Weekly market news: 26 May 2025
Markets enter the final week of May with central banks holding fire and fresh data set to test the outlook for rate cuts. In the UK, April’s headline inflation unexpectedly rose to 3.5% year-on-year, driven by higher energy and council tax bills.
The Bank of England could therefore be likely to sit tight on further rate changes until later in the summer.
In the US, Federal Reserve minutes signalled that policymakers remain wary of cutting rates until clear signs of slowing inflation emerge, even as jobless claims ticked up slightly.
Across Europe, flash PMI surveys showed continuing weakness in Germany and France, reinforcing expectations that the European Central Bank will begin lowering rates in June – but only if inflation continues to track lower.
Geopolitical tensions and trade policy uncertainty remain a backdrop to markets, keeping volatility elevated as traders await the next batch of economic reads.
Coming up this week
Note: The upcoming economic events have been cross-checked against public economic calendars and mainstream market information services, which compile official releases and announcements from central banks and government agencies.
They are chosen because they either guide central bank policy or reveal consumer and business behaviour in key economies.
Monday 26 May
- UK spring bank holiday (markets closed): a public holiday in the UK, leading to lighter trading volumes and potentially larger price moves elsewhere.
- Germany Ifo business climate index (May): a survey of German firms on current conditions and expectations, offering a barometer of eurozone industrial health.
- US markets closed for Memorial Day: US equities and bond markets are shut, which can amplify moves in Asia and Europe.
Tuesday 27 May
- Germany preliminary inflation (May flash): an early estimate of consumer price changes in Germany; a key guide for ECB rate-cut timing.
- US durable goods orders (April): measures new orders for long-lasting manufactured products, indicating business investment trends.
- Eurozone unemployment rate (April): the percentage of the labour force out of work across the euro area, reflecting labour-market strength.
Wednesday 28 May
- UK gross domestic product (April monthly estimate): a snapshot of UK economic growth for April, showing whether activity is gaining momentum after a slow start to 2025.
- US GDP (second estimate, Q1): a revised reading on US economic growth in the first quarter; upgrades or downgrades influence Fed policy expectations.
- Japan national core CPI (April): inflation excluding fresh food, a key measure for the Bank of Japan as it assesses its ultra-loose policy.
Thursday 29 May
- Eurozone flash composite PMI (May): a survey of purchasing managers across services and manufacturing, signaling whether the region is emerging from contraction.
- US initial jobless claims: weekly data on new unemployment benefit filings; a rise may boost expectations of Fed rate cuts.
- US existing home sales (April): the annualised number of previously owned homes sold, offering insight into consumer spending and wealth effects.
Friday 30 May
- Eurozone flash inflation (May flash): headline and core CPI estimates for May; crucial for confirming when the ECB can start cutting rates.
- US personal consumption expenditures (PCE) core price index (April): the Fed’s preferred inflation gauge excluding volatile food and energy, key to future policymaking.
- China manufacturing and services PMIs (May flash): early indicators of business activity in the world’s second-largest economy, which can sway global growth expectations.
What you might’ve missed last week
UK: April’s headline CPI rose more than expected to 3.5%, driven by energy and council tax increases, putting rate-cut hopes on hold.
US: May meeting minutes showed officials are prepared to keep rates higher for longer until inflation clearly declines. Initial claims ticked up to 230,000, suggesting a slight cooling in the tight US labour market.
Eurozone: flash PMI surveys for May indicated continued contraction in Germany and France, reinforcing calls for ECB easing next month.
Rest of world: retail sales and industrial output grew modestly in April, but policymakers face the challenge of reinvigorating demand without igniting asset bubbles.
Why it matters
This week’s data will be pivotal in confirming whether central banks can begin cutting rates or must remain on hold. UK inflation is proving stickier than expected, likely delaying Bank of England moves.
In the US, higher-frequency indicators like jobless claims and PCE inflation will guide the Fed’s timing. Meanwhile, eurozone and Chinese surveys will set the tone for global growth prospects.
Volatility is set to remain elevated as markets balance signs of resilience against ongoing price pressures.
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