Global Stock Markets Navigate Tariff Turmoil and Shifting Economic Data

A Week of Tariff Turmoil and Shifting Sentiments

The week ending May 30, 2025, presented a complex and often turbulent landscape for global stock markets. The dominant theme was the ongoing “tariff saga” ¹ involving the United States and China, which cast a long shadow over investor sentiment worldwide. Market participants found themselves reacting to a rapid succession of legal developments concerning US tariffs, creating an undercurrent of caution that rippled across international exchanges. While some markets, notably in the United States, demonstrated resilience and posted gains, others, particularly across Asia, faced significant headwinds. Adding to the intricate picture were key economic data releases, including crucial inflation reports and GDP figures, alongside central bank commentary and actions, all of which played pivotal roles in shaping the week’s market performance.

The interconnectedness of global markets was starkly highlighted by the immediate and widespread reactions to US trade policy developments. A ruling by the U.S. Court of International Trade declaring President Trump’s “Liberation Day” tariffs illegal was swiftly followed by an Appeals Court decision to temporarily pause that ruling within 24 hours.¹ This rapid back-and-forth had a tangible impact far beyond American shores. In Australia, for instance, the reinstatement of tariffs prompted a discernible shift by investors towards defensive stocks as uncertainty mounted.² Similarly, European stock movements were also influenced by these US court rulings.³ This sequence of events underscores how major trade policy decisions in a dominant economy like the US can act as a direct lever on global market volatility. The core issue for investors extended beyond the specific tariff rates; it was the inherent instability and unpredictability of the trade policy environment that fostered caution. This environment compels global investors into a more reactive, short-term posture, often leading to a preference for defensive assets or triggering sharp sector rotations as they attempt to anticipate the next policy shift. The week’s events served as a clear reminder of the deep integration of global supply chains and economic fortunes, effectively making US trade policy a significant driver of global economic conditions.

Table 1: Major Global Index Performance (Week Ending May 30, 2025)

Note: Weekly change for DAX 40 is for Friday’s session; Nikkei 225 weekly change is not specified, Friday’s change shown. Closing levels are as of May 30, 2025, where specified in research.

United States: Equities Advance Amidst Tariff Whiplash and Mixed Economic Data

A. Market Performance: Tech Leads Gains

Despite the persistent uncertainty surrounding trade policy, US equity markets demonstrated notable strength during the week. The S&P 500 index registered a solid advance of 1.9%, while the technology-focused Nasdaq 100 outperformed with a significant 2.1% gain. Small-capitalization stocks, as represented by the Solactive 200 index, also participated in the upward trend, rising by 1.6%.¹

The broad-based nature of the rally was evident as all eleven sectors within the S&P 500 finished the week in positive territory. The Information Technology sector was the standout performer, surging by 2.8%.¹ This leadership from the tech sector underscored continued investor appetite for technology-related investments, even amidst broader economic concerns and trade-related anxieties.

B. The Tariff Saga’s Direct Impact

The week was characterised by significant developments in US trade policy, which directly influenced market sentiment. A pivotal moment occurred when a U.S. Court of International Trade initially ruled President Trump’s extensive “Liberation Day” tariffs illegal. This decision, had it stood, could have potentially lowered the U.S. effective tariff rate from approximately 12% to a range of 5-7%. However, the ruling’s impact was short-lived, as an Appeals Court quickly issued a temporary pause on the decision. Consequently, the tariffs remained in effect, maintaining the higher effective tariff rate.¹

This legal back-and-forth contributed to market volatility throughout the week. Nevertheless, despite these trade-related headwinds, US equities ultimately trended higher. The market’s sensitivity to tariff news was previously observed when a pause in tariffs between China and the U.S. around May 12th contributed to a stock market recovery and a rebound in consumer confidence.⁴

C. Key Economic Indicators: A Mixed Bag

Several key economic data releases provided a mixed picture of the US economy:

• GDP Revision: The Bureau of Economic Analysis (BEA) issued its revised estimate for first-quarter 2025 real Gross Domestic Product (GDP), indicating a 0.2% contraction at a seasonally adjusted annual rate (SAAR). This was an upward revision from the initial estimate of a 0.3% decline. The contraction in Q1 GDP was primarily attributed to a substantial negative contribution from net trade, a consequence of businesses and consumers increasing imports in anticipation of potential tariffs.⁴
• Inflation Moderation: There were signs of moderating inflation. The Personal Consumption Expenditures (PCE) price index edged higher by 0.1% in April, with the year-over-year rate standing at 2.1%. More significantly, the core PCE price index, which excludes volatile food and energy components and is the Federal Reserve’s preferred measure of inflation, also rose by a modest 0.1% in April. This brought the annual increase in the core PCE index down to 2.5%, marking its lowest level in four years. This moderation suggested that, thus far, inflation had been largely unimpacted by the implemented tariffs.⁴
• Consumer Confidence Rebounds: After five consecutive months of declines, consumer confidence experienced a significant resurgence in May. The Conference Board’s Consumer Confidence Index jumped by 12.3 points to 98.0. It was noted that a considerable portion of the survey responses were received after the May 12th announcement of a pause in US-China tariffs and the subsequent stock market recovery. While purchasing plans for homes, cars, and other big-ticket items saw an increase, consumers expressed heightened anxiety regarding affordability, even more so than job security.⁴
• Durable Goods Orders Decline: Headline orders for long-lasting durable goods fell by 6.3% in April. This decline was largely driven by a sharp pullback in orders for civilian aircraft. Core business orders, specifically nondefense capital goods excluding aircraft (a key indicator of business investment), were also 1.3% lower for the month.⁴
• Federal Reserve Activity: The minutes from the Federal Open Market Committee (FOMC) meeting held on May 6-7 were released, revealing increased uncertainty among policymakers regarding the economic outlook.⁵ Adding to this cautious tone, S&P Global reported that concerns about tariffs had led to the largest build-up of manufacturing input inventory ever recorded by its Purchasing Managers’ Index (PMI). This was accompanied by the most significant spike in input prices since November 2022, signalling potential future inflationary pressures despite the current moderation in the PCE index.⁷ Throughout the week, the Federal Funds effective rate remained stable at 4.33%.¹

The divergence between the current benign inflation readings and the forward-looking indicators of price pressures presents a complex picture. The core PCE inflation at a four-year low of 2.5% year-over-year ⁴ suggests that, for April, inflation remained contained. The official assessment even stated that inflation had been “largely unimpacted by tariffs thus far”.⁴ However, the May S&P Global Flash US PMI data painted a different picture, highlighting the “largest build-up of manufacturing input inventory ever recorded” due to tariff worries and the “largest spike in prices since November 2022”.⁷ This PMI report also indicated that average charges rose at a pace not seen since August 2022, directly linked to higher tariffs. This apparent disconnect can be attributed to a lag effect. The April PCE data may reflect conditions prior to the full impact of recent tariff escalations or the temporary relief from the May 12th tariff pause. In contrast, the Flash PMI for May offers a more current snapshot of business sentiment and actions, where companies are actively stocking up in anticipation of tariffs or due to existing tariff-related supply disruptions, and are paying more for these inputs. This suggests that while consumer-level inflation had not yet fully reflected these cost pressures in April, significant pipeline pressures are building. Consequently, the current low inflation environment could prove temporary if tariffs persist or escalate, potentially leading to future inflation spikes and posing a considerable challenge for the Federal Reserve’s policy decisions.

The rebound in consumer confidence also warrants a closer look. While the headline number improved and purchasing plans for big-ticket items increased ⁴, the concurrent anxiety about affordability, even more than job security, is telling.⁴ This concern persists despite rising personal income and an increase in the personal savings rate from 4.3% in March to 4.9% in April.⁴ This suggests that the confidence rebound might be fragile, perhaps buoyed by temporary factors such as the tariff pause. The underlying apprehension about affordability implies that existing price levels are already perceived as high, stretching household budgets. Any further price increases, whether from tariffs or other sources, could therefore quickly dampen consumer spending, a critical engine of the US economy. This affordability concern could represent a more persistent drag on economic activity than temporary shifts in sentiment related to tariff news.

D. Corporate Spotlight: HP Inc.

Shares of HP Inc. (NYSE: HPQ) experienced a notable downturn during the week, declining by 11%. The significant drop in the company’s stock price was a direct consequence of its fiscal second-quarter earnings report, which disappointed investors, and a subsequent lowering of its full-year financial guidance.⁹

Europe: Inflation Data Offers Relief Amid Trade Uncertainties

A. Market Performance: Modest Gains Across Key Bourses

European equity markets generally navigated the week with positive results. The broad Stoxx 50 index advanced by 0.80% (80 basis points) over the week.¹

In the United Kingdom, the FTSE 100 index rose by 0.6% for the week, closing at 8,772.38 on Friday.¹⁰ Germany’s DAX 40 index recorded a gain of 0.3% on Friday, closing at 24,122.42.¹⁰ France’s CAC 40 index managed a weekly gain of 0.23%, finishing at 7,751.89, despite experiencing a 0.36% decline on the final trading day of the week.¹²

B. Navigating US Trade Policy and Local Inflation

Similar to other global markets, European bourses were notably influenced by the ongoing developments in the US tariff situation. European stocks generally ticked higher on Friday, partly benefiting from the evolving court rulings related to US trade tariffs.³

Adding to the supportive sentiment was positive inflation data emerging from within the Eurozone. Reports indicated that price increases in Spain and France had cooled during May.³ Specifically, inflation in Spain reportedly fell below the European Central Bank’s target in May.¹³

In Germany, the consumer price index (CPI) remained steady in May, with a year-over-year increase of 2.1%. This matched the rate recorded in April and was in line with market consensus. On a month-on-month basis, German consumer prices rose by a modest 0.1%.¹⁰ This stable inflation reading out of Europe’s largest economy was interpreted by some analysts as bringing “more relief for the European Central Bank”.¹⁰

C. European Central Bank (ECB) Outlook

The cooling inflation figures from key Eurozone economies, including Germany, Spain, and France, served to reinforce market expectations that the European Central Bank is on track to meet its inflation target.³

Consequently, the market is now fully pricing in a 25 basis point interest rate cut by the ECB at its upcoming monetary policy meeting, anticipated on June 5th. Financial analysts, such as those at Franklin Templeton, suggested that the ECB is likely to proceed with caution, with a potential pause in rates at 2% as inflation forecasts are expected to drift slightly lower, possibly reaching 1.8% by 2026.³ Economists at BNP Paribas also foresee the ECB cutting policy rates by 25 basis points in both June and September, with the deposit rate potentially reaching 1.75% by July 2025.¹⁴

During the week, ECB President Christine Lagarde delivered a significant speech on May 26th. She discussed Europe’s evolving role in a global order that she described as fracturing. Lagarde highlighted the potential for the euro to assume a greater international role, particularly given the prevailing uncertainty surrounding the US dollar and the global rise of protectionist trade measures. She emphasised the critical need for Europe to reinforce its economic foundations by developing deeper and more liquid capital markets.¹⁵

The ECB appears to be navigating a complex environment. While the improving domestic inflation picture in key Eurozone economies argues for monetary easing, significant external economic threats loom. US tariff uncertainty remains a considerable factor for European markets.³ President Lagarde’s focus on the risks from global fragmentation and the strategic imperative for a stronger euro ¹⁵ suggests concerns that extend beyond immediate inflation figures. This indicates that while the ECB is likely to proceed with the well-telegraphed initial rate cut(s) due to domestic disinflation, its forward guidance and the pace of any subsequent easing will be heavily contingent on how these external risks evolve, particularly US trade policy and its broader impact on global economic growth. Over the longer term, the strategic objective of enhancing the euro’s international role might also temper purely domestic-focused monetary policy, as the ECB balances immediate economic management with the need for greater economic sovereignty and resilience in an increasingly fragmented world.

D. Broader Economic Outlook

The European Commission’s Spring 2025 Economic Forecast projected real GDP growth for 2025 at 1.1% in the European Union and 0.9% in the euro area. The forecast anticipates an acceleration in growth in 2026, to 1.5% for the EU and 1.4% for the euro area.¹⁷

BNP Paribas, in its economic outlook, noted that increased military spending across Europe and significant fiscal support measures in Germany are expected to provide a boost to Eurozone growth in 2025 and 2026. However, they also cautioned that the ongoing trade conflict with the United States and persistent uncertainty surrounding the Chinese economy could impose limits on growth in the short term.¹⁴

Asian Markets: A Patchwork of Performances Amidst Regional and Global Pressures

A. Japan & Greater China: Varied Reactions to Data and Trade Talk

• Japan: The Tokyo Stock Price Index (TOPIX) managed to achieve a weekly increase of 2.8%.¹ However, the week concluded on a weaker note for Japan’s benchmark Nikkei 225 index, which lost 1.2% on Friday to finish at 37,965.10.¹¹ This decline was partly attributed to the release of stronger-than-expected core inflation data for Tokyo in May, which registered 3.6%. This figure fueled speculation among investors that the Bank of Japan might be inclined to implement further interest rate hikes.¹¹ Earlier in the month, the national Consumer Price Index (CPI) indicator for April had also shown an acceleration in core inflation.²⁰
• China: Mainland Chinese markets displayed caution. The Shanghai Composite index ended Friday’s session down 0.47% at 3,347.49.¹¹ Investor sentiment was shaped by the ongoing US-China trade tensions and anticipation of the official Purchasing Managers’ Index (PMI) figures for May, which were scheduled for release on May 31st.²¹ Adding to concerns, the Conference Board Leading Economic Index (LEI) for China fell by 0.3% in March, continuing a recent declining trend and suggesting potentially softer economic conditions ahead.²³ However, some analysts, like those at Lundgreens Investor Insights, expressed an expectation that the May manufacturing PMI would show a recovery from April’s contraction. This optimism was based partly on recent policy easing measures by Chinese authorities and perceived progress in US-China trade negotiations, which reportedly led to accelerated imports by overseas buyers during a 90-day period of lower tariffs.²¹ The Asia-Pacific region, in general, saw some front-loading of manufactured goods due to trade actions.⁴
• Hong Kong: The Hang Seng Index also experienced a decline on Friday, slipping 1.2% to close at 23,289.77.¹¹

China’s economic management faces a delicate balancing act. The declining LEI points to underlying economic softness ²³, and while authorities are endeavouring to stimulate domestic private consumption, the export sector is reportedly suffering from weakening trade with the US.¹⁴ US tariffs remain a significant concern for Chinese exporters.²¹ The anticipated recovery in the May PMI, if driven by a short-term “rush-to-export” effect during a temporary window of lower tariffs ²¹, may not be sustainable if underlying trade tensions with the US persist or worsen. This front-loading of exports could mask deeper vulnerabilities if a more stable and predictable trade environment is not achieved. Consequently, China’s economy appears caught between its domestic stimulus efforts and the considerable drag from external trade actions, making a sustained recovery potentially fragile and highly dependent on the unpredictable nature of international trade relations.

A notable divergence in monetary policy considerations is emerging in developed Asia. In Japan, unexpectedly high Tokyo core inflation is prompting speculation of Bank of Japan (BoJ) rate hikes as the country may finally be escaping its long battle with deflation.¹¹ Conversely, the Bank of Korea (BoK) is actively cutting interest rates and has significantly downgraded its growth forecast, citing immediate economic challenges and heightened trade risks.²⁴ This contrast highlights how differing domestic economic conditions and inflation dynamics are currently shaping policy, even though both nations are export-oriented and subject to similar regional and global trade pressures. This policy divergence could have implications for currency valuations, such as the relative strength of the Yen versus the Won, and influence capital flows within the Asian region, adding another layer of complexity for investors.

B. South Korea: Central Bank Cuts Rates as Growth Outlook Dims

South Korea’s Kospi index closed Friday down 0.8% at 2,697.67 ¹¹, and was generally reported to have finished the week in negative territory.¹³

A major development during the week was the Bank of Korea’s (BoK) decision on Thursday to cut its benchmark interest rate by a quarter percentage point, bringing it down to 2.5%. This marked the fourth such rate cut since October 2024, signalling a continued accommodative monetary policy stance.²⁴

In conjunction with the rate cut, the BoK significantly revised its economic growth projection for 2025, nearly halving it to 0.8% from a previous forecast of 1.5%. The central bank attributed this downgrade to an economic contraction experienced in the first quarter of the year and heightened trade risks, explicitly including the impact of US tariff actions.²⁴ Despite this pessimistic revision, the Kospi index reportedly rose on the day of the announcement, partly buoyed by the US court ruling that initially moved against some of the US tariffs.²⁴

C. Broader Asian Drivers

General weakness in Asian market cues was cited as a contributing factor to downturns in other regional markets, such as India.¹³

Looking at the broader landscape, the resurgence of protectionist trade measures globally and the rapid acceleration of artificial intelligence (AI) are increasingly viewed as two transformative forces reshaping the international economic order, with China positioned at a critical intersection of these trends.²⁶

While Asia is still expected to be a major driver of global economic growth, the region faces growing risks from geopolitical tensions, uncertain global demand, and potential financial volatility in 2025.²⁷

The Asian technology sector, however, is projected for significant expansion. Global IT spending is anticipated to rise, with particularly strong growth expected in data centres, software development, and AI applications.²⁸ A series of fintech events scheduled for the second quarter of 2025 across Asia are set to focus on key growth areas such as digital payments, regulatory technology (regtech), and next-generation financial technologies.²⁹

India: Markets Dip on Sectoral Weakness and Global Jitters

A. Market Performance: Key Indices End Week Lower

Indian equity markets concluded the week ending May 30, 2025, with discernible losses. The broader NSE Nifty 50 index declined by 102.45 points, or 0.41%, to close the week at 24,750.70. Similarly, the 30-share BSE Sensex fell by 270.07 points, or 0.33%, settling at 81,451.01.¹³

On the final trading day of the week, Friday, May 30th, the Nifty 50 was down by 0.33%, and the Sensex registered a decline of 0.22%.¹³

B. Key Drivers: Domestic and International Factors

Several factors contributed to the downturn in Indian markets. Sector-specific losses, particularly in the IT, metal, and auto segments, weighed heavily on the indices.¹³

Broader market sentiment was also dampened by weak cues from other Asian markets and a degree of investor caution prevailing ahead of the scheduled release of domestic Gross Domestic Product (GDP) data.¹³ Furthermore, the temporary reinstatement of US tariffs by an appeals court reportedly influenced some investors to adopt a more cautious stance and remain on the sidelines.¹³ Market experts had anticipated that trading might remain range-bound, with ongoing sectoral shifts likely to characterise market activity.¹³

C. Sectoral Movements

An analysis of sectoral performance reveals distinct trends:

• Losing Sectors: The metal sector experienced the most significant drop on Friday, declining by 1.68%. Other sectors that faced downward pressure during the week and/or on Friday included BSE Focused IT (down 1.14%), commodities (down 1.14%), utilities (down 1.09%), teck (down 0.99%), auto (down 0.91%), and telecom (down 0.79%).¹³ Within the Sensex constituents, Tech Mahindra was among the top laggards on Friday, with its shares falling by 1.73%.¹³
• Gaining Sectors: In contrast, some sectors managed to post gains on Friday. These included financial services, bankex (banking index), and capital goods.¹³

D. Foreign Institutional Investor (FII) Activity

Foreign Institutional Investor (FII) and Foreign Portfolio Investor (FPI) activity presented a mixed picture. For the month of May, up to May 23rd, FIIs and FPIs were net buyers in Indian equities, having infused a substantial ₹36,299 crore.³⁰

However, a shift occurred in the week ending May 23rd, during which FPIs turned net sellers to the tune of $(560) million. This included significant daily outflows, such as $(1,175) million (approximately ₹10,041 crore) on May 21st and $(634.61) million (approximately ₹5,436 crore) on May 23rd.³¹ This reversal came after five consecutive weeks of net buying by FPIs. It is important to note that FII/FPI data for the full week ending May 30th was not available at the time of this report.

In the debt segment, FIIs were reported to be net sellers in May, with notable outflows observed.³⁰

The behaviour of FIIs suggests a tactical, rather than purely strategic, approach in the immediate term. While the substantial overall monthly inflow up to May 23rd indicates underlying confidence in India’s long-term growth narrative, which is supported by the Reserve Bank of India’s projection of 6.5% GDP growth for the fiscal year 2025-26 ³², the sharp weekly reversal into net selling points to a heightened sensitivity to immediate risk factors. This could reflect profit-taking at elevated market levels, pre-emptive positioning for potential volatility surrounding the release of GDP data, or a reaction to renewed global trade jitters stemming from the US tariff situation. This pattern underscores that FII flows, a crucial driver for Indian markets, can be quite reactive to short-term news flow and risk perceptions, even if the longer-term outlook for India remains attractive.

E. Reserve Bank of India (RBI) and Economic Outlook

The Reserve Bank of India’s Annual Report for the fiscal year 2025 (which concluded in March 2025) was a key point of attention. The report highlighted a record surplus transfer of ₹2.7 lakh crore (also cited as ₹2.69 lakh crore) from the RBI to the central government for FY25. Other notable points included an increase in the RBI’s gold holdings and significant earnings from its Foreign Currency Assets (FCA), driven by better returns on dollar-denominated assets and the RBI’s own dollar sales operations.³²

Looking ahead, the RBI projected that India’s real GDP would grow at a rate of 6.5% for the fiscal year 2025-26. Inflation for the same period was expected to be around 4%, with the central bank assessing risks to both growth and inflation as evenly balanced.³² Separately, analysts at Jefferies suggested that there could be room for the RBI to cut interest rates by as much as 75 basis points during 2025, particularly if the US dollar shows signs of weakening.¹³

There appears to be a potential disconnect between the RBI’s longer-term positive macroeconomic outlook and the market’s more immediate, shorter-term anxieties. The RBI’s forecasts are for the next fiscal year (2025-26), while the market, during the week ending May 30th, was reacting to current global events and the imminent release of GDP data for a past quarter (Q4 FY25). This suggests that while India’s fundamental long-term story, as endorsed by the RBI, remains strong, short-term global volatility and domestic data releases can cause temporary deviations and cautious sentiment. The market may be in a “wait-and-see” mode, looking for the immediate data to confirm if the economy is indeed on track to achieve the strength projected by the RBI.

F. Corporate Earnings

The earnings season continued, with numerous Indian companies announcing their audited financial results for the quarter and year ending March 2025. Companies reporting during the week, including on May 30th, comprised Bajaj Holdings and Investment, SML Isuzu, Ahluwalia Contracts (India), and Brightcom Group, among others.³⁴

While the direct impact of these specific earnings announcements on the overall weekly market performance was not detailed in the available information for this particular week, the broader corporate earnings landscape remains a key focus for investors. Analysts project that Nifty 50 earnings are set to grow by 14.7% for the financial year ending March 2026. This follows a period where corporate earnings growth had been more moderate over the past year.³⁵

Oceania: Central Bank Easing and Tariff Jitters Shape Trading

A. Australia: Modest Gains on RBA Cut, Defensive Shift

Australia’s S&P/ASX 200 index edged up 0.3% on Friday to close at 8,434.7. This contributed to a weekly gain of 0.6% for the benchmark index, marking its third consecutive week of advances. For the month of May, the S&P/ASX 200 rose by 3.5%.²

A significant domestic driver for the Australian market was the Reserve Bank of Australia’s (RBA) decision earlier in May to lower its official cash rate by 25 basis points to 3.85%.² Looking forward, the ASX RBA Rate Tracker, as of May 28th, indicated a 62% market expectation of a further interest rate decrease to 3.60% at the RBA’s next Board meeting scheduled for July 8th.³⁶

Investor behaviour in Australia during the week was notably influenced by “tariff jitters” stemming from the US appeals court decision that kept President Trump’s tariffs in effect. This uncertainty prompted a flight to defensive sectors, with investors favouring traditionally safer havens like banks and healthcare stocks.² Consequently, financials and healthcare stocks recorded weekly gains, while energy and IT stocks faced some selling pressure.²

Commodity prices remain a critical factor for the Australian economy and market. NAB’s Non-rural Commodity Price Index is anticipated to fall by 4.9% in the second quarter of 2025. Iron ore prices, a key Australian export, are expected to weaken later in the year, although they are likely to find support above US$95 per tonne in the near term.³⁷

The RBA’s recent rate cut is a typical monetary stimulus aimed at bolstering economic activity. However, Australia’s heavy reliance on commodity exports means that the trajectory of global commodity prices is a crucial variable. The forecasts for declines in key commodities like iron ore and coal ³⁷ could present a headwind. Falling commodity prices translate to lower export revenues, potentially impacting corporate profits in the significant resources sector, reducing government revenues, and weighing on overall national income. This could, in turn, dampen business investment and consumer confidence, thereby working against the intended stimulatory effects of the RBA’s monetary easing. The Australian economy might therefore face a challenging scenario where domestic stimulus measures are contending with deteriorating external conditions as reflected in commodity markets.

B. New Zealand: Market Ends Week Lower Despite RBNZ Rate Cut

New Zealand’s benchmark S&P/NZX 50 index finished Friday’s session 1.1% higher at 12,418.89.² Despite this end-of-week gain, the index recorded an overall decline of 1.8% for the week.³⁹

Earlier in May, the Reserve Bank of New Zealand (RBNZ) Monetary Policy Committee had decided to lower the Official Cash Rate (OCR) by 25 basis points to 3.25%.⁴⁰ The RBNZ’s rationale for this easing measure included observations of declining core inflation, the presence of spare productive capacity in the economy, and an expectation that increased global tariffs would likely slow global economic growth, thereby moderating New Zealand’s own economic recovery and inflationary pressures.⁴⁰ Analysts at Westpac had anticipated that the RBNZ would also signal an appetite for further easing depending on how the weaker global growth environment translated into domestic conditions.⁴¹

Among individual stocks on Friday, The Warehouse Group (WHS) was a notable gainer, rising by 6%. Conversely, Ryman Healthcare (RYM) and Air New Zealand (AIR) were among the main decliners, both falling by 2%.³⁹ Oceania Healthcare Limited (OCA), which released its annual report on May 22nd, saw its share price decline by 4.84% compared to its closing price seven days prior, as of May 30th.⁴²

The monetary policy actions in both Australia and New Zealand, coupled with investor behaviour in Australia, suggest a regional defensive posture. Both the RBA and RBNZ have recently cut interest rates ², with the RBNZ explicitly citing concerns about global tariffs and their impact on growth.⁴⁰ Simultaneously, Australian investors have been observed shifting capital into defensive sectors due to US tariff uncertainties.² This convergence of central bank stimulus and market-driven defensive rotation indicates a broad-based anticipation within Oceania of increased global economic volatility and headwinds. It appears that both policymakers and market participants in the region are bracing for potential impacts from a less certain global economic environment.

Table 2: Oceania Central Bank Policy Snapshot (as of May 30, 2025)

Conclusion

The week ending May 30, 2025, was largely characterised by global market reactions to the fluctuating US-China trade tariff situation. US equities displayed a surprising degree of resilience, closing higher despite the “tariff saga.” In contrast, many Asian markets, including India, experienced declines as regional and global pressures mounted. European markets presented a mixed performance but found some measure of support from cooling inflation data within the Eurozone, which bolstered expectations for an imminent ECB rate cut.

Central bank actions were a prominent feature in Oceania and South Korea. Both the Reserve Bank of Australia and the Reserve Bank of New Zealand had recently cut interest rates, and the Bank of Korea followed suit during the week, all aiming to provide monetary stimulus to their respective economies in the face of anticipated global headwinds, including those stemming from trade protectionism.

Looking ahead, the “tariff saga” involving the US and its trading partners, particularly China, will undoubtedly continue to be a focal point for investors. Upcoming economic data releases, especially China’s manufacturing PMI and key US labour market figures, will be scrutinised closely for further indications of the global economic trajectory and the tangible impact of ongoing trade tensions. The rhetoric and actions of major central banks will also remain critical, as policymakers navigate the delicate balance between managing inflation concerns and supporting economic growth in an increasingly uncertain global environment.

Disclaimer

This article is for informational purposes only and should not be considered as financial or investment advice. The stock market is inherently risky, and past performance is not indicative of future results. Financial decisions involve risk, including the potential to lose some or all of the money invested. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author and publisher will not be held liable for any actions taken based on the information provided in this article. The information provided is not specifically tailored to any individual’s needs or situation.

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