Market Update

Monthly Market Roundup

5 June 2025
Invesco
Back view of tourists looking over London city skyline from Parliament Hill in Hampstead Heath
Key takeaways
1

European equity markets gain as trade war shows signs of de-escalation.

2

Chinese markets gained ground amid positive signals in US–China trade talks, hinting at a thaw in bilateral relations.

3

Indian markets rallied, supported by easing geopolitical tensions following a truce with Pakistan.

Summary 

Global equities rose in May, supported by easing US-China trade tensions and strong economic data. European markets advanced, led by Germany, Italy, and Spain, though defensives underperformed. UK stocks climbed on robust Gross Domestic Product and a Bank of England rate cut. US markets rallied, driven by tech and consumer discretionary. Asian equities gained on policy support and chip demand. Emerging markets outperformed. Bonds were mixed, and Eurozone inflation fell, with a European Central Bank rate cut expected.

Europe

European equities rose in May as US-China trade tensions eased, boosting cyclical sectors like technology and industrials. Financials gained on strong earnings, while defensives underperformed. Germany led gains, supported by infrastructure spending, while Italy and Spain benefited from a stronger euro. Eurozone inflation fell to 1.9%, driven by lower services inflation. Sentiment improved slightly, though the economy remains fragile. The ESI (Economic Sentiment Indicator) rose to 94.8, while flash Purchasing Managers’ Index (PMI) data declined slightly.

The UK

UK equities rose in May, supported by strong economic data and improved consumer confidence. The Bank of England (BoE) cut interest rates to 4.25%, with markets expecting further cuts. Inflation rose to 3.5%, driven by energy and services costs.  Gross Domestic Product (GDP) grew 0.7% in the first quarter, led by services and investment. Wage growth eased, while employment declined. Trade deals with the US, EU, and India boosted sentiment, alongside rising retail sales and warmer weather.

The US

US equities rebounded in May, with the S&P 500 posting its best monthly gain in 18 months. Markets were lifted by easing trade tensions and strong economic data. Inflation fell to 2.3%, supporting rate cut hopes, though the Fed held rates at 4.50%. Job growth beat expectations, and consumer confidence surged. Sector gains were led by tech and consumer discretionary, while healthcare lagged. PMI data signalled continued economic expansion.

Asia

Asian equities climbed in May, driven by easing US and China trade tensions and supportive domestic policies. Chinese stocks gained on tariff relief and central bank stimulus. Indian markets rallied on improved monsoon forecasts and easing geopolitical tensions. Taiwan and Korea benefited from strong semiconductor demand and rate cuts. Japanese equities rose on a weaker yen, despite weak consumer sentiment. Australian stocks advanced on rate cuts, energy gains, and renewed political stability.

Emerging Markets

Emerging markets performed strongly in May, with Latin America, Eastern Europe, South Africa, and the Middle East contributing to gains. Chile and Peru led Latin America, supported by mining rebounds and dovish central banks. Poland outperformed in Eastern Europe after its first rate cut in 18 months. South African equities rose on critical minerals talks and budget approval. Middle East markets gained despite tensions, with Saudi Arabia and the UAE benefiting from non-oil growth and upcoming global events boosting investor confidence.

Fixed Income

Government bond markets struggled in May amid US fiscal concerns and rising yields, with treasuries, UK gilts, and German bunds posting negative returns. In contrast, France, Spain, and Italy saw gains. Moody’s downgraded the US credit rating due to deficit concerns. Corporate bonds saw tighter spreads, with euro IG outperforming. High yield bonds delivered strong returns. The European Central Bank (ECB) is expected to cut rates in June, while UK inflation rose. Euro IG issuance hit €110 billion, matching a record from January 2009.

Download June's summary

Read previous editions

Related insights

  • Investment risks

    The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.   

    Important information

    Views and opinions are based on current market conditions and are subject to change.

    This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. 

    EMEA4558486