SVET Markets Weekly Update (May 5–9, 2025)
On Week 19, major indexes showed modest declines as investors ponder on Fed’s rate decision, Powell’s comments, and a trade war twists and turns. At the same time crypto shoot up on traders’ temporary optimism.
On Monday, stocks were uncertain as PMI rose unexpectedly in April, rebounding from a nine-month low. New orders and inventories grew faster, while employment contracted more slowly. Price pressures surged to a 26-month high, with respondents citing tariff impacts and federal budget cuts as concerns. China’s Caixin Services PMI fell, missing forecasts and marking the weakest growth since September. New orders slowed sharply amid US tariff disruptions, while employment and business sentiment declined. Input costs rose, but firms cut output prices to boost sales. Crypto were mostly in the green.
On Tuesday, stocks were mixed as the trade deficit hit a record $140.5B in March, surpassing forecasts. Imports surged ahead of expected tariffs. The gap widened with the EU and Vietnam but narrowed with China and Canada. In April, the Eurozone’s PMI dipped, though it still marked four months of growth. Services remained stable, while manufacturing shrank less. New orders fell, but output rose. Hiring continued, and cost pressures eased. Tariff worries dampened future expectations. Eurozone industrial producer price inflation slowed to 1.9% year-over-year in March, down from 3.0% in February. Energy and intermediate goods drove the decline, while capital and non-durable goods saw faster price growth. Monthly prices fell 1.6%, the steepest drop since May 2023. The crypto market lingered as investors continued to accumulate.
On Wednesday, Stocks mostly fell as Fed warnings about stagflation and persistent tariffs weighed on markets. Alphabet plunged on reports that Apple may end their search partnership. The Fed held rates at 4.25%-4.50%, maintaining policy for the third straight meeting amid Trump tariff risks. While noting solid growth and low unemployment, policymakers warned of rising inflation and economic uncertainty.
World’s Markets:
- The Eurozone construction PMI edged up in April, signaling a slower contraction — the mildest since February 2023. While new orders and employment continued to fall, input costs rose at their fastest pace in a year. Germany improved slightly, France weakened, while Italy stabilized.
- Eurozone retail sales fell month-over-month in March, while annual growth slowed to 1.5% — the weakest since July 2024.
Commodities and Currencies:
- The dollar index fluctuated near 99.5 after the Fed held rates but warned of growing economic risks. Markets still expect three rate cuts in 2024.
Crypto:
- The crypto market remained stagnant.
The State Of Markets: Mixed, after Fed kept its rates steady.
On Thursday, stocks rallied after Trump announced a UK trade deal framework, boosting optimism. Tech stocks rebounded, while jobless claims dropped to 228K, below forecasts, reversing the prior week’s 2-month high. Inflation expectations held steady at 3.6%. Gas, medical, college, rent, and home prices saw higher expected costs, while food prices dipped. Three-year expectations rose to 0.2% (highest since July 2022), but five-year forecasts eased to 2.7%. The Fed’s balance sheet increased to $6.7T. Since 2002, the average was $3.8 trillion, peaking at $8.9T in April 2022. The crypto market is on the rise, with BTC hitting $100K.
On Friday, stocks were flat as investors awaited China trade talks. Mixed earnings and tariff uncertainties kept markets cautious. China’s April producer prices fell, marking the 31st straight month of deflation and the sharpest drop since October 2024, driven by trade tensions and weak demand. Costs for materials declined further, while consumer goods prices remained low. Crypto market was climbing, with ETH outpacing BTC.
On Week 20, markets will focus on trade talks, inflation, retail sales, and Fed speeches. Key earnings from Walmart, Alibaba, and others are due. Global highlights include UK GDP, China’s economic data, and Germany’s sentiment index. Japan and India will release GDP and trade figures.