Monthly Macro Review - May 2025

Macro at a glance

From 13-16 May 2025, Donald Trump visited the Middle East and signed a number of economic agreements. The result: more than $2,000 billion in cumulative commitments with Saudi Arabia, Qatar and the United Arab Emirates. In Riyadh, Trump signed a $142 billion defence contract and pledged to invest $600 billion in energy, infrastructure and artificial intelligence. Qatar Airways signed the largest order in its history: 210 Boeing aircraft for $96bn. Other deals include defence and the modernisation of the Al Udeid base. The UAE also announced strategic partnerships in technology, including a huge purchase of Nvidia chips and the creation of a huge data centre dedicated to artificial intelligence. (FT, Le Figaro, Reuters)

This has been a historic month for the bond market, especially in Japan, which is breaking all-time records. A disastrous auction, linked in particular to macroeconomic uncertainty, shook the global bond market. Japan is paying record yields of 3.15% on 30-year bonds and 3.7% on 40-year bonds. Moreover, Japanese Prime Minister Shigeru Ishiba has compared the country's fiscal situation to that of Greece. With a debt/GDP ratio of 237%, Japan holds the sad world record for public debt. The spiral of debt linked to the rising interest paid on the existing debt is only reducing growth, which is already critical. Even though this financial situation has been unfolding for more than thirty years, investors are beginning to realise that debt leads to unnecessary risks, a trend that can spread more globally. (Zone Bourse, FT)

On May 19, the UK hosted its first official post-Brexit summit with the European Union, a symbolic milestone aimed at “turning the page” after years of tension. During the meeting, both blocs agreed upon a new Security and Defence Partnership. This partnership paves the way for UK defence firms to participate in the EU’s proposed €150 billion Security Action for Europe (SAFE) fund. While the agreement does not grant immediate access, it establishes a framework for future collaboration, allowing UK defence companies to bid for projects financed by the SAFE initiative. The pound saw a modest uptick following the announcement, reflecting investor relief over reduced uncertainty. (Financial Times, Politico Europe, Reuters)

The India-Pakistan conflict escalated dramatically in May 2025 after militants killed 26 civilians, mostly Hindu tourists, near Pahalgam in Kashmir on April 22. India accused Pakistan of involvement, which Pakistan denied. On May 7 India launched "Operation Sindoor" striking nine sites across Pakistan with missiles. India claimed it targeted terrorist infrastructure, while Pakistan said civilian areas including mosques were hit. After four days of fighting, both countries agreed to a ceasefire on May 10 following international pressure from the UN, US, and China. This is the most serious conflict between the two nuclear-armed neighbours in decades. (TIME, CNN)

One Sector, One Insight

Basic Materials and Energy :

After 18 months of political and regulatory uncertainty, the $14.9 billion acquisition of U.S. Steel (X) by Nippon Steel (5401) was approved by Donald Trump via Truth Social on 23 May. The head office will remain in Pittsburgh, the CEO must be American, and a majority of the board of directors must be made up of American citizens. The government will also hold a ‘golden share’, giving it the right to veto any strategic decision contrary to national interests. United States Steel's share price rose by more than 17% following the announcement. (Reuters, CNBC)

Consumption and General Public Services:

Faced with falling demand and pressure on its margins, Diageo (DGE) is to launch a $500mn savings plan between now and 2028. The group is planning cuts in logistics, marketing and asset disposals, excluding Guinness, in order to improve its FCF, with a target of $3bn next year ($2.6bn in 2024). The company is the symbol of a sector in crisis, where the spirits giants (Diageo, LVMH  (MC), Pernod Ricard (RI)) are struggling to adapt to more sober and young consumers. (FT, Reuters)

Financial Services :

During Berkshire Hathaway’s (BRK) annual shareholders meeting on May 4 in Omaha, Warren Buffett announced that he will retire as CEO by the end of 2025. The 94-year-old investment icon, who turned Berkshire into a trillion-dollar conglomerate over more than six decades, reaffirmed his succession plan, naming Greg Abel as the next CEO. Abel is expected to assume full executive control while continuing Buffett’s long-standing investment philosophy. Buffett reassured shareholders that he would not sell any of his Berkshire shares. “The mission and culture of Berkshire won’t change,” he told a packed auditorium of 30,000 shareholders. (CNBC, The Guardian, Wall Street Journal)

Healthcare:

On May 12, Trump signed an executive order implementing "Most Favored Nation" pricing to lower US drug costs by 30% to 80%. The order aims to match American prices with the lowest international prices and directs Health and Human services to establish direct consumer purchasing programs. Drugmakers have 30 days to meet price targets or face potential rulemaking and import restrictions. Americans currently pay up to three times more for identical medications than other countries. Drug stocks initially fell but recovered as the order seemed less severe than expected. (Yahoo Finance, White House)

Industrials:

On 20 May, Chinese car battery giant CATL (3750) made its initial public offering on the Hong Kong stock exchange. In the largest IPO of the year, CATL raised up to $4 billion by offering 117.9 million shares at up to HK$263. Despite tensions with Washington, which condemns them for being associated with the Chinese armed forces. The supplier of Tesla and Mercedes is a major challenge for Hong Kong, which is seeking to regain its status as the world's leading stock market for initial public offerings. (Le Temps, AllNews)

Technology and Network Equipments :

On 28 May 2025, Nvidia (NVDA) announced record sales of $44.1 billion for the first fiscal quarter of 2026, up 69% year-on-year, driven by sustained demand for AI chips. The Data Centre segment, the company's flagship business, generated $39.1 billion, up 73% year-on-year. Despite a $4.5 billion charge linked to the Trump administration's restrictions on exports to China, net profit came to $18.8 billion. The share price rose by more than 3% the following day. (FT)

The stock of the month:

Centrus Energy (LEU) shares rose by more than 83% in May. The rise was driven by better-than-expected quarterly results and the announcement of 4 federal contracts for the production of HALEU nuclear fuel, totalling up to $2.7 billion over ten years. (Bloomberg)

Key performances 

Name	As of May  31	Monthly change	YTD
S&P500	5911.69	6.15%	0.51%
Dow Jones	42270.07	3.94%	-0.64%
NASDAQ	19113.77	9.56%	-1.02%
FTSE100	8772.38	3.27%	6.20%
CAC40	7751.89	2.08%	4.84%
DAX	23997.48	6.67%	19.84%
SMI20	12227.08	0.91%	5.19%
MSCI WORLD	3863.48	5.69%	4.20%
VIX	18.57	-24.82%	7.03%
CHF/USD	1.2169	0.21%	10.47%
CHF/EUR	1.0709	0.45%	0.65%
Brent $/bbl	61.99	-3.52%	-18.36%
Gold Spot $/oz	3289.40	-0.89%	23.71%

Upcoming events

June 15-17: G7 Summit

June 16-17: BoJ Meeting 

June 17-18: Federal Reserve FOMC Meeting