ECB Rate Cut, German Tax Breaks, and Strong U.S. Jobs Data: PALvatar Market Recap, June 4 2025
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It's decision time for two major central banks today. The consensus was that the Bank of Canada would maintain interest rates at their current level. In contrast, the European Central Bank was widely expected to cut rates by 25 basis points to 2%, especially after inflation came in below its target yesterday.

Additionally, the HCOB Eurozone Composite PMI for May was revised slightly higher, moving from contraction territory into expansion, but still indicating marginal growth overall. Manufacturing was the main driver of output, offsetting the first decline in services activity since November. New business inflows continued to decline, but confidence improved for the first time since January.

Staying in Europe, the DAX has reached a fresh record high after reports suggested that the German government wants to pass corporate tax breaks worth some 46 billion euros. We're seeing generally positive sentiment in stocks around the world today, particularly for the Taiwan Stock Exchange and the Kospi, following the opposition party candidate's victory in South Korean presidential elections.

In Japan, growth in the services sector slowed in May due to weaker demand, with a private survey from AU Jibun Bank showing PMI at 51. Meanwhile, the US labour market remains resilient, with job openings rising to nearly 7.4 million in April, which was better than expected. Hiring also picked up to its highest level in nearly a year.

However, factory orders fell by 3.7%, reflecting challenges faced by manufacturers due to tariff-related uncertainties. Speaking of which, US President Donald Trump has implemented increased tariffs on steel and aluminium imports from various countries, except for the UK. The move comes ahead of anticipated talks between Trump and Xi Jinping later this week, although Trump downplayed the prospects of a deal.

That's it for today. Looking like a pretty good day overall. Hope I haven't just jinxed it. See you again tomorrow.