PAST WEEK'S NEWS (June 02 – June 06)

The most powerful man vs the richest man is all the talk today, with Donald Trump and Elon Musk engaging in a dramatic public feud that erupted on Thursday after Musk, who had recently departed his governmental support role, publicly criticised Trump's "One Big, Beautiful Bill" as an "abomination" that would increase the debt ceiling and undermine his cost-cutting efforts. Trump expressed disappointment with Musk's attacks during a meeting with the German Chancellor, suggesting Musk was upset about the elimination of electric vehicle mandates that benefitted Tesla, which was countered by Musk to fire back with accusations that Trump was lying and that he had been crucial to Trump's 2024 election victory. The feud escalated when Musk suggested that Trump appears in Jeffrey Epstein's files and endorsed calls for Trump's impeachment, while Trump threatened to terminate Musk's lucrative government contracts worth billions of dollars. Musk initially responded by threatening to decommission SpaceX's Dragon spacecraft, which is vital for NASA operations, but later walked back this threat as both sides appeared to seek de-escalation.

Palantir, an American data analytics company with deep ties to Israel, providing critical AI support for its military campaign in Gaza has shown to include advanced targeting capabilities, linked to devastating strikes in Gaza, leading to accusations of complicity in the ongoing humanitarian crisis. Critics argue that Palantir's CEO, Alex Karp, has dismissed these concerns, even with employees resign in protest of the company's involvement. Beyond its role in the Gaza conflict, Palantir's Foundry software is increasingly integrated into various U.S. federal agencies, including the Social Security Administration and IRS, enabling the creation of detailed individual profiles. This extensive data integration capability, combined with its history of assisting agencies like ICE in tracking immigrants, spark fears of comprehensive citizen surveillance and potential weaponization for political and violent purposes. The growing influence of Palantir in both military operations and domestic surveillance poses a substantial risk to fundamental freedoms and civil liberties, as a single entity gains unprecedented control over sensitive government data.

INDICES PERFORMANCE

Wall Street seen to benefit off of a strong rally last week, with market confidence returning across major indices. The S&P 500 gained 1.50%, closing at 6000.37, as positive economic sentiment boosted investor confidence. The Dow Jones Industrial Average (DJIA) also posted solid gains of 1.17%, finishing at 42762.87. The Nasdaq led the advance with a 1.97% increase, closing at 21761.79, as tech stocks found renewed buying interest throughout the week, especially in small-cap stocks, suggesting a rotate from big tech.

European markets also showed positive momentum during the period, though with more modest gains than their American counterparts. The UK's FTSE 100 rose by 1.11%, closing at 4277.90. France's CAC 40 increased by 0.68%, ending at 7804.88, while Germany's XETRA DAX demonstrated strong performance with a 1.28% gain, closing at 24304.46. European markets appear to be benefiting from both regional optimism and broader global market strength.

Asian markets were mixed, with notable regional variations in performance. Japan's Nikkei 225 declined by 0.59%, closing at 37741.39, moving against the positive trend seen in other major markets. However, Hong Kong's Hang Seng Index posted strong gains of 2.16%, finishing at 23792.55. In mainland China, the Shanghai Composite Index showed positive movement with a 1.13% gain, ending at 3385.36, suggesting improved trading activity in the region alongside the broader global rally.

CRUDE OIL PERFORMANCE

Crude oil posted its best weekly performance of 2025, with WTI surging 6.67% to $64.52 and Brent climbing 6.31% to $66.56, supported by renewed U.S.-China trade talks and strong May jobs data that eased recession concerns. The rally gained momentum from optimism that trade agreements could boost global oil demand, while employment figures raised expectations for a possible Fed rate cuts. However, bullish sentiment faces major headwinds from anticipated OPEC+ production increases of 685,000 barrels per day in August-September, threatening to create Q4 supply surpluses. Meanwhile, the U.S. escalated pressure on Iran's shadow oil trade by sanctioning dozens of companies across Hong Kong, UAE, and Iran that facilitate illicit crude exports to Asia. Markets turned cautious Monday as investors awaited London trade talks between senior U.S. and Chinese officials, alongside key Chinese economic data that could signal demand strength. The oil market now sits at a critical juncture between trade-driven demand optimism and looming supply flooding, making upcoming diplomatic outcomes and OPEC+ decisions pivotal for price direction.

OTHER IMPORTANT MACRO DATA AND EVENTS

The U.S. added 139,000 jobs in May, beating forecasts despite federal job cuts and tariff uncertainty. With steady unemployment and rising wages, the Fed is expected to keep rates unchanged.

U.S. Defence Secretary Pete Hegseth expressed confidence that NATO allies will back Trump’s push for a 5% GDP defence spending target by the June summit, despite current gaps. A proposed split came to 3.5% for military and 1.5% for broader security become popular, though divisions remain over timing and definitions.

What Can We Expect from The Market This Week

US CPI May: Headline inflation rises 0.2% month-over-month in April, although it fell to 2.3% annually, closing in on the 2% target, while core inflation (excluding food and energy) is still elevated at 2.8% annually, reflecting persistent price pressures in other sectors despite overall moderation.

UK Unemployment Rate: The Unemployment rate in UK increased by 0.1% to 4.5% in the three months to March 2025, up from 4.4% in the previous period and representing the highest level since August 2021. There are growing labour market challenges, with payrolled employees decreasing by 106,000 year-on-year to 30.3 million in April 2025, while jobs are becoming scarce.

German CPI May: Preliminary data shows price in Germany only grew 2.1% annually in May, steady after cooling in April, although higher energy costs could sway final data. The Harmonised Index of Consumer Prices (HICP) notched the same figure, with core inflation (excluding food and energy) rising to 2.8%.

UK GDP April: Economic growth in the Kingdom is healthy with a 0.2% monthly expansion in March, gaining traction after the Bank of England (BoE) continues to cut interest rates. The broad-based growth is seen across services and manufacturing sectors, supporting expectations for continued moderate expansion.

US Initial Jobless Claims: Unemployment claims grew to 247,000 for the week ending in May, an increase of 7,000 from the previous week, reaching the highest level since October 2024. This uptick suggests some weakness in the labour market, though claims remain at historically low levels, with the four-week moving average providing a more stable indicator of underlying employment trends.