Global News Summary 5 – 10 May 2025

Written By Larry Lim

Summary

Global markets navigated renewed trade war tensions as President Trump floated an 80% tariff on China ahead of weekend talks, while finalising a limited trade deal with the UK. The Fed held rates steady, warning tariffs could spark inflation and job losses, as April US jobs rose by 177,000 but consumer sentiment plunged. The UK cut rates to 4.25% amid fiscal pressure, while the ECB signalled flexibility on easing. China and Japan reopened trade discussions with the US, while Australia, Canada, and Switzerland showed mixed data. AI saw major M&A activity, and global investors remain cautious amid high inflation risks and geopolitical uncertainty.

United States

Trade & Tariffs

  • Trump threatened up to 80% tariffs on Chinese imports ahead of 11 May trade talks.

  • China expressed interest in reopening negotiations but insisted the US show “sincerity”.

  • UK-US trade pact finalised: UK secured relief on car and steel tariffs, but the flat 10% levy on other goods remains.

Monetary Policy

  • Fed held rates steady for the third meeting. Chair Powell warned tariffs could lead to higher inflation and weaker job growth.

Jobs & Inflation

  • April nonfarm payrolls: +177,000 (vs. 135k consensus). Unemployment steady at 4.2%.

  • Consumer sentiment plunged. Long-term inflation expectations hit highest since 1991.

  • Fed officials (Kugler, Barkin, Barr) warned tariffs may reduce margins and trigger inflation.

Markets

  • S&P 500 ended flat after a $6T rally in prior weeks. Dow -0.3%, Nasdaq stable.

  • 10Y UST yield at 4.38%. Market expects rate cuts delayed to Q3.

  • Dollar rallied midweek but ended the week down 0.2%, with rising demand for non-USD FX hedging.

  • Bitcoin up 2.1% to $103,200, Ether +6.7% to $2,332.

United Kingdom

Fiscal Policy

  • Reeves rejected wealth tax hikes despite pressure from fiscal overshoot (£15bn above target).

  • Parliament committee said social care reforms risk failure without proper financial backing.

Monetary Policy

  • BOE cut rates 25bps to 4.25%, signalled caution due to tariff fallout.

  • BOE's Bailey and Greene warned tariffs may dampen growth and even lower prices.

Trade

  • UK agreed to limited US trade deal; also discussed mobility schemes with the EU.

  • Brussels offered easier professional qualification recognition to support post-Brexit reset.

Eurozone

Trade

  • EU threatens €95bn in retaliatory tariffs by July if no deal is reached with the US.

  • Brussels paused steel/aluminium countermeasures for 90 days.

Growth & Inflation

  • German industrial production +3.0% MoM in March, boosted by pre-tariff demand.

  • Eurozone April business confidence dropped to 50.1 (from 50.9).

  • ECB officials (Villeroy, Lagarde) noted inflation risks have subsided, opening door to rate cuts.

China

Economy & Policy

  • April services PMI (Caixin) dropped to 50.7, lowest in 7 months.

  • PBOC cut policy rate and RRR to support economy ahead of trade talks.

  • China exploring lifting EU sanctions to revive stalled investment deal.

Trade

  • Reengaged with US, calling for “sincerity”; wary of Trump’s 145% tariffs, with more threatened.

  • Chinese companies urged to shift from exports to domestic sales.

Japan

Trade

  • Tariff talks resumed; Japan pushing for June deal. Auto and agriculture dominate the agenda.

  • Finance Minister flagged $1T UST holdings as a potential trade negotiation “card”.

Inflation & Labour

  • CPI ex-fresh food +3.2% YoY in March.

  • Nominal cash earnings +2.1% in March (vs. 2.7% Feb).

  • BOJ expected to proceed cautiously with rate hikes due to rising trade uncertainty.

Canada

  • GDP shrank in Q1; PM Carney rejected Trump’s provocative offer to make Canada the “51st state”.

  • Unemployment remains the highest in G7 at 6.8%.

Australia

  • Household spending -0.3% in March due to storm disruptions.

  • Job ads up 0.5% MoM in April; AUD rose on easing global trade fears.

Switzerland

  • Inflation at 0% YoY in April, a four-year low, led by a strong franc and cheaper imports.

  • SNB reaffirmed willingness to intervene in FX markets if needed.

Artificial Intelligence

  • OpenAI bought Windsurf (ex-Codeium) for $3B – largest acquisition yet.

  • ServiceNow expects AI product ARR to hit $1B by 2026.

  • Apple + Anthropic partner on "vibe-coding" platform.

  • Google admitted it may use web content for training even without opt-in — raised concerns.

ESG & Market Trends

  • ESG bonds up 12% YoY, but US ESG funds face political and performance pressures.

  • Central banks remain cautious — "wait and see" is the dominant strategy across the G10.

Larry Lim
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