Strong jobs, stronger jitters

The US added 172,000 jobs in May, significantly outperforming expectations of 80,000 and reinforcing evidence that the labour market remains resilient despite ongoing economic uncertainty.

Meanwhile, the unemployment rate held steady at 4.3%, highlighting continued labour market stability.

While stronger employment figures would typically be welcomed by markets, the reaction was notably different.

Equities sold off sharply following the release, while the benchmark 10-year Treasury yield climbed to 4.53%. Investors grew concerned that a combination of improving economic momentum and lingering inflation pressures could prompt the Federal Reserve to consider interest rate hikes.

Geopolitical developments also remained firmly in focus. Hopes for a breakthrough in negotiations between the US and Iran faded once again. President Trump has continued to suggest that discussions are nearing a conclusion, however, statements from Iranian officials have painted a less optimistic picture.

The Strait of Hormuz remains closed and the ongoing supply shock has intensified concerns over rising energy prices and the potential for a renewed inflationary surge across major economies.

In Europe, equity markets finished the week under pressure as investors digested a mixed set of economic indicators.

Manufacturing activity provided a rare bright spot, with the final May PMI rising to 51.6 and exceeding expectations. However, optimism was short-lived as the Composite PMI fell deeper into contraction territory at 48.5, while the services sector remained weak at 47.7.

Combined with elevated energy costs and accelerating input price pressures, the data reinforced stagflation concerns and strengthened expectations of a near-term European Central Bank rate increase.

In addition, Eurozone unemployment edged up to 6.3% in April from 6.2% the previous month. In Asia, Japan’s Nikkei 225 continued its remarkable run, reaching another record high before profit-taking emerged later in the week. The pullback was amplified after semiconductor giant Broadcom reported revenue that fell short of expectations, temporarily cooling enthusiasm surrounding the global AI-driven technology rally.

Equities

Global stocks finished down -1.3% in euro terms and down -2.2% in local terms last week. Year-to-date global markets are up by 9.8% in euro terms and up by 8.0% in local terms. The US market, the largest in the world, finished down at -1.6% in euro terms and down at -2.5% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.5% last week. The German equivalent finished at 3.0%. The Irish 10-year bond yield finished at 3.2%. The Euro/US Dollar exchange rate finished at 1.15, whilst Euro/GBP finished at 0.86.

Commodities

Oil finished the week at $91 per barrel and is up 60.7% year-to date in euro terms. Gold finished the week at $4,329 per troy ounce and is up 2.2% year-to-date in euro terms. Copper finished the week at $13,490 per tonne and is up 10.4% year-to-date in euro terms.

The week ahead

Monday 8^th June

Japan GDP data is released.

Wednesday 10^th June

US CPI data goes to print.

Thursday 11^th June

The ECB make an interest rate decision.