USA

Over the past week, U.S. economic data presented a mixed picture. The second estimate for Q1 GDP showed a 0.2% annualized contraction, driven largely by a surge in imports that widened the trade deficit. Initial jobless claims rose by 14,000 to 240,000, suggesting a softening labor market. However, manufacturing activity offered a bright spot, with the S&P Global Manufacturing PMI climbing to 52.3 in May—its highest in three months—indicating expansion. Inflation showed signs of moderating, with April’s annual CPI easing to 2.3%. On the policy front, Fed Governor Christopher Waller maintained a dovish tone, signaling openness to rate cuts later this year. Equity markets responded positively overall: the S&P 500 and Nasdaq gained 1.9% and 2% respectively for the week, while the Dow rose 1.6%.

Europe

In Europe, economic signals were subdued as the region continued to grapple with tepid growth and lagging inflation. Eurozone annual inflation remained steady at 2.2% in April, while Q1 GDP growth registered a modest 0.3% quarter-over-quarter. However, forward-looking indicators weakened, with the flash PMI for May declining to 49.5 from 50.4—signaling contraction in private sector activity. Market expectations solidified around a 25-basis-point rate cut by the European Central Bank in early June, as the ECB attempts to stimulate growth amid persistent economic stagnation. European equities reflected cautious optimism; the STOXX Europe 600 posted a year-to-date gain of 8.5% as of May 27, supported by improving sentiment in sectors like real estate and utilities despite the structural challenges facing Europe’s tech landscape.

Japan

Japan’s economic narrative this week was shaped by persistent inflation and tentative signs of stabilization in manufacturing. Tokyo’s core CPI rose to 3.6% year-over-year in May, the highest level in two years, driven by strong services inflation. This fueled expectations that the Bank of Japan may consider a rate hike in the coming months. On the industrial front, the au Jibun Bank Manufacturing PMI for May rose to 49.4 from 48.7 in April, showing a slower pace of contraction. However, trade-related uncertainties, particularly U.S. tariffs and their implications for Japanese exports, remained a headwind. Despite the inflationary pressure and uncertain external environment, Japanese equity markets held relatively steady, supported by expectations of stable monetary policy and a rebound in domestic consumption.

China

China faced renewed headwinds amid escalating global trade tensions and domestic structural challenges. Moody’s downgraded its 2025 GDP growth forecast for China to 3.8%, citing the impact of U.S. tariffs and weakening global demand. The lack of updated PMI data during the week left investors relying on broader sentiment indicators, which remained cautious. In response to economic pressures, analysts expect Chinese authorities to announce additional fiscal stimulus in the coming weeks, with a focus on infrastructure spending and household consumption support. Market confidence was fragile; though specific index figures for the Shanghai Composite and Hang Seng were not reported, sentiment remained dampened by concerns over policy effectiveness and geopolitical risks. Investors will be watching closely for signals of policy shifts at upcoming government meetings.