European markets extend winning streak
European equity markets commenced the new week with a third consecutive session of gains, bolstered by strong corporate earnings and a landmark agreement between the United Kingdom (UK) and the European Union (EU).
This agreement aims to reset relations between the UK and the EU five years after Brexit. By addressing crucial issues such as trade, energy, defence security, travel, and fisheries. The agreement offers optimism for more stable and cooperative future interactions between the two parties.
Perhaps dampening some enthusiasm ahead of today’s session, President Trump’s two-hour call overnight with Russian President Putin to discuss a ceasefire has failed to deliver a concrete deal. However, Russia and Ukraine have agreed to start another round of ceasefire talks.
Economic data in focus
Looking ahead, key economic data releases this week include:
- Flash UK and EU purchasing managers’ indices (PMI) on Thursday, 22 May 2025
- UK inflation report for April on Wednesday, 21 May 2025.
The headline measure of inflation is expected to rise to 3.3% year-on-year (YoY) in April from 2.6% YoY, and the core measure is expected to rise to 3.6% YoY from 3.4% prior. This outcome is expected to see the Bank of England (BoE) keep interest rates on hold until it delivers another 25 basis point (bp) rate cut in September.
On the trade front, United States (US) President Trump indicated towards the end of last week that the US and EU have initiated ‘serious trade talks’ as the 9 July deadline to end the reciprocal tariff pause approaches.
