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Craig Farley of Team Asset Management offers this week’s market review

THE global investment landscape has seemingly returned to a serene and steady state, with Wall Street’s “fear gauge”, the VIX index, dropping to 16 this week, a 75% decline from the panic-induced levels hit during the tariff tantrum of early-April.

Even a very public bad break-up between the world’s most powerful politician, President Donald Trump, and the world’s richest man, Elon Musk, was not enough to derail risk assets from moving steadily higher.

Mom-and-pop retail investors embracing “buy-the-dip” and fast-moving hedge funds that have struggled for performance so far this year and are now playing catch-up, continue to be the marginal buyer of US equities in recent weeks, accumulating more than $50 billion in US ETFs and US single stock securities since early-April alone.

The bellwether S&P 500 index surpassed 6,000 for the first time since February, buoyed by a stronger-than-expected US nonfarm payrolls report and optimism over a successful conclusion to the US-China trade talks. The “Goldilocks” report (not too hot, not too cold) showed 139,000 jobs had been added in America in May, with the unemployment rate steady at 4.2%, a far cry from the recessionary outcome that many were predicting several weeks ago.

Tech-heavy indices like the Nasdaq also rose, with gains in Mega cap stocks like Amazon (+3%) and Alphabet (+3%) supporting the rally. However, Tesla shares were a significant outlier, plummeting 14% on Thursday, wiping out $152 billion in market value, owing to a very public feud between chief executive Elon Musk and President Trump that played out in real-time across social media platforms and public television.

The spat escalated after Musk criticised Trump’s domestic policy bill (referred to as The Big Beautiful Bill), particularly the proposed elimination of the $7,500 EV tax credit by the end of 2025. Trump retaliated by threatening to cut government contracts with Musk’s companies, including SpaceX. Remarks about Trump’s alleged ties to Epstein files further intensified the feud, though Tesla’s stock later recovered slightly as investors speculated on a potential truce.

Meanwhile, in Europe, the European Central Bank cut interest rates by 25 basis points to 2%, as expected, with President Christine Lagarde signalling that policymakers were nearing the end of the current policy-easing cycle. US Treasury yields climbed, with the ten-year yield rising above 4.4% and the 30-year yield approaching 4.9%, reflecting expectations of sustained economic growth, but also reflecting a sense of growing uneasiness at how the country’s enormous and growing debt mountain will be serviced in the years ahead.

Commodity markets showed mixed performance, but the star of the show was in the precious metals sector. Silver surged almost 12%, marking its best week since September. Bulls will point to a long-overdue performance catch-up with gold, and a chronic supply deficit that will be amplified by growing industrial demand (solar, EVs, data centres). Crude oil prices extended gains, an interesting development given the meaningful supply increase announced by OPEC+ during the week.

Looking to the week ahead, US inflation data for May, due mid-week, will be critical, especially after the jobs report suggested persistent wage pressures. In Europe, attention will shift to post-ECB rate-cut economic indicators, including German economic forecasts after a projected stagnation in 2025. The Federal Reserve’s next moves will remain in focus, with Trump’s pressure on chair “Too Late” Jerome Powell clearly not influencing market prices. At the time of writing, no cut was expected this month, and a 16% chance in July, meaning September at the earliest. However, three months is a long time in markets.