2025 W32 Global DM Market Recap

Markets Narratives

Macro Overview

• US Market: Nasdaq Composite set a fresh all-time high, with S&P 500 and Russell 2000 also advancing. Apple announced a new $100 billion investment in US manufacturing (in addition to a previously announced $500 billion). Fed September rate cut probability rose to roughly 90%. ISM services PMI declined to 50.1%, with employment contracting for the second consecutive month, but prices index rose to 69.9% (highest since October 2022). Jobless claims rose to 226,000, and continuing claims hit 1.97 million (highest since November 2021). US Treasuries declined, while municipal and corporate bonds outperformed.
• Europe Market: Pan-European STOXX Europe 600 Index ended 2.11% higher. Major stock indexes like Italy’s FTSE MIB (4.21%), Germany’s DAX (3.15%), and France’s CAC 40 (2.61%) also rose. The Bank of England cut its key interest rate by a quarter point to 4%, forecasting inflation to accelerate to 4% in September. Euro area retail sales expanded 0.3% sequentially and 3.1% year over year. German industrial output shrank 1.9% sequentially in June, with orders falling 1.0%.
• Japan Market: Nikkei 225 Index gained 2.50% and TOPIX Index was up 2.56%. The yen traded within the JPY 147 range against the U.S. dollar. The Bank of Japan’s board members debated the timing and pace of future interest rate hikes. Real wages fell 1.3% year on year, and household spending slowed sharply, rising 1.3% year on year.
• China Market: Mainland Chinese stock markets rose, with CSI 300 Index adding 1.23% and Shanghai Composite Index advancing 2.11%. Hong Kong’s Hang Seng Index rose 1.43%. Total exports in July surged 7.2% from a year ago to $322 billion, despite U.S.-bound shipments sinking 22% year on year. A private survey showed an unexpected uptick in services activity, with S&P China services purchasing managers index rising to 52.6.

Policy Developments

• US: Apple's investment in US manufacturing could exempt it from Trump administration’s steep tariffs on semiconductors. New round of global tariffs kicked in, but market reaction was muted. President Trump announced he would nominate Stephen Miran to temporarily fill a Fed Board of Governors vacancy, which some investors viewed as potentially favoring looser monetary policy.
• Europe: The Bank of England’s decision to cut rates was “finely balanced,” with future cuts expected to be gradual and careful.
• Japan: BoJ board members showed differing views on the policy outlook, with some suggesting a possible exit from the wait-and-see stance by year-end, while others emphasized continued monetary accommodation due to moderating growth and sluggish inflation.
• China: The strong trade data and services sector recovery suggest resilience despite trade tensions and weak consumer sentiment.