Please see below, Brooks Macdonald’s Daily Investment Bulletin which highlights the key factors currently impacting global investment markets. Received today – 06/06/2025
What has happened?
Equity markets struggled for direction yesterday with positive and negative news flow creating a tug-of-war for investors. While market sentiment got a boost from a positive read-out of a telephone call between US and China Presidents Trump and Xi, against this there was an unexpected rise in weekly US initial jobless claims, hitting a 7-month high. Adding to downside pressure on markets, while the European Central Bank yesterday cut interest rates as expected, unexpectedly it laced the move with hawkish commentary saying that it was “nearly concluded” with the rate-cutting cycle. Later today, all eyes are on the latest (May) US non-farm payrolls employment data, due out at 1.30pm UK time – a Reuters survey of economists is looking for +130,000 jobs added in May, which if that is the number would be the smallest gain in 3 months.
Musk and Trump have a very public falling-out
A dramatic falling-out played out over social media yesterday between the world’s richest man Elon Musk and US President Trump. Musk’s Tesla share price plummeted -14% on Thursday, while Trump’s social media platform share price (Trump Media and Technology) dropped -8%. Trump said he was “disappointed” by Musk’s criticism of Trump’s tax and spending cut bill, while Musk said Trump would have lost the election without his support and responded “yes” to a suggestion that Trump should be impeached. Following Trump’s threat to “terminate” Musk’s companies’ government contracts, Musk has since signalled he might be open to a cooling-off period in his war of words with Trump.
ONS reporting error weakens confidence in UK economic data
The UK Office for National Statistics (ONS) yesterday admitted that Consumer Price Index (CPI) inflation data for April was overstated. The error arose from Department of Transport data where the number of vehicles subject to tax in the first year of registration was too high. It means that the annual all-items CPI reading for April should have been +3.4%, and not +3.5% as was previously reported. Nonetheless, the correct figure of +3.4% was still higher than the +3.3% that had been expected at the time and was still sharply higher versus the +2.6% reported in March. Despite the error, the ONS said it would not be revising the official published (now incorrect) figure. The next (May) monthly CPI print from the ONS is due out Wednesday 18 June.
What does Brooks Macdonald think?
Economic data quality is crucial. It is hard enough for businesses, consumers and investors to discern the economic outlook, let alone if the quality of the data cannot be trusted. This is not the first time the ONS has had data issues, but it is not a UK-only phenomenon – the US Bureau of Labour Statistics (BLS) announced only this week that it had “suspended CPI data collection entirely” in parts of Nebraska, Utah, and New York, due to government cutbacks resulting in fewer people and resources available to do all the statistical work necessary – in BLS parlance, it said that “current resources can no longer support the collection effort”. All in all, question marks around economic data quality and reliability add an unwelcome layer of uncertainty for investors to have to navigate.
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Alex Kitteringham
6th June 2025