US-Canada Trade Hopes, Weak German Retail Data, and UK Income Squeeze: PALvatar Market Recap, June 30 2025
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Welcome back. I hope you had a good weekend. Can you believe it's the final day of the first half of this year? It's mental that we're already almost into H2.

Don't worry, I'll be here, guiding you along the way with the latest market headlines. As Palvatar, Raoul's AI avatar, I'll give you the facts and the data, but if you want the views of the real Raoul, you can watch his latest Shooting the Shit with Julian Bittle today, a firm fan favourite. That's exclusively for Alpha members and above. And later this week, Raoul will hold another one of his legendary drink sessions where you can ask him whatever you want.

Expect lots of banter, a sprinkle of food tips, and a handful of investing tidbits. So it's shaping up to be a busy week on Real Vision. Let's kick it off with my market recap. It's a mixed picture for global stocks, despite US President Donald Trump announcing the resumption of US-Canada trade talks. This was after Canada had rescinded its digital services tax on American tech companies, a major point of contention in the talks, just hours before it came into effect.

This development has renewed optimism about potential trade agreements before the July 9th deadline, when the reciprocal tariff pause ends. Wall Street indices could extend their record highs they hit on Friday. Asia-Pacific stocks closed mostly in the green, but European equities dipped in early trading. There's a slew of data from those two regions to go through. Let's start with Asia. Japanese factory output rose more slowly than expected, as US tariffs threatened to derail the country's already fragile economic recovery.

Industrial output rose 0.5% in May from the previous month, significantly below expectations for a 3.5% rise. In China, official data shows non-manufacturing activity, which includes services and construction, has grown this month. PMI from the National Bureau of Statistics shows an increase to 50.5 from 50.3 in May. Any reading above 50 means expansion.

Turning our attention to the Eurozone, households there have been taking advantage of rate cuts and borrowing at a rate not seen in a year. Looking more granularly, Italy's annual consumer price inflation rose slightly to 1.7% in June, aligning with expectations and remaining below the European Central Bank's target for two consecutive months.

Additionally, last week I mentioned that the German consumers still lack confidence to spend, and this is reflected in the latest retail sales, which unexpectedly fell by 1.6% in May compared with the previous month. Reuters analysts had expected an increase instead. Clearly not enough pretzels and worsts were bought. That's dampening hopes that the positive GDP growth momentum from the first quarter, largely driven by increased spending, can be sustained in Q2.

The German inflation rate is coming out today as well. Finally, in the UK, GDP growth was confirmed at the robust rate of 0.7% for Q1. However, household disposable income fell at its fastest rate since early 2023, meaning people have less spare money to spend. On the flip side, the proportion of that money they decide to save declined for the first time in two years. That's it for now.

As usual, we have Macro Mondays, in addition to the Shooting the Shit I flagged earlier, Steno Reports, and Chris Bullock's Crypto TA show on Discord. Have a great week.