Midweek trading saw global equity markets treading water as investors absorbed fresh signals pointing to a deceleration in the U.S. economy and growing complexity in international trade negotiations. Despite no dramatic moves across major indices, caution prevailed due to subdued economic data and geopolitical concerns.
United States: Employment Disappoints, Services Contract
Economic momentum in the U.S. showed signs of fatigue. According to the ADP report, the private sector added only 37,000 jobs in May, a figure that fell well below market expectations. Simultaneously, the ISM Services PMI came in at 49.9, dipping into contraction territory for the first time in almost a year. These disappointing figures sent a clear signal that economic activity may be softening.
As a direct consequence, bond markets responded with declining yields. The benchmark 10-year Treasury yield settled near 4.36%, reflecting increased investor demand for safety. Equities had a muted session: the S&P 500 ended essentially flat, the Nasdaq managed a modest uptick, while the Dow Jones Industrial Average slipped around 0.2%. Investors appear to be increasingly hesitant as they weigh near-term risks against long-term opportunities.
In after-hours trading, shares of Five Below and MongoDB surged by 4.6% and 14.6%, respectively, following better-than-expected earnings and revenue results, signaling continued investor appetite for strong corporate results despite broader macro concerns.
Global Trade Uncertainty: Spotlight on U.S. and China
Trade tensions remained front and center as the market awaited the outcome of a critical deadline for U.S. tariff negotiations. All eyes were on President Trump and his expected dialogue with Chinese President Xi Jinping. While some market participants hoped for constructive progress, most analysts agree that a meaningful resolution is unlikely in the short term. The broader view suggests that the U.S. remains committed to reshaping its industrial landscape through domestic investment and strategic onshoring, which could delay comprehensive trade agreements.
Corporate Moves: Winners and Losers in Focus
Market activity in individual stocks provided a mix of outcomes:
- Meta Platforms rallied over 3% after JPMorgan raised its price target, highlighting continued confidence in its long-term prospects.
- Tesla declined by 3.5% amid disappointing sales data in European markets.
- Hewlett Packard Enterprise shares gained after strong results driven by increased demand for AI servers and hybrid cloud infrastructure.
Asia-Pacific Markets: Mixed Sentiment Amid Political and Trade Headlines
Equity markets across Asia reflected a cautious tone. While broader indices in the region mostly declined due to the backdrop of uncertain U.S. trade policy and weaker global data, Hong Kong and South Korea stood out positively. These markets gained on the back of renewed optimism in the technology sector and favorable political developments, particularly in the wake of South Korea’s presidential election.
European Optimism: Policy Support and Trade Progress Lift Sentiment
In Europe, the tone was more upbeat. Investor confidence received a boost following the German government’s approval of a €46 billion tax relief package designed to stimulate economic growth. Simultaneously, progress in EU-U.S. trade negotiations added another layer of support. Notably, shares in Airbus jumped over 4% after reports emerged regarding a possible major aircraft order from Chinese airlines, underlining a rebound in global travel demand.
Currency and Commodities: Dollar Weakness and Oil Price Pressure
The U.S. dollar remained under downward pressure, with the Dollar Index falling below 99. This move was largely a reaction to the underwhelming economic data, which in turn raised doubts about the Federal Reserve’s near-term policy direction. The euro appreciated as a result, with EUR/USD reaching 1.1415, marking a six-week high.
Oil markets experienced a pullback as U.S. gasoline and diesel inventories grew more than anticipated. This decline was compounded by Saudi Arabia’s decision to cut July crude prices for Asian buyers to near four-year lows. Meanwhile, OPEC+ agreed to increase production by 411,000 barrels per day in July, reinforcing the bloc’s strategy to regain lost market share.
China’s Mixed Economic Signals
China’s services sector provided a glimmer of positivity as the Caixin Services PMI rose to 51.1 in May, reflecting solid domestic demand. However, weakness in manufacturing continued to weigh down overall business activity, as evidenced by the Caixin Composite PMI falling to 49.6. The conflicting signals suggest that while Chinese consumers remain resilient, export-driven industries continue to struggle under the strain of ongoing trade tariffs and global demand challenges.
Corporate Developments and Analyst Ratings
Several notable shifts took place in the corporate arena:
- A U.S. auto suppliers’ group voiced serious concerns over China’s rare earth export restrictions, warning of potential disruptions in key automotive components. This has already led to temporary shutdowns in European manufacturing plants and prompted major carmakers like Mercedes-Benz and BMW to reevaluate their sourcing strategies.
- Raytheon secured a $1.1 billion deal from the U.S. Navy to produce 2,500 AIM-9X Block II missiles annually, reflecting continued strength in the global defence sector and aligning with President Trump’s $892.6 billion defense budget request for 2026.
- Uber launched new features aimed at improving accessibility for older users through senior accounts and Simple mode, including simplified interfaces and family support options, now available across the U.S. and select global markets.
- Meta Platforms is making strategic moves in virtual reality, negotiating with major film studios like Disney and A24 to develop exclusive immersive content for its upcoming premium VR headset “Loma”, due next year. The device, priced under $1,000, is being positioned as a direct competitor to Apple’s Vision Pro, offering a sleeker, eyeglass-like design with higher-fidelity visuals.
- In legal developments, Reddit filed a lawsuit against AI firm Anthropic, accusing it of using Reddit data to train its Claude chatbot without permission and refusing a licensing agreement. Reddit claims this breach enriched Anthropic by billions and is seeking damages along with an injunction.
- Bank of America identified Robinhood as a prime candidate for inclusion in the S&P 500 during the upcoming rebalancing expected Friday. This could significantly enhance its market visibility and attract passive fund inflows.
- Thyssenkrupp announced plans to spin off 49% of its defense division, TKMS, to shareholders later this year while retaining majority ownership. The move aligns with the firm’s shift toward a holding company model and is supported by a record €18 billion order book.
- Bernstein analysts reaffirmed their positive view on Microsoft, citing expectations that AI-related margins will improve over time, supporting long-term profitability despite current development costs.
- Needham downgraded Apple to Hold from Buy, citing mounting earnings risks, valuation concerns, slowing smartphone demand, and geopolitical risks in China. They suggested a more attractive entry point between $170 and $180 per share.
- Bank of America downgraded CrowdStrike to Neutral, citing its high valuation and slowing future revenue growth. While praising current performance and initiatives like Falcon Flex, analysts highlighted the company’s 73x implied P/E ratio as a potential headwind.
- UBS upgraded Snowflake to Buy, citing strong enterprise demand for AI-driven data infrastructure, improving customer sentiment, and a price target of $265, forecasting nearly 30% growth by late 2025.
- Citi upgraded DHL Group to Buy from Neutral, raising the target price to €48, forecasting margin expansion and volume recovery. Analysts expect Express EBIT margin to rise to 13.4% in 2026 and 13.7% in 2027.
- Bernstein initiated coverage of the U.S. entertainment sector with Outperform ratings on companies including Spotify and TKO Group, citing monetization of superfans and premium experiences as key growth drivers. Analysts set a 24% upside target for Spotify at $825.
Looking Ahead: Economic Data and Earnings to Watch
Investors are preparing for a wave of important economic data releases from both the U.S. and Europe, including factory orders, producer price indexes, job cut announcements, and the European Central Bank’s interest rate decision. Additionally, upcoming earnings reports from DocuSign, Broadcom, and Lululemon Athletica will offer valuable insights into sector performance and consumer trends.
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