Please see below article received from M&G Wealth yesterday afternoon, which provides an insight into market movements and the broader economic landscape.
This week’s highlights
- Markets rise despite mixed economic data: stocks and bonds gained over the week.
- US-China trade talks offer optimism: S&P 500 now up 20% from April lows.
- Tesla tumbles: a heated exchange between President Trump and Elon Musk unsettled investors.
Market review
Early in the week, US economic reports pointed to challenges in manufacturing and services sectors. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) fell, signalling contraction for the third consecutive month and ISM Services PMI had its first decline in nearly a year.
The US labour market showed mixed signals. Job openings exceeded expectations at 7.4 million. However, a recent employment report showed a slowdown, with only 37,000 new jobs added in May – the lowest since March 2023.
US President Trump and China’s President Xi held a phone conversation aiming to ease tensions. While details on trade negotiations remained unclear, markets responded positively, with the S&P 500 briefly entering a bull market – up 20% from April lows.
However, momentum slowed later in the week following an exchange of sharp words between President Trump and Tesla CEO Elon Musk. Their disagreements ranged from recent spending legislation, past political ties and concerns over government contracts. Tesla shares fell 14.26% on Thursday.
Outlook
The economic environment has been resilient so far. The recent stumbling blocks posed to tariff implementation on the scale initially laid out, have offered a temporary reprieve for world leaders and policymakers. We expect markets to remain volatile as the legality of Trump’s tariffs moves into the spotlight, meaning nations may pause or pivot on their efforts to strike trade deals with the US.
Chart of the week
ECB reduces interest rates The European Central Bank (ECB) has reduced interest rates again, bringing the deposit rate down from 2.25% to 2%. This marks a significant shift, as rates have now been cut by half since their peak in September 2023.
The decision comes in response to declining inflation in the eurozone, which fell to 1.9% last month – below the ECB’s 2% target. Additionally, the central bank adjusted its inflation forecasts, lowering projections for 2025 and 2026 to 2% and 1.6%, respectively.
ECB President Christine Lagarde highlighted concerns about ongoing tariff uncertainty and its potential impact on economic growth, reinforcing the need for rate cuts. However, she also suggested that the ECB is nearing the end of its rate-cutting cycle.

What this means for you
Varying inflation levels and trade tariff uncertainty continues to influence market performance across the globe, strengthening the importance of maintaining a well-diversified long-term investment approach, rather than reacting to short-term market swings. By staying committed to carefully considered plans, investors can navigate through periods of volatility and uncertainty.
Please check in with us again soon for further relevant content and market news.
Chloe
10/06/2025