Author | Peter Smith, Senior Investment Director
Markets continued to digest the endless news flow on global tariffs, while Nvidia provided further indications of the resilience of company earnings in the first quarter of the year.
Read this article to understand:
- The big stories impacting financial markets this week
- The outlook for financial markets from here
- Our multi-asset portfolio positioning in the current environment
Market review
On Friday May 23, President Trump surprised markets by announcing plans for a 50 per cent tariff on European Union imports and a 25 per cent tariff on foreign-made smartphones, targeting companies like Apple and Samsung. The announcement led to a decline in global stock markets. The German DAX fell by 1.5 per cent and the tech-heavy Nasdaq by one per cent on the news.1
The 50 per cent tariff on EU goods was set to come into effect on June 1. Market jitters somewhat eased when President Trump announced over the weekend a delay until July 9. Market reaction was positive, with the German DAX rising close to two per cent on Monday. Although US markets were closed due to Memorial Day, the S&P 500 played catch up on Tuesday, May 27, rising by 2.1 per cent.
In parallel, markets waited with bated breath for Nvidia to release its quarterly earnings on Wednesday night. They did not disappoint, even in light of the uncertainty around tariffs, with Q1 revenue coming in at $44.1 billion, a 69 per cent increase year-on-year and close to $1 billion ahead of analyst expectations.
On Thursday, a US federal court blocked the implementation of President Trump’s tariffs, stating they exceeded presidential authority under the 1977 International Emergency Economic Powers Act. Markets reacted positively, but by the evening, a US Court of Appeals temporarily paused the ruling, reinstating the tariffs. The saga looks set to rumble on.
Following last week’s spike in long-dated US Treasuries, with the US 30-year Treasury breaking through the five per cent barrier, this week has seen yields in general fall back slightly. On the other hand, Japanese long-dated bond yields have come under pressure on the back of weak demand for a 40-year bond sale as investor concerns around the sustainability of Japan’s massive debt load continued.
In other news, Bitcoin hit an all-time high this week and was trading at $105,800 by Friday morning, while gold continued to slide in the current risk-on environment.
As of the morning of Friday, May 30, global equity markets were positive for the week, up around 1.5 per cent in local currency terms, the only regional detractor being emerging-market equities.
Outlook
The outlook from here will hinge on developments in trade negotiations, inflation trends, central bank policy and future corporate earnings. Market volatility is likely to persist as investors assess the broader economic implications of evolving US policy.
Although investment markets have reacted positively of late to news-driven events, uncertainty persists. They will have to continue navigating a complex macroeconomic landscape while reacting to ongoing trade negotiations that will have divergent impacts on countries and regions.
Our positioning in multi-asset portfolios
In portfolios where we have active discretion, we maintain a small overweight allocation to European and emerging-market equities, due to improvements in short-term market sentiment.
In equities, we recently introduced an overweight position in UK midcap companies relative to UK large caps. A closer relationship with the EU presents an opportunity for mid-caps, which have underperformed large caps for some time.
Within fixed income, we have structured our active positions to be less sensitive to rising bond yields at the long end of the US Treasury curve, favouring exposure at the five-year point. We maintain overweight positions in UK and German government bonds, reflecting our expectation of continued rate cuts from central banks in the regions. We are underweight French government bonds due to the country’s more precarious fiscal situation and political instability relative to the rest of Europe.
In currency markets, based on our outlook for ongoing dollar weakness, we still hold a long position in the Japanese yen versus the US dollar.
We continue to monitor the situation to ensure the portfolios remain positioned appropriately. While cautious, we are still looking to add value where we have active discretion.
References
1. Source of all data in this article: Bloomberg, as of May 29, 2025.
Important information
THIS IS A MARKETING COMMUNICATION
Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but, has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. Some data shown are hypothetical or projected and may not come to pass as stated due to changes in market conditions and are not guarantees of future outcomes. This material is not a recommendation to sell or purchase any investment.
The information contained herein is for general guidance only. It is the responsibility of any person or persons in possession of this information to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. The information contained herein does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it would be unlawful to make such offer or solicitation..
In Europe, this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK, this document is issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: 80 Fenchurch Street, London EC3M 4AE. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.
In Singapore, this material is being circulated by way of an arrangement with Aviva Investors Asia Pte. Limited (AIAPL) for distribution to institutional investors only. Please note that AIAPL does not provide any independent research or analysis in the substance or preparation of this material. Recipients of this material are to contact AIAPL in respect of any matters arising from, or in connection with, this material. AIAPL, a company incorporated under the laws of Singapore with registration number 200813519W, holds a valid Capital Markets Services Licence to carry out fund management activities issued under the Securities and Futures Act 2001 and is an Exempt Financial Adviser for the purposes of the Financial Advisers Act 2001. Registered Office: 138 Market Street, #05-01 CapitaGreen, Singapore 048946. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
In Canada and the United States, this material is issued by Aviva Investors Canada Inc. (“AIC”). AIC is registered with the Ontario Securities Commission as a commodity trading manager, exempt market dealer, portfolio manager and investment fund manager. AIC is also registered as an exempt market dealer and portfolio manager in each province and territory of Canada and may also be registered as an investment fund manager in certain other applicable provinces. In the United States, AIC is registered as investment adviser with the U.S. Securities and Exchange Commission, and as commodity trading adviser with the National Futures Association.
The name “Aviva Investors” as used in this material refers to the global organisation of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the UK.
