USA
During the last week, the U.S. economy presented a mixed picture. Inflation remained sticky, with May's CPI holding at 2.4%, reinforcing the Federal Reserve's cautious stance on rate cuts. Economic growth showed signs of moderation, with the Atlanta Fed revising its Q2 GDP forecast slightly downward to 3.5%. Meanwhile, retail sales fell 0.9% in May and the Conference Board’s Leading Economic Index declined 0.1%, signaling potential headwinds. Labor market data reflected this cooling trend, as initial jobless claims continued to inch upward. Nonetheless, consumer sentiment improved sharply, with the University of Michigan's index rising to 60.5, the highest since February. The equity markets reflected this uncertainty: the S&P 500 and Nasdaq slipped around 0.4% and 0.5% respectively, weighed down by soft economic data and cautious corporate guidance, while the Dow Jones posted a flat to slightly negative performance.
Europe
In Europe, data pointed toward a fragile and uneven recovery. UK output price inflation hit a four-year low, and PMI data signaled slower expansion across the region. The UK’s flash composite PMI eased to 50.7, suggesting near-stagnant growth, and Q2 GDP is expected to slow significantly after a stronger Q1. The ECB and Bank of England are both expected to proceed cautiously with monetary easing, particularly after recent rate cuts failed to spark stronger growth momentum. Geopolitical risks, especially rising oil prices due to Middle East tensions, have renewed inflationary concerns despite the soft economic backdrop. European equities responded negatively: the STOXX Europe 600 declined, and major indices such as the DAX, CAC 40, and IBEX 35 fell between 1% and 2% for the week. The FTSE 100 held up slightly better, supported by energy sector gains.
Japan
Japan's economy offered modestly positive signals. Flash PMI data for June showed manufacturing activity returning to expansion territory at 50.4, breaking an 11-month contraction streak. Services PMI also improved to 51.5, pushing the composite reading to a four-month high of 51.4. Employment grew at its fastest pace in nearly a year, and output prices rose at the quickest rate in four months, even as input costs eased. Despite these improvements, investor sentiment remained fragile, partly due to global risk aversion and the potential impact of energy price spikes. The Bank of Japan maintained its cautious approach, seeking financial stability amid bond market volatility. Japanese equities mirrored this uncertainty: the Nikkei 225 declined about 1% for the week, while the broader TOPIX also trended lower.
China
In China, economic indicators remained underwhelming, as the country continued to grapple with its real estate crisis. New home prices continued to decline, reflecting ongoing weakness in the property sector, although earlier in the week, a brief spike in retail sales offered a glimmer of resilience. Inflation remained moderate around 2%, and the overall 2025 GDP growth forecast was held at 4.5%. However, investor confidence was dampened by the lack of progress in trade talks with the U.S., which resumed in London without substantive breakthroughs. On the equity front, both the Shanghai Composite and Hang Seng indices fell over the week, pressured by domestic economic uncertainty and a broader global shift toward risk aversion due to geopolitical tensions in the Middle East. Policymakers are expected to maintain accommodative policies in the near term to support domestic demand and financial stability.