President Trump has announced an in-principal trade agreement between the U.S. and China where they would impose 10% and 55% tariffs respectively. The U.S. would also receive rare earths from China as part of the deal. Economic data from the U.S. and Canada also improved market sentiment this week. China’s embargo on supply of rare-earth and magnets continues to put Auto companies and other industries at risk of supply bottlenecks.  Resurgent tensions in the middle east have led to a risk-off sentiment in the markets.

Tensions in the middle east resurfaced this week following the commencement of Israel’s ‘Operation Rising Lion’ wherein Isreal attacked Iran targeting its nuclear infrastructure and its leadership. U.S. Secretary of State Marco Rubio distanced the U.S. from the attack on Iran, to head off any reprisals by Iran. Boeing stock price dropped following a major airline crash of a Boeing 787 Dreamliner in India killed 240 people. Colombian presidential candidate Senator Miguel Uribe remains critical after being shot on the campaign trail.

Global Updates
  • The MSCI All Country World Index was higher this week driven by positive economic data. The in-principal agreement in London between the U.S. and China to resolve their disputes also encouraged investor sentiments. The trade deal would encompass supply of rare earths, magnets and education of Chinese students in the U.S. among other issues. The agreement awaits the final approval by the political leadership of the respective countries.
  • The unemployment rate in Canada jumped up for the third consecutive month to the highest of 7% in nine years in May. The uptick in unemployment was driven by the near stagnation in employment growth.
  • Prime Minister Mark Carney announced the largest increase in Canada’s defense spending by $9 billion this year to meet NATO’s 2% spending threshold. Sweden will also be raising its defense spending to 5% of its GDP.
  • France’s BPCE, which is the fourth-largest banking group in the euro zone has arrived at a $ 7.9 billion agreement to acquire Portuguese bank Novo Banco
  • China’s exports to the U.S. dropped by 34.5% year-on-year to $28.8 billion in May, which marks the largest decline in U.S. bound exports from China since the COVID pandemic.
  • Oil and gold prices have risen following the resurgence of conflict in the middle east. The markets are exhibiting concerns on the risks to Strait of Hormuz, which is the conduit for one fifth of the world’s oil supply.
U.S. Equity
  • The S&P 500, Dow Jones and Nasdaq ended higher this week due to renewed confidence in the U.S. economy despite tariff concerns. Additionally, the in-principal agreement between the U.S. and China also improved market sentiments.
  • The U.S. Bureau of Labor Statistics has reported a higher-than-expected additional 139,000 jobs in the U.S. economy in May, while the unemployment rate remained steady at 4.2%. The continued resilience of the U.S. labor market elevated market optimism. The unemployment claims for the previous week also remained steady at 248, 000.
  • The U.S. CPI inflation reading for May was lower than expected at 2.4% due to lower energy prices.
  • According to Bloomberg, U.S. Treasury Secretary Scott Bessent has been shortlisted succeed Fed Chair Jerome Powell. Bessent has also suggested the possible extension of the 90-day tariff pause deadline, to enable negotiations, while testifying in front of the House Ways and Means Committee.
  • Oracle has reported a higher than expected 11% growth in its fiscal fourth quarter revenue to $15.9 billion and an adjusted net income of $4.88 billion. The growth was driven by a 52% jump in the company’s cloud infrastructure revenue to $3 billion. The company also raised its growth forecast for the cloud infrastructure to 70%.
  • Adobe has posted a record higher-than-expected adjusted net income of $2.17 billion on the second fiscal quarter revenue of $5.87 billion. The growth was driven by a 11% jump in its revenue from Creative Cloud subscriptions. The company also raised its full-year revenue outlook to $23.5 billion.
  • Boeing stock price dropped following the major crash of a Boeing 787 Dreamliner, flying from India to the U.K., on a medical college hostel in India. More than 242 people are reported killed in the incident.
  • Apple unveiled a new Liquid Glass Design and its new AI driven strategy this week, at the 4-day long Apple Worldwide Developers Conference. The release of the Siri AI upgrade has been now delayed to the Spring of 2026.
  • Tesla’s stock price continued to slide this week following the public disagreement between President Trump and Elon Musk. Elon Musk later expressed regret for some of his social media posts on X.
  • Walmart and Amazon are exploring the possibility of issuing stable coins which would enable their cross-border transactions and significantly reduce bank fees.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose slightly this week.
  • The U.S. 10-year Treasury yield fell to 4.351% and the yield on the 2-year note also lagged to 901% over the week.
  • The U.S. Dollar Index depreciated to 98.23 this week due to cooling inflation.

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