US stocks posted gains in a holiday-shortened week, led by the Nasdaq (+2.0%), as easing trade tensions supported sentiment. Markets rose after President Trump delayed a planned 50% tariff on EU imports and fast-tracked negotiations. However, late-week gains were trimmed after a court ruling against Trump’s tariff authority was temporarily blocked. Trade concerns resurfaced with comments about stalled US-China talks. PCE inflation cooled to 2.5% in April, its slowest pace in four years, though still above the Fed’s 2% target. Consumer confidence rebounded sharply in May, helped by easing trade tensions. Treasuries rallied on the court’s tariff ruling, while high-yield and investment-grade bonds gained on equity strength, upbeat sentiment, and strong demand.
European stocks rose, with the STOXX Europe 600 up 0.6%, after President Trump delayed tariffs on the EU. Germany’s DAX climbed 1.6%, and Italy’s FTSE MIB gained 1.5%. Slowing inflation in France, Spain, and Italy boosted expectations of a June ECB rate cut, though German inflation remained slightly above target. German unemployment rose by 34,000 in May, surpassing forecasts, while job openings dropped, signaling weaker labor demand. In the UK, confidence in the services sector fell to a 2.5-year low amid rising employment taxes and inflation concerns. April car production plunged nearly 16% y/y to the lowest level since 1952 (excluding pandemic years).
