Please see below article received from Brooks Macdonald this morning, which provides a global market update for your perusal.
What has happened
Markets had a mixed first-trading day of the new month yesterday. The US S&P500 equity index rallied late in the day to finish up +0.41%, as strength in semiconductor stocks led the market higher despite weaker manufacturing survey data. Elsewhere, the pan-European STOXX600 equity index closed marginally lower at -0.14%, closing before that late US intraday rally had kicked in, while Asian equity markets overnight are mostly higher (all in local currency price return terms). Finally – breaking news this morning that the Dutch government has collapsed after the far-right Freedom party quit the governing coalition citing disagreement over migration and border control policy – if a new coalition cannot be formed, it is expected to trigger a snap general election – the timing is unfortunate given the Netherlands is due to host world leaders for a NATO (North Atlantic Treaty Organization) summit later this month.
US manufacturing data underwhelms
The latest US Institute for Supply Management (ISM) manufacturing survey for May was released yesterday. In it, the headline print was 48.5, a six-month low; it was down month-on-month from April’s 48.7, below 49.5 expected, and below the 50-midway point that divides between month-on-month surveyed economic activity contraction versus expansion. Of particular note, within the data, the imports index sub-component fell to 39.9, from 47.1 in April, below its low point during the Covid pandemic and at a level last seen back in May 2009 when the US economy was coming out of the 2008 Global Financial Crisis.
China manufacturing data weaker
Earlier this morning, China has released its own latest manufacturing survey activity data for May. The Caixin/S&P headline print was 48.3, below 50.7 expected, down from 50.4 in April, marking the lowest reading since September 2022, and the first sub-50 reading since September last year. The weaker print in part reflects a drop in the new export orders sub-component, which fell for the second month in a row and was at the lowest level since July 2023.
What does Brooks Macdonald think Tariff uncertainty between the US and China, triggered by US President Trump’s 2 April “Liberation Day” announcement, is already starting to show up in the data – as evidenced by weaker China export and US import data, respectively. Given the recent 90-day pauses in the most extreme parts of Trump’s tariffs, it will be interesting to see whether there might be a subsequent bounce-back in these export and import readings in the coming months. However, it suggests that even if this is the case, there will still be a high level of uncertainty around the range of economic forecasts, and which will likely keep markets on edge for the time being.
Please check in again with us soon for further relevant content and market news.
Chloe
03/06/2025