariffs were taking a toll. Despite the weak figure, markets actually advanced as this boosted hopes that the government would step up stimulus measures in order to support the economy. South Korea’s Kospi saw a strong increase of 4.2% in a holiday shortened week, as the Democratic Party won the presidential election. Bucking the wider positive trend, Japan’s Nikkei 225 ended the week 0.6% lower, while government bond yields eased, with no further progress on US-Japan trade talks.