June 5, 2025

The Pulse: Global Economic and Market News for Thursday, June 5, 2025

Global Economic and Market News: June 5, 2025

U.S. and global markets ended the day mixed on June 5, 2025, as investors reacted to volatile trading, weak economic data, and uncertainty surrounding U.S. trade policy and global economic growth. The much-anticipated call between President Donald Trump and Chinese President Xi Jinping, which failed to deliver a breakthrough, significantly influenced market sentiment, leaving markets disappointed and risk appetite subdued. Meanwhile, the European Central Bank (ECB) cut rates and U.S. inflation expectations remain in focus amid rising tariffs.

Market Performance and Key Developments

• The Dow Jones Industrial Average fell 0.2% to 42,427.74, snapping a four-day winning streak. The S&P 500 finished nearly flat, up just 0.01 points, while the Nasdaq Composite led losses, dropping 1.1% after early gains faded. Profit-taking and “sell the news” reactions followed the Trump-Xi discussions, as traders had hoped for more concrete progress on trade.

• Technology stocks underperformed, with Tesla down 3.6% after reporting a fifth straight month of declining European sales. Dollar Tree tumbled 8.4% after warning that tariff-driven volatility could slash second-quarter profits by up to 50%.

• In after-hours trading, Five Below and MongoDB posted strong earnings, with shares rising 4% and 13%, respectively.

Economic Data and Outlook

• U.S. private sector payrolls rose by only 37,000 in May, the lowest in two years and well below expectations, raising concerns about labor market softness. Weekly jobless claims also exceeded forecasts for the second consecutive week, coming in at 245,000.

• The latest GDP data confirmed a -0.3% annualized contraction in the first quarter, primarily attributed to a surge in imports ahead of tariff hikes. Morningstar notes that, excluding this effect, the underlying growth rate would have been positive; however, it expects a sequential slowdown for the remainder of 2025.

• Inflation readings have trended downward, with headline and core inflation at 2.2% and 2.5%, respectively, in April. However, the Federal Reserve Bank of San Francisco warns that higher tariffs are expected to push inflation up in the coming quarters before resuming progress toward the 2% target next year. Household inflation expectations have risen sharply, though market-based measures remain subdued.

• The ECB cut its deposit rate by 25 basis points to 2%, signaling that its easing cycle may be nearing an end as inflation subsides in the eurozone. This move is expected to stimulate economic activity in the eurozone by making borrowing cheaper, but it also reflects concerns about the region's economic health.

Trade and Policy Uncertainty

• The Trump administration’s new tariffs and lack of clarity on future trade negotiations continue to weigh on investor sentiment. The Trump-Xi call failed to resolve key disputes, and further tariff escalations remain possible if talks stall before the early July deadline. These uncertainties are contributing to market volatility and could have significant implications for global trade and economic growth.

• President Trump renewed his calls for the Federal Reserve to cut rates, arguing that higher borrowing costs are exacerbating economic headwinds. Market expectations now price in more than 50 basis points of Fed rate cuts by year-end, with a 95% probability of a reduction in September.

Global Markets and Commodities

• The U.S. dollar slipped to a six-week low on weak economic data and trade uncertainty, while gold consolidated above $3,300 per ounce as investors sought safe havens. Industrial metals, especially silver and platinum, rallied sharply.

• The crypto market fell, with Bitcoin holding above $100,000 and Ethereum consolidating above $2,350 as long-term investors took profits.

Outlook

• Investors are on high alert for Friday’s U.S. non-farm payrolls report, which is expected to show a 130,000 increase in jobs. A weaker-than-expected report could trigger further market volatility and pressure the dollar, making it a crucial event to watch.

• Analysts warn that, despite recent calm, volatility is likely to persist as markets navigate trade policy risks, rising inflation expectations, and slowing economic momentum. This caution is necessary for investors to navigate the current market conditions.

Disclosure

This article is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation to buy any securities. All information is based on publicly available sources as of June 5, 2025. The author holds no positions in the securities mentioned. Readers should consult financial professionals before making investment decisions.

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The Pulse: Global Economic and Market News for Thursday, June 5, 2025

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