USA
The last week was defined by strong macro data that ultimately hurt equities. The ISM Manufacturing PMI rose to 54.0 in May — the strongest reading since May 2022 — with new orders jumping to 56.8. The ISM Services PMI also beat expectations at 54.5, though the prices index climbed to a four-year high, reflecting energy cost pass-through from the Middle East conflict. The decisive event was Friday's payrolls release. Nonfarm payrolls surged 172,000 in May, more than double the consensus estimate of 80,000, with unemployment holding at 4.3% and hourly earnings up 3.4% year-on-year. The beat pushed Treasury yields sharply higher, reinforcing Fed-on-hold expectations and triggering a broad equity selloff. The week opened at record highs — the S&P 500 touched 7,599.96, the Nasdaq 27,086.81, and the Dow 51,078.88 — driven by Nvidia's 6% surge on a new PC chip launch. By Friday, those gains evaporated. The Nasdaq fell 4.68% on the week, the S&P 500 posted its first weekly loss since March, and only the Dow held up, declining just 0.32%.
Europe
The region faced a stagflationary squeeze. The Eurozone Composite PMI fell to 47.5 in May — the sharpest contraction since October 2023 — as services collapsed to 46.4 and input costs rose the most in three years, driving firms to cut staffing for a fifth consecutive month. Inflation accelerated to 3.2% in May, the highest since September 2023, with energy up 10.9% and core CPI rising to 2.5% — well above the ECB's 2% target. Markets priced a hold at the ECB's June 11 meeting, with Germany's manufacturing PMI returning to 50.1 offering a thin silver lining. U.K. political risk added pressure as PM Starmer faced internal party revolts. Index performance was mixed to negative: the STOXX 600 fell 0.53%, the DAX dropped 1.38%, the FTSE 100 slipped 0.40%, Italy's FTSE MIB lost 0.29%, while the CAC 40 eked out a 0.43% gain. Spain's IBEX 35 also outperformed, supported by domestic demand resilience.
Japan
A positive GDP surprise was overshadowed by global rate anxiety. Japan's Q1 2026 GDP grew 0.5% quarter-on-quarter — the strongest quarterly gain since Q1 2025 — driven by private consumption (+0.3%), a rebound in public investment (+1.5%), and stronger auto exports (+1.8%). The BOJ held its policy rate at 0.75% in a 6-3 split vote, sharply raised its core inflation forecast to 2.8%, and cut its FY2026 growth outlook to 0.5% — framing the decision as both an inflation control and yen defence measure. Japanese manufacturing PMI slipped to a five-month low in May amid surging costs. Equity performance was mixed: the Nikkei 225 gained 0.39% on the week while the TOPIX fell 0.20%, with sentiment remaining cautious amid fragile Middle East ceasefire dynamics. Friday's U.S. jobs-driven spike in Treasury yields then triggered a sharp reversal in subsequent sessions, with semiconductor-heavy Nikkei components bearing the brunt.
China
The Caixin Manufacturing PMI dropped to 48.3 in May from 50.4 in April — back into contraction — as new overseas orders fell at the fastest rate in over two and a half years, while the Caixin Services PMI rose to 51.1, leaving the composite at 49.6. The official NBS readings remained marginally expansionary, reflecting the divergence between state-supported large enterprises and privately-owned exporters. The Caixin Manufacturing PMI for Q2 2026 registered 51.8 overall, with geopolitical energy cost pressures cited as the primary drag, while high-tech manufacturing and new export orders provided resilience. Markets nonetheless ended the week positively, driven by policy optimism and tech sentiment. The Hang Seng Index rose 2.16% to 23,793, the Hang Seng Tech Index rallied 2.25% on chip restriction easing hopes, Tencent gained 2.63%, Alibaba 2.37%, and BYD 2.6%, while the Shanghai Composite advanced 1.13% and the CSI 300 gained 0.88%.