Global equities were broadly flat on the week despite early week losses after President Trump imposed, then postponed, tariffs on Mexico and Canada. The S&P 500 returned -0.23% in local currency over the course of the week while the yield on the US 10-year note was little changed at 4.50%, despite a slowdown in the US services sector and nonfarm payrolls data that was weaker than forecast. 

Markets reacted negatively last Monday to the signing of an executive order by US President Donald Trump imposing 25% tariffs on Mexico and Canada and 10% levies on imports from China. By Monday afternoon, discussions with the Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau led to the postponement of those duties for 30 days. Both leaders pledged to devote more resources to stemming the flow of immigrants and fentanyl to the US. However, China was not spared, and retaliated with 15% tariffs on less than $40 billion of imports from the US which is set to come into effect this week. China also launched antitrust investigations against several US technology companies and expanding export controls on key minerals. 

European markets fared a little better, the MSCI Europe ex UK index returning 0.68% in local currency. French Prime Minister François Bayrou was able to force through his 2025 budget despite a minority government, doing so without the need for a parliamentary vote, after which he survived a vote of no confidence. French bonds rallied after the vote, narrowing their yield gap with German bunds. 

The UK’s FTSE 100 returned 0.31% to a record high. The Bank of England cut its base rate 0.25% to 4.5%, by a 7–2 vote. The two votes were for a more aggressive 50 basis point cut which somewhat surprised economists. The central bank’s forecasts suggest inflation will rise temporarily to 3.7% this year, and 2025 economic growth will only deliver 0.75%, down from previous forecasts for 1.5%.[1]  Elsewhere, the Bank of Mexico and the Reserve Bank of India also cut policy rates last week. 

The price of a barrel of West Texas Intermediate crude fell about a dollar to $71 after the immediate threat of tariffs on Canadian oil dissipated..

Week Ahead

Source: Workspace DataStream, 10/02/25
 

[1] Bank of England – Monetary Policy Report, February 2025

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