Global stock markets witnessed heightened volatility during the week, influenced by developments in trade policies, monetary expectations, and key corporate earnings. In this blog, we’ll know in detail what happened last week (May 26, 2025 to May 30, 2025) all across the globe.
Growing Risk of Inflation and Unemployment in the US
The markets welcomed a U.S. Court of International Trade ruling that blocked former President Trump’s April 2 tariffs, declaring the executive overstepped constitutional bounds. The Court emphasized that Congress holds sole authority over international trade, easing fears of renewed trade disruptions.
This also mitigated inflationary concerns tied to Trump’s tariff stance, which had previously alarmed the Federal Reserve. However, this relief was short-lived. On May 30, 2025, the U.S. Court of Appeals for the Federal Circuit issued a temporary stay on the lower court’s ruling, reinstating Trump’s tariffs pending the government’s appeal.
Meanwhile, the latest FOMC minutes indicated rising inflation risks and a weakening job market outlook. U.S. GDP contracted by 0.2% in Q1 2025-less than the earlier 0.3% estimate-but still marked the first contraction since 2022, following 2.4% growth in Q4 2024.
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European Markets Relieved on Rate Cut Outlook
European equity markets posted modest gains amid easing trade tension and rate cut expectations. The European Central Bank is anticipated to reduce its deposit rate by 25 basis points to 2.00% on June 5, marking the seventh consecutive cut in a prolonged easing cycle.
Eurozone GDP expanded by 0.4% in Q1 2025, supported by strong showings from Spain and Italy, while Germany continued to lag. April inflation held at 2.2%, but rising core (2.7%) and services (3.9%) inflation signaled underlying pressures. The European Commission expects 1.5% growth in 2025, with inflation forecast to decline to 2.4%.
China Market Declined Amid Trade Tensions
In China, markets declined slightly amid persistent trade tensions and softening indicators. Retail sales growth slowed to 5.1% in April, while industrial output beat expectations at 6.1%. However, the official manufacturing PMI likely remained in contraction territory at 49.5.
Despite Q1 GDP growth of 5.4% and strong tech investment, concerns persist over deflation, a weak property sector, and low consumer sentiment. Beijing reaffirmed its 5% growth target and pledged more policy support.
Japan faced inflationary and demand-side dilemmas. Tokyo’s core inflation reached a two-year high, while factory output dropped 0.9% MoM in April. Retail sales rose 3.3%, exceeding expectations, and unemployment held steady at 2.5%.
India Overjoyed on Fastest-Growing Economy
On the domestic front, Indian equity markets displayed resilience with a mixed yet generally positive trend, supported by broad-based buying across various sectors. Investor sentiment was buoyed by robust corporate earnings for the March quarter, improving monsoon forecasts critical for the agriculture sector, and global trade developments influencing export-oriented industries.
India’s macroeconomic fundamentals remained sound, with the Reserve Bank of India (RBI) maintaining its calibrated monetary policy stance. The central bank continues to operate in a withdrawal of accommodation mode, aiming to control inflation-which remains above the upper tolerance limit-while supporting economic growth.
The RBI reiterated that India is well-positioned to remain the fastest-growing major economy in FY26, driven by strong domestic demand. April 2025 industrial production data showed a slowdown to 2.7% year-on-year, primarily due to weaker output in the manufacturing, mining, and electricity sectors.
Market movements were also influenced by foreign institutional investor (FII) flows, fluctuations in crude oil prices, and the rupee’s exchange rate against the U.S. dollar.
Future Outlook
Sectoral rotation indicated a defensive stance among investors, with continued interest in financials, capital goods, and pharmaceutical stocks. These sectors also offer attractive growth opportunities in the evolving post-pandemic global economy.
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Reference:
SMC Global Securities’ Research Team
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