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Manufacturing data weighs on global sentiment

Manufacturing data from the world's two largest economies showed weakness, with China and the US both reporting contractions in factory activity. Despite this, US stocks closed higher on Monday, led by gains in technology shares. In Asia, markets largely shrugged off the disappointing Chinese PMI data, with major indices trading mostly higher on Tuesday. Gold surged to around USD 3360 early in the week, while US Treasury yields fell across the curve, with the 2-year yield at 3.9% and the 10-year yield at 4.4%.

  • Date
  • Author Shane Strowmatt, LGT
  • Reading time 5 minutes

Strategist China
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China's manufacturing activity in May contracted at its fastest rate since September 2022, according to Tuesday's private Caixin/S&P Global survey, which recorded a PMI of 48.3. This figure missed expectations and marked a significant decline from April's 50.4, highlighting the impact of US tariffs on new export orders. A value below 50 signals contraction. The official PMI, released over the weekend, also indicated a contraction for a second month, albeit slightly improved at 49.5 from April's 49. Markets in the region largely ignored the weak PMI data, with China’s CSI 300 up 0.2% and Hong Kong’s Hang Seng Index surging 1%. Elsewhere in the Asia-Pacific region, stocks were also trading mostly higher on Tuesday. Japan’s Nikkei 225 gained 0.1%, while Korea’s Kospi was nearly unchanged. Australia’s S&P/ASX 200 advanced 0.6%.

US stocks rebound despite trade tensions

US stock indices closed higher on Monday, with the Dow Jones Industrial Average up 0.1% to 42,305.48 points and the S&P 500 rising 0.4% to 5935.94 points, despite renewed US-China trade tensions and weak domestic economic data. Technology stocks led gains, with the Nasdaq 100 increasing by 0.7% to 21,491.75 points. Macroeconomic data pressured sentiment with the US manufacturing sector contracting for the third consecutive month in May. The ISM Manufacturing Purchasing Managers’ Index (PMI) fell to 48.5 from 48.7 in April, according to data released on Monday. Supplier delivery times lengthened, reflecting potential supply chain bottlenecks due to tariffs. The survey indicated that new orders saw minimal improvement while production remained subdued. Manufacturing employment also continued to decline, despite a slight increase in the employment index to 46.8 from 46.5 in April.

Swiss GDP revised up on export surge

Switzerland's gross domestic product (GDP) increased by 0.8% in the first quarter, revised up from an initial estimate of 0.7%, the government reported on Monday. This growth, the fastest in two years, was driven by a sharp rise in exports to the US ahead of anticipated tariffs announced by President Donald Trump in April. The services sector also saw broad-based growth, and domestic demand improved. The Swiss franc's recent appreciation and stalled investment may weigh on future economic activity, with downside risks highlighted by a slump in the May Purchasing Managers' Index (PMI) to 42.1 points. The Swiss Market Index saw a slight decrease of 0.1% on Monday.

European stocks decline – carmakers under pressure

European stock indices were mostly lower on Monday. The Euro Stoxx 50 dropped 0.3%, Germany’s DAX fell 0.3% to 23,930.67 points, and France’s CAC 40 declined 0.2%. European autos stocks were under pressure on Monday after US President Donald Trump announced a 50% tariff on steel and aluminium imports late last week, further escalating EU trade tensions.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Dollar General Corporation, Hewlett Packard Enterprise Co., and Solaria Energia. Annual general meetings at Booking Holdings and General Motors.

Economic data in focus: Swiss Consumer Price Index (08:30), euro-area Harmonized Index of Consumer Prices (11:00), US JOLTS jobs report (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.