Weekly Market Review: 2nd June 2025

In the US, markets rebounded at the start of a shortened trading week last Tuesday, following closure on Monday for Memorial Day. Trade and tariffs returned to the spotlight, with President Trump announcing a postponement of the 50% tariffs on EU imports, which had been scheduled to take effect on June 1st.  The tariffs are now set to begin on July 9th, with hopes that a deal can be reached between the US and EU beforehand. However, following the ruling by the US Court of International Trade, the current tariff regime could be in jeopardy, potentially leading to prolonged legal battles between the White House and the judiciary. The Trump administration also urged US companies to cease the sale of software used in semiconductor design to China, in a further attempt to impede China’s progress in producing high-end chips. Another major development last week was NVIDIA’s earnings call. The former most valuable company in the world has served as a key barometer for the AI and semiconductor sectors over the past two years, with its performance closely tied to other major players in the industry. In Q1, revenues rose by 70%, despite new US restrictions on semiconductor exports to China during the same period. NVIDIA reported revenues of $44.1 billion, nearly $1 billion ahead of market expectations, with Q2 revenues projected to reach $45 billion. The company took a $4.5 billion hit due to export curbs on China, with an additional $2.5 billion in lost sales. Data centre revenues made up 89% of NVIDIA’s total revenue in Q1, underscoring continued strong demand driven by the AI boom. On the economic front, the Federal Reserve released minutes from its May meeting, which indicated that FOMC participants were in agreement on maintaining a cautious approach to monetary policy. Every member also expressed concern about the risk of inflation proving more persistent than previously anticipated. GDP forecasts for 2025 and 2026 were revised downward from March estimates, reflecting the anticipated impact of tariffs on the US economic outlook. For the week, the S&P 500 and NASDAQ rose by 2.37% and 2.72%, respectively.

In Europe, equity markets rose early last week, buoyed by the US postponement of EU tariffs however pulled back later in the week. There is now optimism that the EU and US can agree on a trade deal before the 9 July deadline. In corporate news, four of Europe’s oldest industrial groups — Legrand, Schneider Electric, ABB, and Siemens — have added €150 billion in combined market capitalisation since late 2022, driven by increased demand for AI-related infrastructure. Schneider has become one of Europe’s most valuable companies, surpassing French energy giant TotalEnergies in market cap terms. European tech stocks, particularly ASML and SAP, also benefited from NVIDIA’s positive results. For the week, the Euro Stoxx 50 and STOXX 600 closed lower, down 0.53% and 0.18%, respectively.

In the UK, it was a shortened trading week with a Bank Holiday, and the FTSE 100 traded mostly flat for the week. There was increased optimism regarding trade after the US paused tariffs on the EU on Monday and the ruling by the US Court for International Trade that the current reciprocal tariffs were unlawful. However caution still abounded, and overall lower movements as markets enter the typically quieter summer period. For the week, the FTSE 100 closed 0.09% higher.