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US manufacturing pulls further ahead of euro area

Purchasing managers’ index (PMI) surveys released on Monday pointed to a widening transatlantic gap in May, with US manufacturing gaining momentum while euro-area factory activity remained in expansion territory but slowed. Following the release of the data, Wall Street pushed to fresh record highs on Monday, led by technology shares, while European equities closed lower. In Asia, stocks were mixed on Tuesday as investors continued to weigh uncertainty around US-Iran talks. Oil prices eased after Monday’s sharp surge, while traders now await euro-area inflation data and the US JOLTS labour market report later on Tuesday.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

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US manufacturing activity accelerated in May, with the ISM manufacturing PMI rising to 54.0 from 52.7 in April, data showed on Monday, its highest level since May 2022 and signalling a fifth straight month of expansion. New orders increased to 56.8 from 54.1 and price pressures stayed intense as the prices index eased to 82.1 from 84.6 amid higher energy and materials costs linked to the Iran war and supply disruptions. S&P Global’s separate US manufacturing PMI also rose in May, to 55.1 from 54.5, reinforcing signs of stronger factory activity alongside rising input costs and delivery delays.

US stocks hit records

US equities closed at fresh highs on Monday, led by continued enthusiasm around artificial intelligence, although gains remained measured amid lingering concerns over Iran-related tensions. The Dow Jones Industrial Average rose 0.1% to 51,078.88 points, the S&P 500 gained 0.3% to 7599.96 points for its eighth straight advance, and the Nasdaq 100 climbed 0.6% to 30,513.86. Chipmaker Nvidia jumped 6.3% after signalling an expansion into PC processors, lifting related technology shares including Microsoft, Oracle and Adobe, while sentiment also improved after US President Donald Trump said talks with Iran were continuing quickly.

Euro-area factory growth slows

In contrast to the robust increase in the US, euro-area manufacturing PMI fell to 51.6 in May from 52.2 in April, S&P Global data showed on Monday, indicating that factory growth lost momentum. New orders stagnated after rising at the fastest pace in four years in April, with weaker export demand contributing to the slowdown. Input costs rose at the sharpest pace since May 2022 and output price inflation reached a three-and-a-half-year high, driven by higher energy and raw material prices as well as supply disruptions linked to the war in the Middle East. Country-level data suggested France remained a laggard, while the Netherlands outperformed other major euro-area manufacturers. European equities closed lower on Monday: the Euro Stoxx 50 fell 0.2%, while Germany’s DAX lost 0.4% and France’s CAC 40 declined 0.5%.

Swiss PMI rises further in May

In Switzerland, manufacturing PMI rose to 57.3 points in May from 54.5 in April, marking its highest level in more than three years and signalling a third straight month above the 50-point growth threshold. Output and order backlogs strengthened further, while employment was broadly stable at 49.9, and firms reported higher input costs and longer delivery times, particularly for oil-based goods such as plastics amid tensions in the Middle East. Switzerland’s services PMI also improved to 56.0 from 54.8, driven by a sharp pickup in business activity to a 52-month high, although the employment component slipped to 48.2. Switzerland’s Swiss Market Index lagged on Monday, dropping 1.8%.

Oil slips as Iran talks continue

Oil prices eased on Tuesday after surging more than 5% on Monday, as markets weighed conflicting signals over US-Iran negotiations and the risk of disruption to flows through the Strait of Hormuz. Brent crude oil was trading around USD 94 per barrel and West Texas Intermediate (WTI) was at USD 91, following losses of more than 16% in May on hopes for a peace agreement. Sentiment remained fragile after US President Trump said talks with Iran were continuing and that he expected a deal within a week, even as Tehran had reportedly suspended indirect discussions with Washington. Gold prices rose slightly and were trading around USD 4520 per ounce on Tuesday, while bitcoin was trading lower around USD 70,500. US Treasury yields fell across the curve, while the US dollar was little changed.

Asian stocks mixed

Asia-Pacific equities were mixed later on Tuesday after opening broadly lower, as investors continued to assess uncertainty around US-Iran peace talks despite record closes on Wall Street. Japan’s Nikkei 225 was down 0.5%, while South Korea’s Kospi and Australia’s S&P/ASX 200 were little changed, each down 0.1%. In contrast, Hong Kong’s Hang Seng rose 1.8% and China’s CSI 300 gained 1.6%.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: euro-area Consumer Price Index (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.