Will world markets rise or fall this week? What to watch out for

19/05/2025 02:54 AST

Global investors ended last week on a high note, driven by signs of easing trade tensions between the US and its key partners. Wall Street closed one of its best weeks in 2025, with major US stock indexes climbing for the fifth day in a row.

This momentum was sparked by news of progress in US-European Union trade talks and a truce between the US and China-signals that the White House may be softening its stance after months of aggressive tariff moves.

For UAE investors watching from afar, this marks an important shift. American stock funds saw a $20 billion inflow last week, the first in over a month, suggesting fund managers are warming back up to US equities. If the mood holds, the S&P 500 could soon retest its February highs, recovering from near-bear market levels just weeks ago.

What about Europe, Asia?
In Europe, stock markets also logged their fifth straight week of gains. The improving outlook for US trade talks helped lift sentiment, and corporate earnings in the region have been slightly better than expected-another tailwind for risk assets.

However, Asia tells a more mixed story. While Australian shares ended higher last week, markets in Japan and China came under pressure, and South Korean equities remained flat. Some of the hesitation stems from renewed speculation that the US Federal Reserve could cut interest rates later this year if tariffs start to weigh more heavily on growth.

Back in the US, investors are keeping a close eye on earnings this week. Major retailers like Home Depot, Target, Lowe's, TJX, and Ralph Lauren will report their results, offering clues on the health of the consumer. At the same time, tech and travel stocks such as Snowflake, Palo Alto Networks, Intuit, and Ryanair are also on the calendar.

In addition, several key US Federal Reserve officials-including New York Fed President John Williams-are set to speak this week. Markets will be listening closely for any hints on future interest rate policy, especially as pressure builds from President Trump to stimulate growth with rate cuts.

Will markets rise or fall this week?
Given the current momentum, the lack of negative surprises on trade, and steady investor flows into equities, global markets-particularly in the US and Europe-look set to extend their gains in the near term. While Asian markets remain cautious, and central bank commentary could still sway sentiment, the overall tone is tilted toward the upside.

Bottom line: This week may offer more opportunities than risks. But stay alert-tariff talk and Fed signals remain key market drivers.

Gulfnews