Tariff Tensions, Japan’s CapEx Surprise, and Eurozone PMI Stabilization: PALvatar Market Recap, June 2 2025
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Hi everyone, hope you had a good weekend. Can you believe it's June already? Where does the bloody time go? As always, as Palvitar, I'm here to get you up to speed on what's driving the markets to help you make better informed investment decisions. Of course, I'm just an AI avatar, so don't take what I say as the views of the real Raoul. With that said, let's see what's going on. The tariff show goes on, although viewers are increasingly less bothered.

US President Donald Trump's plans to double tariffs on steel and aluminium imports from 25% to 50% have caused a slightly negative sentiment in global markets. The falls have been modest though, maybe with the exception of the Nikkei 225, which closed 1.3% lower. The sentiment there wasn't helped by accusations from China that the US had violated their recent tariff agreement, further straining relations between the two countries.

This boosted the value of safe haven yen, dragging stocks lower. That's despite Japan reporting a notable increase in capital expenditure by companies during the first quarter. The rise of 6.4% year-on-year suggests renewed corporate confidence, even though uncertainty around trade policies persists. In Europe, we've had a host of manufacturing PMI readings. Let's focus on some of the more notable ones.

The Eurozone's HCOB manufacturing PMI was confirmed at 49.4 for May, indicating continued contraction, but with signs of stabilisation as output rose modestly. The reading was the highest in nearly three years. Similar trends were observed in Germany, where new orders stabilised after prolonged declines, despite ongoing job cuts within the sector. The overall PMI there dipped slightly compared to April. France and Italy were mixed.

Make sure to listen to Andreas Steno and Mikkel Rosenwald on Macro Mondays today for a more detailed analysis of the data. Looking ahead, we'll have the US manufacturing PMI and ISM tomorrow and the latest jobs numbers later in the week. We'll also hear from the European Central Bank, which is expected to cut rates. Thanks for listening. Take care.