Review of the Week of May 12–16, 2025: Financial Leaders

Overview

The week of May 12–16, 2025, marked a pivotal moment for global financial markets, driven by a landmark US-China trade agreement announced on May 13. The 90-day truce, which significantly reduced tariffs, alleviated months of trade-related uncertainty, sparking a broad-based rally across equities, cryptocurrencies, and select currencies. US Treasury Secretary Scott Bessent noted, “We had very productive talks... reached an agreement on a 90-day pause and substantially move down the tariff levels”. This development, coupled with key economic data releases from the US, UK, and Japan, shaped a dynamic week for investors and traders.

Financial Markets Weekly Recap

Equities

The equity markets experienced a robust rally, fueled by optimism surrounding the US-China trade deal. On May 12, futures signaled strong gains as traders anticipated progress in trade talks, with Nasdaq futures (QQQ) rising 2%, S&P futures (SPY) up 1.5%, and Dow futures (DIA) gaining 1.1%. The momentum carried into May 13, when the Nasdaq surged 4.3%, crossing its 200-day moving average and entering bull market territory, defined as a 20% rise from its April 8 low. The S&P 500 climbed 3.3%, and the Dow Jones Industrial Average rose 2.8% (1,161 points), both crossing their 200-day lines.

By May 14, the S&P 500 turned positive for the year, gaining 0.7% and closing 0.3% above its year-end 2024 level. President Trump’s praise for a “total reset” in US-China trade further bolstered sentiment. Individual stocks also shone, with Apple Inc. (AAPL) soaring 6.1% to $210.79 on May 13, driven by relief over tariff reductions, given its heavy reliance on Chinese manufacturing. Other “Magnificent Seven” stocks, such as Amazon (AMZN) (+8.1%) and Meta (META) (+7.9%), also contributed to the rally.

Currencies

The US dollar exhibited strength early in the week, driven by the trade deal’s positive implications for the US economy. On May 13, the EUR/USD pair dropped from $1.1242 to $1.1140, reflecting dollar strength against the euro. The USD/JPY pair reached a one-month high of ¥147.00, supported by improved risk sentiment. However, by May 16, the Japanese Yen gained ground, with USD/JPY falling to ¥144.91, as Japan’s GDP data highlighted a quarterly contraction.

On May 15, the British pound (GBPUSD) saw volatility after the UK released stronger-than-expected GDP data. GBP/USD initially rose to $1.3304 but later fell under selling pressure. The US dollar later pared back some gains as forex markets adjusted to the trade deal’s broader implications.

Commodities

Gold (XAUUSD) prices, a traditional safe-haven asset, declined as trade tensions eased. On May 12, gold fell below $3,300 per ounce as traders priced in reduced geopolitical risks. By May 15, prices dropped further to under $3,150, marking a sharp retreat from recent highs. This decline reflected a shift in investor preference toward riskier assets like equities and cryptocurrencies.

Cryptocurrencies

The cryptocurrency market saw significant gains, buoyed by the risk-on sentiment following the trade deal. On May 12, Bitcoin (BTC.X) climbed to $106,000, just $3,000 shy of its all-time high, marking a 40% increase from its April low of $75,000. Ethereum (ETH.X) outperformed, surging above $2,700 on May 14 with a remarkable 50% weekly gain, pushing its market cap above $320 billion. Despite some outflows from Bitcoin ETFs ($91 million on May 13), the crypto market remained robust, supported by broader market optimism.

Economic Indicators and Policy Developments

Economic data releases provided critical context for market movements. On May 15, the US Retail Sales Report for April was released, with expectations of flat month-on-month growth, potentially signaling a slowdown in consumer spending. Additionally, US CPI inflation for April cooled to a four-year low of 2.3%, raising speculation about potential Federal Reserve rate cuts.

In the UK, Q1 GDP growth of 1.3% year-on-year exceeded consensus estimates of 1.2%, with quarterly growth at 0.7% (above 0.6%) and March monthly growth at 0.2% (above 0%). Japan’s Q1 2025 GDP contracted by 0.2% quarter-on-quarter but grew 1.7% year-on-year, supported by a 0.6% rise in domestic demand.

Other global indicators on May 16 included Malaysia’s Q1 GDP growth of 4.4%, Japan’s March capacity utilization decline of 2.4%, and France’s Q1 ILO unemployment rate of 7.4%. These data points underscored the varied pace of global economic recovery.

Summary

The week of May 12–16, 2025, was a turning point for financial markets, driven by the US-China trade deal’s tariff reductions. Equities rallied, with the Nasdaq entering a bull market and the S&P 500 erasing year-to-date losses. Cryptocurrencies, particularly Ethereum, saw explosive gains, while gold prices fell as safe-haven demand waned. Currency markets reflected mixed economic signals, with the US dollar initially gaining but later ceding ground to the Yen. Economic data from the US, UK, and Japan highlighted both resilience and challenges, setting the stage for continued market focus on trade developments and monetary policy.

Looking Ahead

• Trade Negotiations: Investors will track progress in US-China talks as the 90-day truce unfolds, with potential implications for global supply chains and market sentiment.
• Economic Data: Upcoming US consumer confidence and manufacturing PMI reports will provide further clarity on economic health.
• Central Bank Policies: Meetings of the Federal Reserve and European Central Bank could influence markets, particularly if rate cut expectations grow following the US CPI’s decline to 2.3%.

Disclaimers and Limitations

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