Global Markets Face Mixed Fortunes Amid Trade Tensions

The mixed global economic climate is influenced by a deteriorating U.S. consumer sentiment linked to aggressive trade policies and inflation concerns. Despite this, global equities remain largely positive due to a U.S.-China trade truce and robust earnings, supported by low oil prices. European and Asia-Pacific stocks see gains, while bond yields fluctuate.

Global markets saw a turbulent yet overall positive week, with European stocks marking their fifth consecutive week of gains. Despite a slump in U.S. consumer sentiment in May, largely due to inflation worries and trade policy uncertainties, upbeat corporate earnings helped maintain an optimistic mood in equity markets.

Surprisingly, U.S. import prices surged in April, driven by increased costs in capital goods, while cheaper energy products helped moderate the rise. Jeffrey Roach from LPL Financial noted concerns over uncertainty affecting housing builders amid these economic shifts. The U.S.-China trade deal and a subsequent softer outlook for tariffs have supported the markets.

The oil market experienced volatility, with prices rising on trade optimism but later falling due to increased supply pressures. Meanwhile, retail sales and producer prices in the U.S. showed weakening, prompting expectations of Federal Reserve rate cuts. This environment kept bond markets under scrutiny, with yields reflecting mixed economic signals.

(With inputs from agencies.)