Written by Ilaria Massei

Last week, global equity markets proved resilient amid a backdrop of mixed economic signals. The MSCI All Country World Index rose +1.1% in GBP terms, reflecting continued investor confidence. Meanwhile, fixed income markets were more volatile, with the Bloomberg Global Aggregate Index falling slightly by -0.2% in GBP Hedged terms.

In the US, Nonfarm payrolls – the number of jobs added or lost, excluding farm work, government, and some other sectors- rose by 139,000 in May, and the annual unemployment rate remained stable at 4.2%. While this is somewhat encouraging for the economy on the surface, the underlying picture was more nuanced, with sizable downward revisions to March and April unemployment figures and a decline in the employment-to-population ratio suggesting some softness in the labour market.

Jobless claims also rose unexpectedly, with initial claims increasing to 247,000, against expectations for a decline. At the same time, business sentiment indicators in the manufacturing and service sectors weakened. The ISM Manufacturing PMI slipped to 48.5, and the ISM Services PMI dropped to 49.9, marking the first contraction in the services sector since June 2024. A reading below 50 means that both US factories and service businesses are shrinking.

In Europe, the outlook was supported by a more benign inflation reading, with the MSCI Europe ex-UK rising +1.1%. The Eurozone Consumer Price Index fell to 1.9% year-on-year in May, down from 2.2% in April and below the European Central Bank’s (ECB) 2.0% target. This supported the ECB’s decision to cut interest rates by 25 basis points in June, in response to updated growth and inflation forecasts.

Meanwhile, Japan faced a more mixed week, with the MSCI Japan Index declining by -2.1% in GBP terms. Nonetheless, structural reforms among corporates continue. Farallon Capital Management – an American multi-strategy hedge fund – has taken a top-three position in one of Japan’s largest insurers (T&D Holdings) and is pushing for faster changes in governance and investment strategy. This move reflects the broader transformation underway in Japan’s corporate landscape – a dynamic that continues to attract global investors’ interest.

In a world undergoing transition, where opportunities vary across geographies and asset classes, we continue to believe that investing in a diversified mix of regions, sectors, and styles is the most effective way to navigate uncertainty and position portfolios for long-term growth.

 

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete.Unless otherwise specified all information is produced as of 9th June 2025.

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