I. Performance and Valuation of Global Equity Indices
Data Sources: Bloomberg, Tiger Asset Management
Key Highlights
◼ Last week, U.S. equities generally trended higher despite some turbulence. The May PMI data caused brief market panic, but stronger-than-expected employment data quickly reignited bullish sentiment. Moreover, a high-level phone call between Chinese and U.S. leaders officially marked the beginning of the second round of bilateral trade talks, helping to dispel earlier rumors. Driven by multiple positive catalysts, nearly all major global equity indices posted gains, with U.S., Hong Kong, and emerging markets leading the advance.
◼ Notably, ISM and S&P Global released two vastly different May PMI readings last week. ISM showed figures below previous values, expectations, and the 50-point expansion threshold, while the other exceeded all benchmarks. The divergence stems primarily from differences in survey samples, reflecting the resilience of U.S. domestic consumption. Although the nonfarm payrolls and unemployment figures appeared solid, hidden concerns remain beneath the surface. Nevertheless, the U.S. economy is holding up, particularly with household income remaining unaffected. Inflation data in May and June will be crucial.
◼ This week’s key events include the outcome of China-U.S. trade negotiations, May CPI/PPI releases, and the University of Michigan consumer sentiment survey.
II. Key Market Themes
U.S. Stocks: Macroeconomic Backdrop Acceptable, Market Narrative Becoming Clearer
Over the past week, May macroeconomic data was released progressively. Although the process had some hiccups, the final results turned out better than expected—no major shocks, and even a few positive surprises. ISM’s manufacturing and services PMIs came in at 48.5 and 49.9, respectively—both below prior readings, expectations, and the 50-point threshold. These seemingly alarming figures briefly shook markets, but were quickly absorbed.
Interestingly, S&P Global's PMI survey delivered the opposite message, with both manufacturing and services PMIs significantly outperforming prior readings and comfortably above 50. Their sample focuses more on small and medium-sized enterprises (SMEs), which are mainly domestically oriented and less affected by international trade or tariffs. This suggests that U.S. domestic demand remains robust. Furthermore, S&P Global uses industry-weighted construction methodology more aligned with GDP calculation, slightly boosting expectations for Q2 economic growth.
Data Source：Institute for Supply Management, Tiger Asset Management
In addition, Friday’s employment data came in solid. May nonfarm payrolls increased by 139,000—slightly cooler than the prior month but still above expectations. The unemployment rate stood at 4.2%, broadly in line with forecasts. Markets responded positively, shrugging off the panic from the previous day’s ADP private payroll miss, with all three major U.S. indices rallying on Friday.
However, a closer look reveals the data is less rosy than it appears. April and March payrolls were revised downward by a combined 95,000, meaning May’s net gain may be under 50,000. Similarly, the jobless rate remained at 4.2%, but the unrounded figure rose from 4.187% in April to 4.244% in May—an uptick of roughly 0.6%. Thus, while U.S. employment conditions are stable, they are far from exuberant.
Wage growth, on the other hand, once again exceeded expectations—repeating April’s pattern. On one hand, this confirms the economy's resilience and continued consumer spending power; on the other hand, it underscores sticky inflation. This week’s CPI/PPI data will be a key inflection point. Notably, markets have shown extreme strength recently, seemingly ignoring macroeconomic risks—an overconfidence that might in itself become problematic.
Beyond macro data, the public dispute between Elon Musk and Donald Trump also drew investor attention. Tesla shares plunged nearly 20% in one day. The spat centers around Trump’s “One Big, Beautiful Bill Act” fiscal reform. Musk claimed his DOGE initiative saved $1.7 trillion (a number disputed by critics), only for Trump’s new bill to potentially raise the government deficit by nearly $3 trillion. Over the weekend, Musk posted on social media exploring the feasibility of forming a third political party, while Trump publicly stated his fallout with Musk.
There is no doubt that Trump, as the incumbent president, holds significantly more influence and authority. Musk’s third-party aspirations are arguably more challenging than sending rockets to Mars. The key takeaway: the fiscal mega-bill is Trump’s top legislative priority and not open to challenge. If successfully enacted, a narrative combining fiscal expansion and future rate cuts could serve as the next support for U.S. equities.
On tariffs, there were also developments. The Chinese and U.S. heads of state spoke last week and agreed to launch the second round of trade talks this week. Although the outcome remains uncertain, we expect incremental progress at best. A comprehensive resolution to core issues is unlikely in the short term. Markets appear to have priced in an overly optimistic scenario, assuming a smooth path for Trump’s TACO (Tariff Adjustment & Compliance Ordinance). Retail investors are already speculating on how to profit from the TACO rollout. Such excessive optimism is arguably the biggest short-term risk. If negotiations falter, volatility may spike. Ultimately, whether to “buy the dip” depends on the long-term question: how impactful are these tariffs on inflation—and are those effects one-off or lasting? For now, a wait-and-see approach seems prudent as more data becomes available and clearer narratives emerge.
Data Sources:Tiger Asset Management
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