Issue #12 - Luxury Markets Under Pressure: What's Next for Global Consumer Trends?

What’s in this issue;

In this issue, you'll find an overview of the latest developments shaping the financial markets and global economy.

Market Movements: May concluded on a strong note for Wall Street, with the S&P 500 gaining 6.2%, rebounding from earlier tariff disruptions. The Dow and Nasdaq also saw robust growth. However, trade tensions between the U.S. and China remain a key concern, especially after recent accusations and court rulings around tariffs.

Global Trends: President Trump's critical minerals initiative has sparked a deep-sea mining rush, stirring environmental and geopolitical debates. Meanwhile, Apple’s satellite ambitions face hurdles due to strategic and regulatory complexities, and LVMH is grappling with reduced luxury spending from Chinese consumers.

Economic Highlights: The ECB is poised to cut interest rates amidst sluggish eurozone growth. The U.S. labour market remains steady, with easing inflation, while global growth projections remain modest with potential downside risks.

Looking Ahead: Expect key labour market reports, central bank announcements, and corporate earnings updates in the coming week. Market watchers will focus on potential shifts in interest rate expectations and economic performance indicators.

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What is Moving the Markets This Week

Wall Street capped off May with its best monthly advance since November 2023, as the S&P 500 surged 6.2%—recovering from the tariff shock delivered by U.S. President Donald Trump in April—while the Dow and Nasdaq also posted robust gains, up about 4% and nearly 10% for the month, respectively.

The final trading session of May saw a mixed finish after Trump accused China of violating a tariff agreement, keeping trade tensions and tariff uncertainty in the spotlight throughout the week, despite a court ruling that blocked many of Trump’s sweeping tariffs.

Economic data highlighted an upward revision to U.S. Q1 GDP growth and an in-line reading for the April core personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, while Nvidia’s blowout quarterly report and strong guidance impressed analysts despite ongoing export controls to China.

For the week, the S&P 500 advanced 1.9%, the Nasdaq climbed 2.0%, and the Dow added 1.6%.

Trump’s Critical Minerals Push Ignites Deep-Sea Mining Rush and Global Tensions

President Donald Trump’s aggressive drive to secure critical minerals has set the stage for a modern “gold rush” on the ocean floor, following an April executive order that accelerates deep-sea mining in U.S. and international waters to counter China’s dominance in the sector.

The initiative, hailed by industry as a game-changer, aims to unlock vast undersea reserves of key minerals like cobalt, nickel, copper, and manganese, vital for defense and green technologies, while promising regulatory certainty for U.S. companies.

However, the move has sparked international controversy, with China denouncing the order as a violation of international law and the United Nations’ International Seabed Authority (ISA) reiterating its sole authority over seabed mining in international waters.

Environmental advocates and scientists warn of unpredictable ecological risks, and the U.S. approach has increased pressure on the ISA to finalise global mining regulations, raising the stakes in an emerging geopolitical and environmental flashpoint.

Apple’s Satellite Plans Stall After Rejecting Elon Musk’s $5B Offer

Apple’s ambitions for satellite connectivity have faced significant setbacks due to concerns about its relationships with telecom carriers, potential government involvement, and a fraught interaction with Elon Musk. According to a report from The Information, Apple originally envisioned a bold project—codenamed Project Eagle—with Boeing to deliver comprehensive satellite internet directly to iPhones and homes, but CEO Tim Cook ultimately worried that such a move would jeopardise Apple’s crucial partnerships with wireless carriers.

In 2022, Elon Musk’s SpaceX offered Apple an exclusive satellite deal for $5 billion upfront and $1 billion annually thereafter, but Apple rejected the proposal; Musk then partnered with T-Mobile to offer similar services, intensifying Apple’s anxieties about government regulation and privacy, especially if it expanded satellite offerings or began charging for them.

These concerns have kept Apple’s satellite features limited to emergency communications, despite continued investments, such as a $1.7 billion deal with Globalstar, and internal debate about whether to scale back further. While rumors suggest upcoming Apple devices like the Watch Ultra 3 may add satellite support, the company’s broader satellite ambitions appear to remain constrained by regulatory, industry, and strategic challenges.

LVMH Feels the Pinch as Chinese Shoppers Cut Back on Overseas Luxury Spending

As Chinese consumers—once the driving force behind global luxury sales—scale back their international travel and spending, luxury conglomerate LVMH is beginning to feel the impact.

The shift comes as economic uncertainty and changing travel patterns prompt Chinese shoppers to spend more cautiously, especially abroad, challenging luxury brands that have long relied on their purchasing power in key markets like Europe.

This trend signals a potential recalibration for the luxury sector, which may need to adapt strategies to maintain growth amid evolving consumer behaviors.

Top Economic News

1. ECB Expected to Cut Interest Rates Amid Sluggish Eurozone Growth

The European Central Bank is widely anticipated to lower its main interest rate by 25 basis points at its June meeting, responding to persistent weak growth and easing inflation in the eurozone. The region's economy is projected to grow by just 0.8% in 2025, mirroring last year’s sluggish pace, while business activity and employment remain stagnant.

2. US Labor Market Holds Steady, Inflation Eases

The US unemployment rate remains stable at 4.2%, with 177,000 jobs added in the most recent report. Core inflation is at 2.8%, and headline inflation is at 2.3%. However, long-term unemployment is rising, and there are concerns about future demand and the sustainability of recent output growth.

3. Global Growth Outlook Remains Weak and Uneven

The IMF projects global growth at 3.3% for both 2025 and 2026, with significant downside risks and divergent regional performance. Renewed inflationary pressures and policy uncertainties could disrupt the expected monetary

Looking Forward: What We Anticipate Next Week

Market Context

- Wall Street just posted its strongest monthly gain since November 2023 and now shifts focus to June, with several key economic reports and events on deck.

Key Economic Events

Jobs Week (U.S.)

- Multiple labor market updates are due, culminating in Friday’s nonfarm payrolls report, a major market mover.

- Tuesday: JOLTS Job Openings (Apr) — Forecast: 7.05M vs. previous 7.192M

- Friday: Nonfarm Payrolls (May) — Forecast: 130K vs. previous 177K

- Friday: U.S. Unemployment Rate (May) — Expected to hold at 4.2%

Central Bank Watch

- Monday: Fed Chair Jerome Powell speaks in Washington, D.C., with markets watching for any policy signals.

- Wednesday: Bank of Canada rate decision — No change expected (current: 2.75%).

- Thursday: European Central Bank (ECB) rate decision — Expected cut from 2.40% to 2.15%.

Other Global Data

- Tuesday: Eurozone Core Inflation (Flash) — Key for ECB policy direction.

- Wednesday: Australia Q1 GDP — Indicator for RBA stance.

- Friday: Canada Unemployment Rate (May) — Forecast: 7% (up from 6.9%).

Notable Themes

- Earnings season is winding down, but several large-cap tech and retail names will report.

What to Watch

- Labor Market:A weaker jobs report could raise expectations for Fed rate cuts; a strong report could push them out further.

- Central Bank Signals: Powell’s comments and ECB/BoC decisions will shape global rate expectations.

- Earnings: Results from CrowdStrike, Broadcom, and others may influence tech and retail sector sentiment.

Next week is packed with critical economic data, central bank decisions, and a handful of key earnings reports. Investors will be watching for any signs of cooling in the labor market and for central bank commentary that could shift interest rate outlooks.

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