Main U.S. equities indices closed higher for the 2nd week in a row. The Russell 2000 Index outperformed (up +3.2%), while the Nasdaq (+2.2%) and the Dow (+1.2%) both advanced to join the S&P 500 Index in positive territory for the year. At the sector level, Tech outperformed, due in part to upbeat sentiment around AI-related stocks. Tesla was a notable underperformer on the back of Trump-Musk breakdown. On the trade side, tensions between the U.S. and China continued to re-escalate and then eased on Thursday, as Trump and Xi Jinping held a phone call that “resulted in a very positive conclusion for both countries,” according to a social media post from Trump. The highlight of the week’s economic calendar arguably came from Friday’s closely watched US nonfarm payrolls report, which seemed to indicate the labor market is cooling but at a slower pace than many were anticipating. This helped offset the “Musk-Trump tantrum”. Meanwhile, US ISM Manufacturing contracted for the third month in a row; services activity contracted for first time in 11 months. Jobs report sent US Treasury yields higher. The dollar was down this week to its lowest weekly close since July 2023. In Europe, the ECB trimmed its deposit rate by a quarter point to 2%, the lowest level since 2022 as Lagarde said Lagarde says policy “nearly concluded”. The Stoxx Europe 600 index gained 0.9% during the week. Gold managed modest gains, oil prices rallied strongly, hitting a six-weeks high. Bitcoin was slightly lower.
Have a great week-end
Charles for the team