Weekly Market Review: 19th May 2025

In the US, equity markets rose last week, buoyed by positive economic data and, more significantly, the announcement of a temporary suspension of trade hostilities between the US and China. Under the terms of the truce, US tariffs on China will fall from over 145% to 30%, while Chinese tariffs will decrease to 10% for the next 90 days. This period is intended to allow both parties time to negotiate a more permanent resolution. President Trump also acknowledged that the previous tariff level of 145% was unrealistic and indicated that future tariffs would not be set so high. Equity markets rallied significantly in response, with the S&P 500 and NASDAQ both climbing nearly 3% on Monday. Alongside this, a lower-than-expected US inflation print added further momentum to the rally. As a result, US markets have now fully recovered the losses incurred following the reciprocal tariff announcement on 2 April. While the tariffs were highly detrimental to both US and global markets, they had the intended effect on US customs revenue, with duties rising to $16.3bn in April—more than double the $7.1bn recorded in April 2024. In corporate news, Chime, the mobile banking group, has filed for an initial public offering in the US, with plans to list its shares on the NASDAQ. Chime had previously intended to go public in 2023 with a projected valuation of between $15bn and $20bn. Meanwhile, Kraft Heinz has committed $3bn to upgrading its US factories—the company’s largest investment in its production facilities in a decade. This move aims not only to reduce overall costs but also to mitigate tariff-related risks. Walmart, the world’s largest retailer and leading generator of cash, released its earnings results on Thursday. Revenues rose by 2.5% to $165.6bn. However, the company warned that it would need to raise consumer prices in the coming months due to the recent tariff escalation. For the week, the S&P 500 and NASDAQ closed 2.61% and 3.21% higher, respectively.

In Europe, markets rose last week amid easing trade tensions between the US and China. The Eurostoxx50 and STOXX 600 both gained over 1% on Monday, enough to return both indices to their March levels. The temporary reduction in tariffs between the two superpowers also benefited European luxury goods companies, with LVMH gaining 7.5% and Kering rising 6% on Monday alone. However, President Trump’s announcement of an executive order to lower prescription drug prices weighed on European healthcare stocks, with Novo Nordisk falling 8% on Monday. There were no significant economic data releases in the region. For the week, the Eurostoxx50 and STOXX 600 rose by 0.72% and 0.86%, respectively.

In the UK, the FTSE 100 tracked gains in both Europe and the US during the early part of the week, driven by the de-escalation of trade tensions between the US and China. UK-listed stocks with exposure to Asia benefited from this development, including mining companies Rio Tinto and Glencore, and financial groups HSBC and Standard Chartered. The UK economy grew by 0.7% in Q1 2025, surpassing expectations of 0.6% and marking the strongest quarterly growth in three quarters. This also represents the strongest Q1 GDP growth among the G7 nations and may signal renewed optimism regarding the UK’s economic outlook. For the week, the FTSE 100 closed 0.72% higher.