US stocks ended the week slightly lower, with the Nasdaq holding up best. Tariff news, led by President Trump’s 25% levies on countries like Japan, South Korea, and a 50% tariff on copper, drove headlines but had a muted market impact. Delta Air Lines’ upbeat 2025 outlook boosted airline stocks, and NVIDIA briefly hit a $4 trillion market cap. FOMC minutes showed division on rate cuts, with some members open to a July cut while others see no cuts in 2025. Treasuries rallied midweek but fell later, though demand for 10-year notes was strong. Investment-grade bonds underperformed, while high-yield bonds followed equities. Bank loan markets were active with refinancing deals.
European stocks rose, with the STOXX Europe 600 up 1.1% on hopes for US trade deals, though gains were trimmed after President Trump threatened EU tariffs. France, Germany, Italy, and the UK all saw strong index gains, with the UK’s FTSE 100 hitting a record high. The UK economy shrank 0.1% in May, its second monthly decline, driven by weaker production and construction. Housing prices were flat, but activity improved. A mortgage guarantee plan is reportedly in the works to aid first-time buyers. Eurozone retail sales fell 0.7% in May, pointing to weak consumer demand. In Germany, industrial output rose 1.2%, but exports declined again. Italy’s output dropped 0.7%, nearly erasing April’s gain, as manufacturing remained sluggish.
