North America News
Wall Street Treads Water as Trade Uncertainty and Weak Data Weigh
Markets ended Wednesday mixed as investors struggled to find direction amid weak U.S. data and growing doubts over trade progress with China. The Dow Jones closed down 91.90 points at 42,427.74, while the Nasdaq gained 61.53 points to finish at 19,460.47. The S&P 500 eked out a marginal gain of 0.44 points to close at 5,970.81.
The session was dominated by economic concerns after the ADP report showed only 37,000 new jobs in May and the ISM Services PMI slid into contraction territory at 49.9. Both data points pointed to slowing momentum in the U.S. economy—especially in the service sector, which represents more than two-thirds of GDP.
President Trump added to the uncertainty, remarking on Truth Social that Chinese President Xi is “extremely hard to make a deal with.” The comment, lacking context, fueled speculation ahead of a possible call between the two leaders later this week.
Despite the murky backdrop, mega-cap tech helped limit losses. Meta (+3.2%), Amazon (+0.7%), and Nvidia (+0.5%) were notable gainers. They helped offset pressure from CrowdStrike, which tumbled 5.8% after missing revenue guidance, and Apple, down 0.2% on a downgrade.
Semiconductors outperformed again, with the Philadelphia Semiconductor Index up 1.4%. Treasury yields fell sharply post-data, with the 2-year yield dropping to 3.88% and the 10-year yield to 4.36%.
The communication services sector led all S&P sectors with a 1.4% gain. Energy (-1.9%) and utilities (-1.7%) lagged, reflecting profit-taking and growth concerns.
Despite today’s chop, the S&P 500 is still up 1.5% year-to-date, while the Nasdaq has gained 0.8%. The Dow, however, remains slightly negative for 2025, down 0.3%. Small caps continue to lag, with the Russell 2000 down 5.9% YTD.
Markets now turn to Thursday’s jobless claims and Friday’s Nonfarm Payrolls for further direction on growth and policy.
US ISM Services PMI Falls to 49.9 in May—First Contraction Since Late 2023
The ISM services index dropped to 49.9 in May, missing forecasts for 52.0 and falling below April’s 51.6. It’s the first contraction since late last year.
Breakdown of key sub-indexes:
- New orders: 46.4 (down from 52.3) – first negative reading in 12 months
- Business activity: 50.0 (down from 53.7)
- Employment: 50.7 (improved from 49.0)
- Prices paid: 68.7 (up sharply from 65.1)
- Supplier deliveries: 52.5 (up from 51.3)
- Inventories: 49.7 (down from 53.4)
- Backlog of orders: 43.4 (down from 48.0)
- Export orders: 48.5
- Imports: 48.2
- Inventory sentiment: 62.9 (up from 56.1)
The weak new orders print, combined with sticky input prices, paints a picture of slowing demand and ongoing cost pressure—raising fresh questions about the sustainability of the services rebound.
Comments in the report:
- “Tariff variability has thrown residential construction supply chains into chaos. Many items are still manufactured in southeast Asia, and suppliers are beginning to test the waters for increases. Major heating, ventilation and air conditioning equipment manufacturers are passing on their cost increases due to higher refrigerant and steel commodity prices. Planning is difficult for community projects that could be scheduled for the next 22 to 30 months.” [Construction]
- “Steady, with some signs of growth and opportunity.” [Finance & Insurance]
- “Federal budget cuts are affecting purchasing decisions.” [Health Care & Social Assistance]
- “Tariffs remain a challenge, as it is not clear what duties apply. The best plan is still to delay decisions to purchase where possible.” [Information]
- “Due to the tariffs, we’ve had had small price increases on our international raw materials, and some suppliers are holding back inventory to cover uncertainties. We’ve seen some slowdown in the production of new wells, but there has been an increase in restimulation of existing wells.” [Mining]
- “Life science startups continue to push forward on clinical trials and market launches. The level of investment grew this month. The impacts of tariffs are being watched but are not driving changes in strategic plans.” [Professional, Scientific & Technical Services]
- “The projects are slowly starting to be issued, albeit with a great deal of market uncertainty.” [Public Administration]
- “Business is strong. Consumer concerns over tariffs may be driving some demand.” [Retail Trade]
- “Tariffs have increased the cost of doing business. It’s too early to tell what the lasting impact of this will be. We have tried to budget for the increase, but it has been a moving target. Overall, we are seeing a leveling off in business activity; time will tell if this is temporary or long lasting.” [Transportation & Warehousing]
- “Business activity is increasing due to demand for data centers, commercial growth and infrastructure. Residential growth remains flat.” [Utilities]
US Final Services PMI for May Revised Up to 53.7
The U.S. services sector posted stronger-than-initially-reported growth in May. S&P Global’s final services PMI came in at 53.7, up from the 52.3 preliminary and well above April’s 50.8.
The composite PMI also rose to 53.0 (prelim: 52.1; prior: 50.6), marking a healthy expansion across both services and manufacturing. The upward revision suggests stronger momentum heading into summer.
ADP Jobs Report for May Comes in Well Below Expectations
Private payrolls in the U.S. rose by just 37,000 in May, a massive miss compared to April’s upwardly revised 110,000 and even lower than the prior 62,000.
- Goods-producing jobs: -2,000 (down sharply from +26,000 prior)
- Service sector jobs: +36,000 (up slightly from +34,000 prior)
Wage growth held steady:
- Job stayers: +4.5% (unchanged)
- Job changers: +7.0% (up from 6.9%)
ADP’s chief economist Nela Richardson said the labor market is showing signs of fatigue: “After a strong start to the year, hiring is losing momentum. Pay growth, however, held firm in May, with solid gains for both job-stayers and job-changers.”
This is the weakest report since March 2023—when job growth actually went negative.
US Mortgage Applications Slide Again as Rates Stay High
For the week ending May 30, mortgage applications in the U.S. fell 3.9%, following a 1.2% drop the previous week, according to the Mortgage Bankers Association.
- Market index fell to 226.4 from 235.7
- Purchase index down to 155.0 from 162.1
- Refinance index dropped to 611.8 from 634.1
- 30-year mortgage rate edged down to 6.92% from 6.98%
High interest rates continue to choke both home purchase and refinancing activity, keeping mortgage demand weak across the board.
Beige Book: Economic activity has declined slightly since the prior report
- Comments in the Beige Book
- Half of the Districts reported slight to moderate declines in activity, three Districts reported no change, and three Districts reported slight growth.
- All Districts reported elevated levels of economic and policy uncertainty
- Consumer spending reports were mixed
- Residential real estate sales were little changed
- Employment steady, hiring cautious due to uncertainty
- Tariffs driving moderate price hikes; costs increasingly passed to consumers
- Manufacturing softens slightly due to tariffs, cautious investment.
BofA Projects 150K Payroll Gain in May, Sees Risks from Trade Volatility
Bank of America is forecasting a 150,000 gain in U.S. nonfarm payrolls for May, above the consensus of 120K but below April’s 177K. They expect the unemployment rate to hold at 4.2%.
Notable points:
- Job growth in trade-related sectors may slow due to front-loaded hiring from tariff uncertainty.
- BofA doesn’t see widespread layoffs but acknowledges downside risks.
- Even if the jobs report underperforms, the Fed is unlikely to shift policy unless weakness deepens.
Trump: Making a Deal With Xi ‘Extremely Hard’
On Truth Social, Trump expressed frustration over trade talks with China, calling President Xi “VERY TOUGH” and “EXTREMELY HARD TO MAKE A DEAL WITH!!!”
He also said, “I like President XI of China, always have, and always will,” but left it unclear whether direct communication between the two has taken place. Previous reports hinted at a possible phone call between the leaders later this week.
Trump followed the Xi comment by boasting: “THE UNITED STATES HAD THE BEST MAY IN 30 YEARS. MAKE AMERICA GREAT AGAIN!!!”
Economist Warns Trump Tariffs Could Hurt U.S. Manufacturing Jobs
Trump’s decision to double down on steel tariffs could end up backfiring for U.S. manufacturing, according to Diane Swonk, Chief Economist at KPMG.
Referencing Federal Reserve research, Swonk noted that Trump’s 2018–2019 tariffs protected some steel jobs but triggered broader manufacturing job losses due to higher input costs.
She warned this time could be worse, with even steeper tariffs now in place.
BoC’s Macklem: Watching CPI Closely, Uncertainty Remains
At a press conference following the Bank of Canada’s latest rate decision, Governor Tiff Macklem said policymakers will be “watching carefully” the next two inflation reports before making any rate move.
Key takeaways:
- Recent inflation data shows volatility; Macklem warned against overreacting to one-off moves.
- The risk of the BoC’s most severe downside scenario has decreased since April.
- Comments about possible rate cuts are not forward guidance, he clarified.
- Wildfires are starting to impact economic activity in some regions.
Bank of Canada Holds Rates at 2.75%, Warns on U.S. Tariff Risks
The Bank of Canada kept its benchmark interest rate at 2.75%, as expected. Markets had only priced in a 26% chance of a cut.
Governor Tiff Macklem said there was “a clear consensus” to hold rates steady amid growing uncertainty around U.S. trade policy.
Highlights from the BoC’s decision and statement:
- Inflation excluding taxes came in at 2.3%, slightly hotter than forecast.
- U.S. tariff moves—particularly on steel and aluminum—have become unpredictable and are weighing on export expectations.
- Pull-forward of exports and inventory restocking helped boost Q1 growth.
- Domestic consumption is slowing, consumer confidence has dipped, and housing activity—especially resales—has taken a hit.
- The Bank expects weaker performance in Q2.
The BoC flagged several risk areas, including how quickly tariff-related costs might filter into consumer prices and how inflation expectations may evolve.
Macklem also noted businesses are planning to scale back hiring, and that “more diverse views” are emerging on whether a rate cut may be needed later in the year—particularly if economic softness persists and U.S. trade policy remains volatile.
RBC: BoC Holding Steady for Now, But Cuts Possible If Data Worsens
RBC says the Bank of Canada’s next move depends heavily on incoming economic data. A sharp Q2 slowdown in GDP growth and a rising jobless rate could tip the scales toward cuts.
Economist Claire Fan notes:
- Economic data is mixed, partly due to distortions from trade timing.
- RBC’s internal data shows consumer spending rose in April.
- Job listings in manufacturing and transportation appear to be rebounding.
- If CPI flares again due to new tariffs, the inflation outlook could worsen.
RBC believes rate cuts are still likely but not guaranteed, especially if Q2 data outperforms low expectations.
Canada Services Sector Still Contracting but Shows Some Recovery
Canada’s services PMI climbed to 45.6 in May, up from April’s 41.5, according to S&P Global. The composite index also rose to 45.5 from 41.7.
Although still well below the 50.0 threshold that marks growth, May’s data reflects a slower pace of contraction and improving sentiment.
Service providers reported the highest level of confidence since January. Job losses, a persistent trend in recent months, were nearly flat, with some employers even showing slight gains. Input costs accelerated, however, adding renewed inflation pressure.
Paul Smith, Economics Director at S&P Global Market Intelligence, said: “Canada’s service sector continued to struggle in the face of ongoing tariff and residual political uncertainty during May, with activity and new business volumes again declining markedly. Panellists reported hesitancy in committing to new work, with the unknown path of international trade policies and tariffs remaining a prevalent theme. “That said, there are some hopes of greater stability in the year ahead, with confidence improving since April and helping to support some marginal employment growth as firms look ahead to higher workloads in the months ahead. “Still, cost pressures remain a concern, with operating expenses rising to a greater degree in May. Wages, tariffs and supplier charges in general were all noted as factors underpinning higher costs. This meant that service providers to raise their own prices to the greatest degree in a year.”
Canada’s Labor Productivity Barely Moves in Q1
Canada’s labor productivity ticked up by just 0.2% in Q1 2025, a step down from the prior +0.6%, which has now been revised up to +1.2%.
While small, productivity is a critical metric for long-term economic health—though notoriously hard to measure in real time. The soft Q1 print adds to concerns about efficiency gains stalling as broader growth slows.
US-Canada Trade Deal Could Land Before G7 Summit
According to Canadian sources, Washington and Ottawa may finalize a trade agreement as early as next week—possibly ahead of the G7 summit on June 15.
The speculation gained traction after Trump’s new envoy to Canada, Pete Hoekstra, delivered a speech at Toronto’s Empire Club. Though his remarks lacked detail, the tone was upbeat. “I am optimistic about where this relationship is and I’m more optimistic about where I believe this relationship is going,” he said, which sparked buzz in the room.
One insider commented, “It will happen before the G7, perhaps as early as next week,” while another noted, “Ottawa knows what they need to do.”
Despite Trump’s recent tariff threats, a senior Canadian source suggested that there’s still a “hopeful scenario” for a deal—if both sides can move decisively in the next 48 to 72 hours. Another noted that “the Carney team’s goal is to wrap this before the G7.”
The chatter hints at a possible shift in Trump’s approach—from escalation to negotiation—not just with Canada, but globally.
Economists Expect Bank of Canada to Hold Rates Steady
The Bank of Canada is widely expected to keep its benchmark rate at 2.75% during today’s meeting, with 11 out of 13 economists in a Wall Street Journal poll predicting no change.
Though unemployment is rising and domestic consumption is weakening, stronger-than-expected Q1 GDP growth—partly due to pre-tariff spending—has lent the economy some resilience.
Still, core inflation at 3.15% in April, well above the BoC’s 2% target, remains a concern. Most analysts believe the central bank could begin cutting rates later this year, possibly as early as July if domestic weakness persists.
Canada Blasts U.S. Tariffs on Steel and Aluminum as ‘Unjustified’
The Canadian government is pushing back against newly announced U.S. tariffs on steel and aluminum, calling them unlawful and unjustified.
Ottawa says negotiations with Washington are ongoing and active as it seeks to have the tariffs removed.
Commodities News
Gold Surges Past $3,380 on Weak U.S. Data, Renewed Trade Friction
Gold surged over 0.8% on Wednesday, hitting $3,382 as disappointing U.S. economic data and escalating trade tensions reignited demand for safe-haven assets. The yellow metal bounced off its session low of $3,343 after both the ADP employment and ISM services reports showed signs of a slowing economy.
The ADP report revealed a meager gain of 37,000 private-sector jobs in May, well below expectations. Simultaneously, the ISM Services PMI dropped to 49.9, signaling contraction in the service sector for the first time in almost a year. These prints confirm that growth is losing momentum, bolstering gold’s case as a defensive asset.
Geopolitical risks also came back into focus. President Trump signed an executive order doubling tariffs on steel and aluminum to 50%, effective June 4. The move adds pressure to already-tense U.S.-China trade relations, particularly ahead of a potential call between Trump and Xi Jinping later in the week.
Fed officials have expressed caution about accelerating rate cuts, but soft data is shifting market expectations. Traders are now pricing in 54 basis points of rate cuts by year-end, according to futures markets.
The U.S. Dollar Index fell 0.44% to 98.81, further supporting gold. With bond yields retreating—10-year Treasury yields dropped 10 basis points to 4.36%—the conditions are aligning for continued upside in precious metals.
Investors will watch Thursday’s jobless claims and Friday’s Nonfarm Payrolls for the next macro inflection point.
Silver Climbs Back Toward $34.80 as Dollar Wobbles Ahead of Key Data
Silver prices rebounded from $34.00 support, climbing to around $34.50 on Wednesday as bulls eyed the critical resistance zone between $34.60 and $34.80. The 161.8% Fibonacci extension from the May 20–22 rally and previous 2024 highs both sit in this band, making it a technical pivot for the next move.
The rebound comes as the U.S. Dollar Index (DXY) starts to lose steam after a brief bounce earlier in the week. Investors are now turning cautious ahead of key U.S. data releases, including the ADP jobs report and ISM services data, both of which will feed into broader economic sentiment and rate expectations.
Silver’s technicals remain bullish. The 4-hour RSI holds above 50, signaling strength, and downside support has held firmly around $33.70. Should silver break above $34.80, a test of the late 2012 high at $35.40 is possible. Conversely, a move below $34.00 would risk a retest of the $33.50 and $32.75 levels.
Traders are watching for momentum cues, but with gold also rallying and the U.S. dollar faltering, the setup favors continued upside for silver—especially if macro headwinds escalate.
US Crude Inventories Drop Sharply, But Product Builds Raise Concerns
The latest EIA data shows U.S. crude oil inventories fell by 4.3 million barrels last week, beating expectations of a 1 million barrel draw. The prior week saw a draw of 2.8 million barrels.
However, the bullish headline is tempered by large product builds:
- Gasoline: +5.2 million barrels (vs. +609K expected)
- Distillates: +4.2 million barrels (vs. +1 million expected)
While crude supplies are tightening, these product surpluses could weigh on prices in the short term.
Saudi Arabia Pushes for Bigger Output Increases to Win Market Share
According to reports, Saudi Arabia is pushing to boost oil output by 411,000 barrels per day in August and possibly again in September as part of a broader effort to claw back market share.
The news triggered a dip in oil prices, as markets worry about oversupply amid global demand uncertainty.
Gold Buying Slows in April as Central Banks Pull Back at High Prices
Global central bank gold purchases slowed in April, with net additions of just 12 tonnes—down 12% from March and well below the 12-month average of 28 tonnes.
According to the World Gold Council:
- Poland was the top buyer, adding another 12 tonnes, bringing its reserves to 509 tonnes—more than the ECB’s 507 tonnes.
- Gold prices hit record highs near $3,500/oz in April.
- Central banks are still net buyers but appear cautious at elevated levels.
ING’s Francesco Pesole expects buying to resume over time as global diversification away from the U.S. dollar continues.
OPEC Output Rises in May as Market Eyes Summer Demand Surge
OPEC production climbed by 200,000 barrels per day in May, reaching 27.54 million bpd, according to Bloomberg estimates. That’s short of the 300K+ bpd increase allocated under the OPEC+ plan.
Key market signals:
- Canadian wildfires initially disrupted supply but have eased thanks to rain.
- Brent touched its highest level since mid-May, just below $66/bbl.
- Both Brent and WTI markets are in steep backwardation, reflecting near-term supply tightness.
Refined product inventories are rising, though:
- Gasoline: +4.73M barrels
- Distillates: +761K barrels
- Crude: -3.28M barrels (API data)
- Cushing stocks: +952K barrels
ING analysts expect output from OPEC to keep trending higher into the summer.
Barclays Softens Bearish View on Oil Prices
Barclays is taking a less pessimistic view on oil, citing stronger-than-expected spot fundamentals and easing trade tensions.
The bank says demand looks more stable than previously forecast, and supply has largely tracked expectations, contributing to a firmer market outlook.
Trump to Use Emergency Powers for Critical Minerals Push
Donald Trump plans to activate emergency authority under the Defense Production Act to boost U.S. production of critical minerals, cutting through red tape and sidestepping standard legal and funding limits.
The initiative is aimed at challenging China’s grip on global supply chains, especially after Beijing’s recent export restrictions amid growing trade tensions.
Trump’s strategy would override requirements like congressional approval for projects exceeding $50 million and stringent delivery schedules.
The approach mirrors tactics used by President Biden during the COVID-19 response.
Analysts say the U.S. still depends heavily on China for critical minerals, and domestic production ramp-up could take 5 to 10 years.
Private Survey Shows Larger-Than-Expected Crude Oil Draw
A private industry survey revealed a significantly larger U.S. crude inventory draw than anticipated, ahead of official government figures.
- Crude oil: -3.3 million barrels (expected -900,000)
- Gasoline: +4.7 million barrels
- Distillates: +760,000 barrels
Europe News
Eurozone PMI Revised Higher but Points to Stagnation
The Eurozone’s final services PMI for May improved to 49.7 from a 48.9 preliminary read. Still, it was down from April’s 50.1.
The composite PMI was revised up to 50.2 from 49.5, offering a glimmer of growth—but just barely.
The services sector is flirting with stagnation, dragged down by soft demand, especially in Germany. Confidence remains low amid ongoing uncertainty.
HCOB notes that:
“The eurozone economy has grown for the fifth month in a row, but this interpretation requires a certain amount of goodwill, as the overall index of 50.2 is only marginally above the expansion threshold and the pace of growth also slowed slightly in May. This development is due to a slight decline in activity in the service sector, while manufacturing output showed the same moderate growth as in the previous month. For the rest of the year, we are confident that further key interest rate cuts by the European Central Bank and fiscal stimulus, particularly from Germany, will be sufficient to offset the negative effects of higher tariffs and increased uncertainty.
“The European Central Bank will not be entirely satisfied with the PMI price data. In the services sector, which is closely watched for inflation, the rate of increase in sales prices fell again. However, the situation has worsened somewhat with regard to cost increases, which are already relatively high. This will probably not prevent the ECB from lowering key interest rates again at its meeting on June 5, partly because goods prices have fallen slightly and at an accelerated pace.
“Southern Europe is ensuring that the service sector as a whole is spared a slump. Solid growth in this sector in Italy and the weaker but still positive expansion rate in Spain are helping to offset the mild decline in activity in France and the relatively sharp drop in Germany. If the southern European countries can maintain their momentum to some extent, while German service providers begin to benefit from expansionary fiscal policy, a recovery in this sector is quite possible this year. Confidence that this will happen has increased slightly, but is still not particularly strong by historical standards.”
Germany’s Services Sector Shrinks to 30-Month Low
Germany’s final services PMI for May landed at 47.1, just under the preliminary 47.2 and well below April’s 49.0.
The composite PMI dropped to 48.5, its lowest since December, as business activity declined sharply.
This marks the weakest services performance in over two years. Input and output price pressures eased slightly, but the overall picture is one of economic deceleration.
Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:
“The service sector is no longer stabilizing the overall economy, it is slowing it down instead. Business activity declined for the second month in a row, new business fell more sharply than in the previous month, and work from abroad was also lower than before. However, there are many indications that this development is not sustainable, but rather attributable to the volatility of economic activity that is observed from time to time.
“The conditions for a recovery are relatively good: real wages have risen and are likely to continue to do so therefore driving up demand for services, lower interest rates are helping many companies, and the new government’s expansionary fiscal policy should also have a positive impact on large parts of the service sector.
“Service providers have significantly slowed the pace of hiring, but despite weaker new business, they are not yet prepared to lay off staff on balance. This may be due to the usual lag with which lower activity is reflected in personnel decisions. However, it is also quite possible that companies are proceeding with greater caution with respect to job cuts because they are hoping for a recovery soon. This view is supported by the higher level of optimism compared with the previous month, even though it remains lower than seen on average in the past.
“The continued sharp rise in costs is a challenge for the service sector. The rise is primarily due to wage increases, as energy prices fell in May. Since it is apparently only possible to pass on smaller price increases to customers, service providers’ margins are coming under pressure. An improvement in demand as a result of expansionary fiscal policy could improve the situation here in the coming months.”
France’s Services PMI Revised Up, But Still Contractionary
France’s final services PMI for May came in at 48.9, a notable upward revision from the 47.4 preliminary reading and a tick above April’s 47.3.
The composite PMI rose to 49.3 from a 48.0 preliminary, yet the reading still reflects a contraction.
The drop in new orders and employment was less severe than in previous months, signaling a potential bottoming-out, though activity remains under pressure.
HCOB notes that:
“The French private sector economy seems like it’s on the brink of exiting contraction. The composite HCOB PMI improved to 49.3 in May, still below the growth threshold, but marking the highest reading so far this year. The upward trend is visible in both manufacturing and services PMIs.
“Overall market conditions remain constrained, with both domestic and foreign demand continuing to decline, though at a slower pace. While there are tentative signs of a recovery in market demand, optimism for improvement in the coming year has deteriorated further, suggesting that service providers remain unsettled by ongoing uncertainty. It remains to be seen how effective President Macron’s efforts to attract research and investment to France will be.
“Profit margins in the French service sector appear to have narrowed in May. Input cost inflation accelerated, driven in part by wage pressures. At the same time, output prices declined, indicating that firms were unable to pass on rising costs to customers. Competitive pressures prompted companies to lower their prices despite increasing cost burdens. The ECB might feel supported by this price trend, leaving scope for them to cut rates again at the next meeting tomorrow. Looking ahead, we anticipate two additional rate cuts from the ECB later this year.”
Italy’s Services Sector Beats Forecasts in May
Italy’s services PMI surprised to the upside, hitting 53.2 for May compared to a forecast of 52.0. That’s up from April’s 52.9.
The composite PMI also climbed to 52.5, above last month’s 52.1. Business activity gained steam, with firms expressing increased optimism about future conditions.
However, growth in new business cooled slightly, though it remained historically elevated. Inflation pressures also picked up, suggesting costs are once again trending higher.
Commenting on the PMI data, Nils Müller, Junior Economist at Hamburg Commercial Bank, said:
“Italy’s service sector continued to expand in May, with the HCOB Services PMI rising to 53.2 – its highest reading in nearly a year. The sixth consecutive month of growth was underpinned by resilient domestic demand and a steady inflow of new business, helping to solidify the sector’s role as the main engine of Italy’s economic expansion. While the pace of new order growth softened slightly, it remained elevated by historical standards, suggesting that the recovery is gaining traction.
“Employment growth accelerated to its strongest pace since mid-2024, as firms responded to rising workloads by hiring additional staff – often on temporary or part-time contracts. Business confidence also improved, reaching a three-month high, though it remained below the long-run average, reflecting lingering caution.
“At the same time, the external environment continues to cast a shadow over the sector. Export demand fell for a tenth consecutive month, with the sharpest contraction since January. Survey respondents pointed to subdued global conditions as a key factor dampening international sales. What will the US-EU trade negotiations bring? We don’t know yet – and until there is clarity, ongoing trade uncertainty will remain a central theme for Italian services exporters.
“Inflationary pressures, meanwhile, showed signs of reacceleration. Input costs rose amid higher energy prices and wage burdens, prompting firms to raise their selling prices at the fastest rate in over a year. While this may help protect margins, it could also test the limits of consumer tolerance in the months ahead. For the ECB, which HCOB Economics expects will lower its key interest rates once more at the upcoming June meeting, the uptick in service-sector inflation is an unwelcome development, potentially complicating the path toward broader price stability across the eurozone.”
Spain’s Services Growth Slows Sharply in May
Spain’s services sector lost momentum in May, with the HCOB Services PMI falling to 51.3, well below the 52.8 expected and down from April’s 53.4.
The composite PMI dropped to 51.4 from 52.5, hitting an 18-month low. Weaker demand and mounting uncertainty dragged on activity, and confidence in the outlook slumped to its lowest point since November 2023.
HCOB notes that:
“Cooling conditions in Spain’s private sector economy. The headline HCOB Composite PMI Index for Spain remains just above the growth threshold, supported by weak activity in the service sector, resulting in the softest performance since late 2023. Within the service sector, demand conditions appear constrained—particularly in terms of new business. Reports frequently link this development to uncertainty stemming from tariffs, especially among internationally engaged clients. New business from abroad even declined in May.
“The subdued new order situation is also reflected in outstanding business, which fell for the first time in nearly a year-and-ahalf. Nevertheless, companies continue to seek improvements in staffing levels, although the pace of new hires has slowed. However, as the Spanish economy remains relatively robust – especially compared to other major Eurozone countries – concerns over headcount reductions should remain limited, even amid ongoing global economic uncertainty. Economic risks remain tilted to the downside, as reflected in future business expectations, which have dropped below average, suggesting that customers may act more cautiously in the current environment.
“Service price inflation remained elevated in May. Panellists frequently attributed the rise in input costs to a dual pressure: increasing wages and suppliers raising their prices – often in response to tariff-related effects. Sale prices indicate that companies are still able to pass on higher costs to clients, although output price inflation has continued to ease slightly over the past three months.”
UK Services PMI Rebounds Slightly in May
UK services activity ticked back into growth territory in May, with the final PMI at 50.9—up from the 50.2 preliminary and April’s 49.0.
The composite PMI rose to 50.3, surpassing the preliminary 49.4 and prior month’s 48.5.
Business activity edged higher and optimism climbed to its strongest level in seven months. However, job numbers and new orders continued to decline, showing that the recovery is fragile.
Tim Moore, Economics Director at S&P Global Market Intelligence, said:
“The service sector regained its poise in May as receding concerns about US tariffs, recovering global financial markets and greater confidence among clients all helped to support output growth. Although only marginal, the upturn in service sector activity was stronger than first estimated in May.
“Output growth expectations for the year ahead also rebounded after April’s tariff-related slump. Optimism reached its highest level since October 2024, which reflected forthcoming business investment plans alongside hopes of a turnaround in sales pipelines and improving domestic economic prospects.
“Prevailing demand conditions nonetheless remained challenging in May, as signalled by a sustained reduction in total new orders across the service economy. Survey respondents mostly cited cutbacks to discretionary business and consumer spending.
“Reduced workloads and pressure on margins from increased payroll costs meant that headcounts remained under close scrutiny. Aside from the pandemic, the current eight-month period of falling employment numbers is the longest streak since 2008-10.
“While rising wages were again the most commonly reported factor pushing up input prices, the overall rate of cost inflation eased from April’s 21-month high. Softer cost inflation and intense competitive pressures contributed to the slowest rise in price charged by service providers since last October.”
EU’s Sefcovic: Constructive discussion with Greer, we are advancing in right direction
- Comments from the EU’s Trade Commissioner
- We had substantive and constructive discussion with Greer, concluded we are advancing in right direction and pace.
- Main message from at trade talks in Paris is strong support for multi-lateral ties, strong rules based system.
- On US steel tariffs, we discussed this with Greer, told him we strongly regret it, and it does not help negotiations.
- Currently out discussions with the US are covering all the issues.
- The 50% US tariff hike on steel is a surprise.
- I still believe in negotiations with the US, believe we can achieve a positive result, but we are ready to defend out interests.
- Discussions on EU countermeasures are ongoing, we are following a rules-based procedure.
- We should do the most to get the deal before July 9th.
- We discussed things we believe we could work better together with the US, such as AI chips, semiconductors, critical materials, and energy security.
- We agreed on how to restructure the focus of our negotiations with the US.
- We are advancing in the right direction at pace on tariffs
SNB’s Tschudin dismisses the monthly inflation number as just one data point
- Still, the Bank won’t be happy with the negative print
- SNB won’t be distracted by monthly inflation numbers
- “We’re focused on the medium term”
- “this is just one data point”
Asia-Pacific & World News
China’s Commerce Minister Meets with EU and Canadian Trade Officials
China’s Commerce Minister Wang Wentao held talks with EU Trade Commissioner Maroš Šefčovič in France to discuss pressing issues in China-EU trade. The talks were described as open and focused, with both sides pledging deeper cooperation.
The meeting emphasized the role of the WTO in addressing unilateral tariffs and urged for more balanced trade governance.
Wang also met Canada’s Minister of International Trade, where the two sides agreed on the need to resolve trade tensions through dialogue and enhance multilateral coordination.
PBOC sets USD/ CNY central rate at 7.1886 (vs. estimate at 7.1977)
- PBOC CNY reference rate setting for the trading session ahead.
PBOC injected 214.9bn yuan via 7-day reverse repos at 1.40%
- 215.5bn yuan mature today
- net drain is 0.6bn yuan
Australian Services PMI Final at 50.6 for May
Australia’s S&P Global Services PMI for May 2025 came in at 50.6, slightly above the preliminary 50.5 but down from April’s 51.0.
The composite PMI landed at 50.5, compared to a preliminary 50.6 and previous 51.0, pointing to slower overall activity.
From the report, Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence:
- “Growth in the Australia service sector slowed midway through the second quarter of 2025, according to the latest S&P Global PMI data. This was centred on a softer rise in new business, as external conditions deteriorated once again. Concerningly, optimism levels among services firms also softened to a six-month low, in contrast to a trend of rising confidence among manufacturers.
- “While hiring activity was sustained at a solid level to signal a relatively tight labour market, the easing of inflationary pressures bodes well for a further reduction of interest rates to support growth in the coming months. Output price inflation notably fell to its lowest level since late 2020, which, alongside the easing of charge inflation in the goods producing sector, hints at a softening CPI outlook for Australia.”
Australia’s Q1 GDP Growth Falls Short of Expectations
Australia’s economy grew by just 0.2% in Q1 2025, well below the 0.4% forecast and down from the previous quarter’s 0.6%.
On an annual basis, GDP increased 1.3%, matching Q4 2024 but missing the 1.5% consensus estimate.
The GDP Chain Price Index rose 0.5%, down sharply from 1.4%, indicating weaker inflation pressures.
Final consumption was flat at +0.2%, while GDP per capita slipped -0.2%. Productivity dropped 1%, and government spending dragged growth more than at any point since 2017.
However, the household savings rate jumped to 5.2%, up from 3.9%.
Japan to Launch Think Tank on Trump Tariffs and Taiwan Risks
Japan plans to set up a new think tank under the National Security Secretariat to study the economic risks posed by geopolitical tensions, including potential trade disruptions linked to Trump-era tariffs and instability around Taiwan.
According to Nikkei, the think tank will help Japan bolster its economic intelligence and assess vulnerabilities in supply chains and critical infrastructure. The project will be detailed in upcoming economic policy guidelines.
Japan’s Komeito Party Proposes Food Tax Cut Ahead of Election
Japan’s Komeito party plans to pitch a sales tax reduction on food—from 8% to 5%—in its campaign platform for the July upper house elections, per Yomiuri newspaper.
The proposal, set for formal release Friday, also includes direct payments to households to ease inflation-related pressures. The party says these measures would be paid for using surplus tax revenues rather than fresh borrowing.
Komeito’s push may add pressure on Prime Minister Ishiba and the ruling Liberal Democratic Party, who remain skeptical about tax cuts due to Japan’s fiscal challenges.
Japan’s Services PMI Dips as Growth Momentum Slows
Japan’s service sector expanded modestly in May 2025, with the Jibun Bank Services PMI registering 51.0, slightly higher than the preliminary 50.8 but down from April’s 52.4.
The composite PMI came in at 50.2, indicating sluggish overall private sector growth.
New business gains slowed to their weakest since November, and employment growth in services was the slowest since December 2023.
Despite weak demand, business confidence improved compared to April but remained below post-COVID norms. High input costs continued to exert inflationary pressure.
Crypto Market Pulse
Bitcoin Resilient as Exchange Reserves Plunge to 7-Year Low
Bitcoin is showing resilience in a choppy crypto market, trading around $105,455 as it hovers between support near $103,000 and resistance at $106,800. The broader trend remains muted, but one bullish signal stands out: BTC exchange reserves have dropped to their lowest levels since August 2018.
This decline is significant. On-chain data from CryptoQuant shows reserves are down to just over 2.38 million BTC, a 13.5% drop since January and over 23% from last year. The trend suggests long-term holders are moving coins to cold wallets, reducing sell-side pressure and reflecting deepening confidence in Bitcoin’s future.
However, Bitcoin’s momentum has slowed. Futures open interest has dropped from $80.16 billion to $70.89 billion in the past two weeks. Spot trading volume has also collapsed to $77.4 billion from over $200 billion in late May, signaling waning trader engagement. The market appears to be in wait-and-see mode, with macro headwinds and trade policy uncertainty weighing on short-term sentiment.
Meanwhile, Ethereum is picking up the slack. ETH spot ETFs saw $109 million in inflows on Tuesday—the 12th consecutive day of net positive activity. With U.S.-based ETFs now holding $3.23 billion in Ethereum, and BlackRock’s ETHA product leading inflows, altcoin rotation may continue as BTC stabilizes.
In the near term, Bitcoin’s price action may stay range-bound. But the structural drop in exchange reserves hints at a possible supply squeeze should demand return quickly.
Ethereum Reclaims Momentum as Institutions Shift Away from Bitcoin
Ethereum is experiencing renewed bullish momentum as big-name financial institutions divert capital away from Bitcoin and into ETH. The shift reflects growing sentiment that Ethereum is more versatile and attractively priced, particularly as ETH continues to gain traction among decentralized application developers and as a Layer 2 ecosystem.
Institutional flows reveal the trend clearly. BlackRock increased its ETH holdings by 100,000 coins—worth roughly $260 million at current prices—while cutting its Bitcoin exposure by 4,000 BTC, or over $420 million. The rebalancing indicates a deeper strategic pivot in asset allocation toward Ethereum’s long-term prospects.
Galaxy Digital also made a significant move, completing an OTC transaction of over 108,000 ETH, valued near $283 million. Blockchain data shows the firm moved 89,000 ETH from exchanges before transferring a larger batch into a cold wallet now holding more than $365 million in Ethereum. This signals not only accumulation but a high level of conviction.
Ethereum trades at around $2,627 as of June 4, holding above key support at $2,500. Analysts say a break above the $2,925 resistance zone could open the door to $3,150, with some targeting a move toward $3,500 if ETF flows and institutional demand continue to build.
Spot Ethereum ETFs in the U.S. are also showing strength, with over $100 million in inflows reported on Tuesday. BlackRock’s ETHA leads the charge, followed by Fidelity’s FETH and Grayscale’s ETH. With momentum on its side and whales backing the move, Ethereum is positioning itself as the institutional favorite for the next leg of crypto growth.
XRP Tests Key Support as Webus Files $300M Treasury Strategy With SEC
XRP is navigating a pivotal technical level as it consolidates between the 50-period and 100-period exponential moving averages. The token is currently trading around $2.24, just below its recent high of $2.27. The sideways action comes as markets digest a major development: China-based Webus International has filed with the SEC to raise $300 million for an XRP-based treasury and payment infrastructure.
The filing, submitted via Form 6-K, outlines a plan by Webus to use the capital to build a Ripple-powered corporate treasury system for its mobility and hospitality business. The funds will be raised through a non-equity credit facility, and the strategy will be implemented in partnership with asset manager Samara Alpha. The goal: establish a strategic XRP reserve and integrate Ripple’s blockchain payments for streamlined, cross-border transactions.
Webus joins a growing list of companies moving institutional funds into XRP. Earlier this week, renewable energy firm VivoPower unveiled a $121 million XRP treasury plan. Meanwhile, derivatives markets are signaling bullish pressure—XRP open interest has surged to $4 billion, with a spike in short liquidations, a setup that often precedes a price breakout.
The increasing presence of large institutions, alongside derivative activity and token accumulation, is sparking renewed optimism that XRP’s sideways churn could give way to a breakout. If bulls defend the current support level successfully, XRP could challenge the $2.27 resistance again—and potentially break toward $2.40 in short order.
PI Network Whale Loads Up as Price Stalls in Consolidation Range
Despite a sharp price correction, a major PI Network whale has been aggressively accumulating tokens—276 million PI coins over two months, worth about $180 million.
Recent price action:
- PI trades around $0.6515, consolidating after a 60% drop from May highs of $1.67.
- Technicals show mixed signals:
- RSI near 47, indicating fading bearish momentum
- MACD climbing but histogram weakening
- EMA structure remains bearish with key resistance at $0.6779 and $0.7137
If PI falls below $0.6285, the next test would be $0.6106, and possibly a drop to $0.5788. A breakout above $0.6586 could shift the momentum bullish.
CoreWeave Surges on $7B Deal With Applied Digital
CoreWeave (CRWV) stock jumped 25% Tuesday and added another 5% premarket following a $7 billion data center deal with Applied Digital.
Deal details:
- Two 15-year leases for 250MW of IT load at Applied’s Ellendale campus in North Dakota.
- First data center goes live in Q4 2025; second in mid-2026.
- Options exist for 300MW more capacity.
- Applied Digital has secured $375M in financing from SMBC to fund development.
CoreWeave is now up 276% year-to-date, driven by surging AI demand and major infrastructure expansion.
UNI Gains Momentum With Spark Integration and Whale Activity
Uniswap (UNI) extended its rally with a third straight day of gains, trading over 2% higher as Spark Finance went live on Unichain.
Key drivers:
- Spark integration introduces native USDC yield for users, boosting protocol utility.
- Whale activity: A notable rise in large transactions over $100K suggests institutional accumulation.
Technical support and rising on-chain volume signal that UNI could target a breakout toward the $7 level if the trend continues.
Truth Social Files for Bitcoin ETF Listing on NYSE
Trump’s social media company, Truth Social, has filed to launch a Bitcoin ETF and seeks to list it on NYSE Arca.
The ETF aims to track Bitcoin’s market price and adds a new dimension to the company’s digital finance ambitions, according to crypto-focused outlets.
The Day’s Takeaway
United States
- Stocks Mixed as Mega-Caps Cushion Weak Data
The Dow dipped 91 points while the Nasdaq gained 61, and the S&P 500 was flat. Investors digested soft labor data and renewed trade tensions. Meta (+3.2%), Amazon (+0.7%), and Nvidia (+0.5%) helped stabilize the indices despite a drop in CrowdStrike (-5.8%) and a downgrade to Apple. - Jobs Data Undershoots Expectations
ADP reported only 37K new private-sector jobs in May—far below forecasts. Small businesses shed 13K jobs, while large firms posted modest losses. The weak print raised speculation of slower growth and future Fed cuts. - Services Sector Contracts
The ISM Services PMI fell to 49.9, indicating contraction for the first time in nearly a year. Prices paid rose, adding to inflation concerns. The report signals slowing demand and stagflation risks. - Yields Slide, Dollar Softens
The 10-year Treasury yield dropped 10 basis points to 4.36%, and the 2-year yield fell to 3.88%. The dollar index slid 0.44% to 98.81, reflecting shifting Fed expectations and investor caution.
Canada
- BoC Holds Rates, Watching CPI Closely
The Bank of Canada kept its policy rate at 2.75% and emphasized uncertainty due to U.S. tariffs and economic softness. Governor Macklem noted further cuts are possible, depending on inflation and trade outcomes. - S&P Global Services PMI Improves But Still Contracting
May services PMI rose to 45.6 from 41.5. Job losses slowed, and confidence reached its highest since January. However, inflation pressures picked up again. - Labor Productivity Slows in Q1
Productivity edged up just 0.2%, down from a revised 1.2% in Q4. The weak figure adds to signs of an economic deceleration in early 2025. - RBC Flags Weak Second Half Ahead
RBC expects economic softening in Q2 and sees rate cuts likely unless inflation flares. They note strong April consumer spending and a modest rebound in job postings but remain cautious.
Commodities
- Gold Surges on Trade Tensions, Weak U.S. Data
Gold spiked 0.80%, reaching $3,382 as economic reports disappointed and Trump doubled metal tariffs. Risk-off sentiment and falling yields helped fuel safe-haven flows. - Silver Holds Gains, Eyes $34.80 Resistance
Silver bounced off $34.00 support, consolidating near $34.50. Technical momentum remains bullish with targets set at $34.80 and $35.40 if resistance clears. Dollar weakness supported the move. - Oil Mixed as Inventories Show Crude Draw, Product Builds
U.S. crude inventories fell by 4.3 million barrels, much deeper than expected. However, gasoline (+5.2M) and distillates (+4.2M) posted large builds, raising demand concerns. - OPEC Output Rose in May
Preliminary data shows OPEC production increased by 200K bpd to 27.54M bpd, short of the OPEC+ target. Canadian wildfires added temporary supply risk but eased midweek. - Saudi Arabia Pushes for More Output Hikes
Reports indicate the Kingdom wants to continue increasing production in August and potentially September, as part of a market share strategy. Oil prices dipped on the news.
Europe
- Eurozone Services PMI Revised Up But Still Weak
Final May services PMI was 49.7, revised from 48.9. Growth remains sluggish, especially in Germany. Composite PMI rose to 50.2 but signals economic stagnation. - UK Services PMI Back Above 50
UK’s final services PMI came in at 50.9, up from 49.0 in April. Optimism improved, but new orders and employment continued to weaken. - Spain Slows, Italy Gains
Spain’s PMI dropped to 51.3, an 18-month low, while Italy surprised to the upside at 53.2, with stronger output but signs of rising inflation. - France Still Contracting
France’s services PMI was revised to 48.9 from 47.4, showing a softer contraction than initially thought. - Germany Services PMI Hits 30-Month Low
Germany’s final PMI sank to 47.1, with business activity and confidence both weakening.
Asia
- China’s Commerce Minister Meets with EU and Canada
China emphasized WTO-led trade governance and bilateral cooperation during high-level meetings with EU and Canadian officials. - Japan Services PMI Eases to 51.0
Service sector growth cooled in May with slowing new business and weak hiring. Composite PMI barely held above 50 at 50.2. - Australia Q1 GDP Misses Forecasts
GDP rose just 0.2% q/q, well below the 0.4% expected. Year-over-year growth was 1.3%. Government spending was the biggest drag, while household savings spiked to 5.2%. - Australia Services PMI Dips Slightly
May final services PMI came in at 50.6, down from April’s 51.0. Activity remains barely expansionary. - US-Canada Trade Deal Could Arrive Pre-G7
- Canadian sources say a bilateral agreement could be finalized before the June 15 G7 summit. Trump’s envoy Pete Hoekstra hinted at progress, though details remain vague.
- Japan Proposes Think Tank on Trump Tariffs, Taiwan Risks
Japan is creating a think tank to assess the national economic security impact of U.S. tariffs and Taiwan tensions. The initiative will sit under the National Security Secretariat.
Crypto
- XRP Consolidates as Webus Files $300M XRP Treasury Plan
Webus International filed with the SEC to raise $300M for an XRP-focused treasury and Ripple-powered payments. XRP holds support near $2.24 as open interest hits $4B and institutional interest grows. - Ethereum Outshines Bitcoin on Institutional Rotation
BlackRock and Galaxy Digital shifted capital from BTC to ETH. BlackRock added 100K ETH, Galaxy made a $283M OTC move. ETH trades near $2,627, with ETF inflows and whale accumulation supporting upside potential. - Bitcoin Reserves Hit 7-Year Low
Exchange-held BTC has dropped to just over 2.38M coins, the lowest since 2018. Meanwhile, BTC trades in a narrow range between $103K–$106.8K as participation wanes. - UNI Targets $7 as Spark Integration, Whale Activity Accelerate
Uniswap is up for a third straight day with whale transactions rising. Spark Finance’s USDC yield launch on Unichain adds bullish momentum. - PI Network Whale Buys 276M Tokens Amid Pullback
A major PI whale added 276M tokens despite a recent price drop. PI is consolidating around $0.65, but technicals show mixed signals with risk of further downside if $0.6285 breaks.
