Weekly Market Review: 26th May 2025

In the US, equity markets remained largely subdued throughout last week, with a light economic calendar and no unexpected trade or political developments. The 90-day truce between the US and China held, with negotiations ongoing between the two superpowers. Markets showed signs of unease as US borrowing costs rose following Moody’s downgrade of the country’s credit rating. Moody’s cited rising levels of government debt and the widening fiscal deficit as key reasons for the downgrade. The House of Representatives narrowly passed President Trump’s new tax bill, which is expected to increase the budget deficit by nearly $3tn over the next decade and includes a $4tn rise in the US debt ceiling. In corporate news, Equinor – the state-owned Norwegian energy company – announced the resumption of construction on its $5bn Empire Wind project in New York City. This follows discussions with US regulators and federal officials. The project had been halted on 16 April by the Trump administration, citing inadequate analysis at the time of approval. Elsewhere, Tesla stood out as one of the few large-cap gainers, rising 2% after Elon Musk reaffirmed his commitment to remain as CEO for the next five years. US equities declined on Friday after President Trump reignited trade tensions by issuing new tariff threats against both Apple and the European Union. For the week, the S&P 500 and NASDAQ closed down by -1.92% and -0.91%, respectively.

In Europe, similar to the US, European markets were generally muted earlier in the week, amid a light economic calendar and an absence of major earnings reports. Investors continued to monitor the geopolitical landscape, particularly after President Trump announced he would defer peace negotiations in the Ukraine conflict to Russia and Ukraine directly. He also claimed on Monday that Russia would begin working towards a ceasefire immediately. On the economic front, the European Commission revised its growth forecasts for the Eurozone downward, citing the impact of US tariffs. European stocks closed sharply lower on Friday, reflecting the potential impact of proposed U.S. tariffs, after President Trump announced he had recommended a 50% tariff on the European Union—posing a threat to demand from a major export market. For the week, the Eurostoxx50 and STOXX 600 closed down by -1.62% and -0.57%, respectively.

In the UK, Airline stocks outperformed last week after news emerged that British tourists would regain fast-track access at European borders. Shares in EasyJet and IAG rose by over 2% in response. Diageo – owner of the Guinness and Johnnie Walker brands – announced a $500 million cost-cutting initiative, which includes potential asset disposals by 2028, in its bid to turn around performance and reduce debts. Shares in the company have declined by 24% over the past year. Vodafone, meanwhile, pledged to invest £1.5 billion in upgrading its UK network in 2025. The investment will go towards expanding national coverage and improving technical infrastructure. The telecoms giant is also nearing completion of a merger between its UK operations and Three, which will give Vodafone a 51% ownership stake and an additional 28 million customers. For the week, the FTSE 100 closed up by 0.58%.