Global News Summary 19–24 May 2025
United States
Economic Growth & Debt:
Trump’s tax bill passed the House (23 May), extending 2017-era tax cuts and adding trillions to the national debt.
Moody’s downgraded US credit to Aa1 on 17 May, citing “unsustainable” fiscal policy and $9.3T debt maturing by March 2026.
Long-term yields rose: 10Y Treasury at 4.51% (24 May) amid poor auctions and growing fiscal risk.
Jobs & Inflation:
Inflation slowed to 2.3% YoY in April (reported 14 May), though tariffs’ full impact is yet to materialise.
Producer prices dropped 0.5% MoM in April (16 May), largest drop in years, suggesting profit margins under strain.
Tariff-induced inflationary risk remains a Fed concern; Powell held rates steady (8 May), citing wage and job pressure.
Trade & Policy:
Trump floated 50% EU tariffs starting 1 June if no deal is reached; Apple threatened with 25% levies.
China–US talks resumed, with industrial tariffs reduced temporarily.
$600B US–Saudi deals in defence and AI sectors announced (14 May).
G7 communique omitted China but pledged action against “global imbalances” (23 May).
Market Moves:
S&P 500 -0.7%, Nasdaq -0.9% (24 May); risk-off sentiment prevailed.
Gold +2% to $3,361/oz, Bitcoin -2.1% to $108,726.
United Kingdom
Economic Growth & Inflation:
GDP rose 0.7% QoQ in Q1 (16 May), fastest pace in a year.
Inflation surged to 3.5% in April (22 May), vs 2.6% in March, driven by energy, utilities, and airfares.
Markets now expect just one BoE rate cut in 12 months.
Jobs & Sentiment:
GfK consumer confidence rose to -20 in May, rebounding from April’s tariff slump.
Doctors, teachers, guards awarded 4% pay rise in line with review body guidance (23 May).
Net migration halved in 2024 to 431k amid visa clampdowns.
Policy & EU Relations:
UK–EU trade reset signed (20 May), estimated to boost GDP by £9bn. Starmer resisted EU customs union return.
Concessions on fishing access for 12 more years angered domestic critics.
Eurozone
Economic Growth & Trade:
EC cut 2025 GDP forecast to 0.9% (from 1.3%) amid trade turmoil (20 May).
Private-sector activity dropped to 49.5 in May (23 May), worst in over a year.
Inflation & Debt:
ECB officials (Wunsch, Lagarde) hinted at more dovish policy as tariffs threatened deflationary pressure.
German Bunds rallied, 10Y yield fell to 2.57% on safe-haven buying (24 May).
Policy:
EU mulls excluding foreign firms from tenders (“buy European” push) (22 May).
Lobster tariff waiver part of new EU–US talks package (23 May).
Japan
Economic Growth & Jobs:
Q1 GDP shrank 0.7% (16 May), even before tariffs fully hit.
CPI rose 3.5% in April, led by rice and energy (23 May).
Debt & Markets:
JGB yields surged, 30Y auctions weak (21–23 May), reflecting BOJ taper fears.
Yen rose +1% on haven flows as trade tensions escalated (24 May).
Politics:
PM Ishiba’s popularity declined post-tariff backlash (19 May); G20 pressure mounting.
China
Growth & Trade:
Industrial output rose 6.1% YoY in April (20 May), down from 7.7%.
Retail sales softened to 5.1% YoY.
Fiscal deficit hit ¥2.65T (~$367B) in Jan–Apr, a record (21 May), driven by stimulus.
Trade Policy:
Banned dual-use item export ban lifted (15 May) as part of US trade thaw.
Xi promoted “self-reliance” in manufacturing (21 May), stoking trade friction.
Australia
Jobs & Inflation:
April employment surged +89,000, jobless rate steady at 4.1% (15 May).
Markets pared back rate cut bets, pricing only 1 more this year.
Artificial Intelligence
Key Developments:
Oracle to spend $40B on Nvidia chips for OpenAI's US datacenter (24 May).
Nvidia builds Taiwan AI base, defying US pressure (21 May).
OpenAI acquired Jony Ive’s hardware firm for $6.4B (22 May).
Anthropic to launch new Claude AI models (23 May).
Apple to open AI APIs to third-party developers (21 May).
Thematic Takeaways
Economic Growth -US, UK, and China show resilience; Japan and Eurozone under pressure. Jobs Strong in US, UK, AU; Japan and Eurozone face stagnation.
Debt & Deficits - US credit downgrade + record deficits in China and Japan raise fiscal concerns.
Inflation - US cooling; UK and Japan heating; Eurozone stable but fragile.
Recession Risk - Still low in US, but high in Japan and EZ.
AI Investment - AI arms race intensifies: Nvidia, Oracle, OpenAI, and Apple drive global push.
ESG/Geopolitics -Tariff wars, “Buy EU” policies, and currency manipulation fears dominate.
Investor Strategy Takeaways – Week Ending 24 May 2025
Brace for Tariff Volatility:
Trump’s tariff threats against the EU and China remain a major market risk. With a 50% EU tariff deadline set for 1 June, investors should limit exposure to sectors most affected — especially autos, tech hardware, and consumer goods with high international input costs.Defensive Repositioning:
Safe-haven flows are picking up. Consider increasing allocation to gold, Swiss franc, and Japanese yen as geopolitical and fiscal risks intensify. Long-duration US Treasuries may remain volatile but still serve as partial hedges in risk-off episodes.Rotate from Big Tech to Value/Defensives:
Megacap tech stocks like Apple are under pressure from both tariffs and antitrust noise. Meanwhile, defensive sectors (e.g., healthcare, utilities) and industrial firms tied to defence and domestic infrastructure (e.g., US Steel) are gaining policy support.Watch US Fiscal Risks & Creditworthiness:
The Moody’s downgrade, rising yields, and soft Treasury auctions reflect deeper investor unease. Be selective with long-dated US credit and monitor bond spreads as sentiment towards US debt shifts.Focus on Earnings Quality & M&A Plays:
With profit guidance momentum falling, emphasis should be on companies with resilient free cash flow and M&A catalysts (e.g., Oracle–Nvidia, Salesforce–Informatica). Avoid over-leveraged firms in sectors vulnerable to policy shocks.Be Tactical with Currency Exposure:
The US dollar is weakening, but volatility is high. Consider active hedging or short USD positions against currencies with strong fundamentals and haven status, such as the yen, euro, and franc.Monitor Central Bank Signals:
Diverging monetary paths are re-emerging. The BoE is cautious, the ECB is dovish, and Fed cuts may be delayed. Markets may need to reprice timing of rate cuts, affecting equity valuations and FX carry trades.