May 2025 Market Summary

Global markets in May 2025 presented a mixed picture, with investors navigating a complex landscape shaped by persistent trade tensions, shifting fiscal policies and monetary easing signals. While some regions, like Europe and India, saw pockets of optimism driven by strategic reforms and delayed trade measures, others – including the UK and parts of Asia – faced challenges from inflationary pressures, subdued demand and ongoing geopolitical uncertainty. As markets continue to adjust to these evolving conditions, policymakers and investors alike are seeking clarity on the trajectory of global growth, inflation and interest rates in the months ahead.

Here is how some of the top indices around the world performed in the year leading up to 2 June 2025:

FTSE100: 6.20%
S&P 500: 11.89%
Stoxx 600: 5.54%
Nikkei 225: -3.73%

United Kingdom

Private sector firms expect activity to decline over the next three months, with the CBI’s latest Growth Indicator showing the weakest outlook since September 2022. Business volumes in services are forecast to fall sharply, with both business and professional services and consumer services contributing to the decline, while distribution sales and manufacturing output are also set to weaken. This negative outlook follows a broad-based fall in activity across all sectors in the three months to May. The CBI’s Deputy Chief Economist, Alpesh Paleja, highlights rising costs, global trade uncertainty and weak domestic demand as key headwinds, urging the government to take decisive action in the upcoming Spending Review and Industrial Strategy to restore confidence and drive sustainable growth.

On a positive note, the UK economy is projected to grow more than previously expected in 2025, with the International Monetary Fund (IMF) now forecasting 1.2% growth for this year and 1.4% in 2026 – despite global trade tensions, US tariffs and inflation risks. The IMF praised the government’s infrastructure and trade reforms but warned Chancellor Rachel Reeves to adhere to strict fiscal rules, balancing tax and spending to maintain market confidence. While the economy showed strong growth in early 2024, aided by consumer spending and business investment, rising inflation and external pressures may dampen prospects.The IMF additionally suggests revisiting some fiscal policies, such as reducing the frequency of official financial assessments.

United States

The U.S. economy faced challenges in May 2025, with durable goods orders falling by 6.3% in April, reflecting caution amid an unpredictable trade environment. The decline in durable goods orders comes as U.S. President Donald Trump reversed a previous threat to impose 50% tariffs on EU imports and extended the deadline for negotiations, highlighting the volatile nature of U.S. trade policy.

Asia

Asia’s manufacturing sector experienced a downturn in May due to diminished demand from China. This regional slowdown follows heightened trade tensions, with US President Donald Trump threatening to double tariffs on steel and aluminium and China filing complaints about discriminatory US measures.
In contrast, India emerged as a leading destination for stock compounders, with Bank of America Securities highlighting strong long-term growth prospects in the nation’s equity markets. However, caution remains regarding short-term market performance due to high valuations and global uncertainties.

Europe

Equity markets in Europe showed notable strength recently, with Germany’s DAX and France’s CAC 40 indices both posting gains. The DAX in particular reached a record peak, reflecting strong investor confidence in the German economy and broader European markets.
This positive momentum was largely driven by two key factors. First, investor sentiment improved significantly following the announcement of a delay in the imposition of US tariffs on EU imports, which alleviated immediate concerns over potential trade disruptions and economic fallout. This reprieve provided European companies with greater visibility and time to adapt to the evolving trade environment. Second, market participants eagerly anticipated the European Central Bank’s (ECB) upcoming interest rate decision, which many expect to include accommodative measures aimed at supporting economic growth amid global uncertainties. The combination of easing trade tensions and potential monetary stimulus contributed to increased buying interest across sectors, bolstering equity valuations in key European markets.