Market Analysis: June 3rd, 2025

Globe and Mail

2 days ago

Global Markets
Canadian Markets
Canada's TSX Composite index rose modestly on Tuesday, supported by gains in the energy sector as crude oil prices climbed nearly 2%.
Investors are focused on the upcoming Bank of Canada (BoC) policy meeting scheduled for Wednesday. While inflation remains sticky in some segments, most economists now believe the BoC is more likely to hold interest rates steady, rather than cut them. The central bank is expected to adopt a cautious tone amid persistent uncertainties in global trade and growth, as well as the lack of a strong domestic disinflationary trend.
American Markets
U.S. stock markets saw gains across all major indices on Tuesday, buoyed by a weaker U.S. dollar and optimism around potential rate stabilization.
However, global concerns were amplified after the Organisation for Economic Co-operation and Development (OECD) revised its U.S. GDP forecast for 2025 downward to 1.6%, from a previous 2.2% estimate. The OECD attributed the downgrade to rising interest rates, global trade tensions, and supply chain vulnerabilities. It urged world governments to finalize new trade agreements to cushion economies from further deceleration.
U.S. manufacturing activity shrank for the third consecutive month in May, according to ISM data, with supplier delivery times stretching to their longest in nearly three years. This signals mounting pressure from tariffs and potential shortages, especially in industrial inputs and electronics.
European Markets
European markets opened lower on Tuesday following the OECD's downward revision of global GDP growth to 2.9% for both 2025 and 2026, down from 3.3%. Initial declines were most pronounced in export-heavy sectors, including industrial goods and automotive. However, sentiment improved later in the trading session, and European indices closed in positive territory.
Switzerland reported a surprising deflaionary trend, with consumer prices falling year-over-year. This increases the probability that the Swiss National Bank could return to negative interest rates.
UK markets initially opened lower on Tuesday, dragged down by mining and materials stocks, from fears of slowing global demand and softer commodity prices.
Despite the rough start, the FTSE 100 managed to close higher, helped by strength in energy, aerospace, and defense stocks. Confidence was supported by comments from Bank of England Governor Andrew Bailey, who reaffirmed the central bank's 'gradual and careful' approach to cutting interest rates amid rising uncertainty around global trade policy and economic projections.
Corporate News
Airbus May Deliveries: Delivered ~51 airplanes in May, a 4% decrease from the same month last year.
Block Inc Target Price Adjustment: Jefferies raised the target price to $75 (from $70), citing growth prospects due to increased hiring in sales and other divisions.
BP Plc Azerbaijan Expansion: Acquired stakes in two offshore blocks in Azerbaijan's Caspian Sea sector with SOCAR.
Bristol Myers Squibb BioNTech Partnership: Agreed to pay up to $11.1B to co-develop cancer immunotherapy with BioNTech, targeting competition with Merck's Keytruda.
Brown-Forman Corp Target Price Cut: Bernstein lowered the target to $53 (from $57.5), citing tariff risks and cautious outlook for upcoming earnings.
KKR & Co Inc Thames Water Exit: Withdrew from £4B investment plan; UK government may step in if Thames Water fails to recapitalize.
Mattel Inc Mattel Studios Launch: Film and TV units merged into Mattel Studios, led by Robbie Brenner, to scale content based on brands like Barbie, Hot Wheels..
Paramount Global Board Nominees: Appointed 3 new directors amid pending $8.4B merger with Skydance; facing headwinds from a Trump lawsuit over CBS.
Pinterest Inc Rating Upgrade: JPMorgan upgraded to overweight from neutral; target raised to $40 (from $35) due to strong 2023 progress.
Salzgitter Tariff Impact Warning: Germany's #2 steelmaker said U.S. tariffs are damaging European industry; warns of supply chain disruption.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) Tariff Commentary & AI Demand: Tariffs having slight impact, but strong AI chip demand continues to outpace supply.
Tesla Inc China EV Promotion: Model 3 and Y included in Chinese rural EV stimulus program for the first time since its inception.
Toyota Motor Corp Privatization Deal: $26B plan to take Toyota Industries private via real estate firm tied to Akio Toyoda; well below earlier reports of $42B.
UBS Group AG Capital Regulation Expected: Swiss govt likely to propose tougher capital rules for UBS post-Credit Suisse collapse; parliamentary scrutiny expected.