Global markets experience volatility on renewed trade and tariff concerns

Global and Philippine Market Update
May 22 to May 28, 2025

Global Markets

Global Stocks experienced heightened volatility due to escalating trade tensions.

• The US stock market experienced significant volatility for the week primarily driven by developments in trade policy and economic indicators. Market declined sharply following President Trump’s announcement of potential 50% tariff on EU imports and a 25% levy on foreign-made iPhones. However, markets rebounded after US postponed EU Tariffs to July 9. Markets rebounded and snapped a 4-day losing streak with major indices recording weekly gains; the S&P 500 up by 1.5%, Down Jones up by 1.2%, and Nasdaq up by 1.9%.
• President Donald Trump has announced a delay in imposing a 50% tariff on European Union imports until July 9, allowing more time for negotiations. The decision follows a conversation with European Commission President Ursula von der Leyen, who emphasized the need for swift and decisive trade talks. Trump had initially threatened to implement the tariffs on June 1, citing difficulties in trade discussions with the EU. The delay has eased market concerns, with European stocks rallying in response. Analysts note that while the postponement provides room for negotiations, uncertainty remains over the final outcome of U.S.-EU trade relations.
  
  
• S. consumer confidence rebounded in May after five consecutive months of decline, as concerns over President Donald Trump's tariffs eased. The Conference Board's consumer confidence index rose 12.3 points to 98, up from April’s 85.7, its lowest level since May 2020. Short-term expectations for income, business conditions, and the job market improved, though they remained below recession-warning levels. While inflation and job security remain concerns, easing gas prices and a slowdown in price increases have provided some relief. Analysts note that Trump’s tariff delays and trade negotiations have helped stabilize sentiment, but uncertainty over future economic policies continues to weigh on consumers.

Philippine Stocks

Philippine Stocks  rose on bargain hunting and Wall Street boost.

• The PSEi managed to close the week higher, snapping a two-day losing streak to close at 6,425.90 level. This recovery was driven by bargain hunting and positive cues from Wall Street, where US markets rallied following Trump’s decision to postpone a 50% tariff on European Union imports and an unexpected rise in US Consumer confidence. All local sectoral indices ended in green, with financials leading the gains.
  
  
• The Philippine government posted a 3-billion budget surplus in April, marking a 57.51% increase from the same month last year, driven by strong tax revenues and lower government spending. Tax collections rose 7.84% to P498 billion, with the BIR contributing P420.5 billion, boosted by corporate and personal income tax filings. Meanwhile, non-tax revenues plunged 68.08% due to delayed remittances from government-owned corporations. Government expenditures fell 8.03% to P454.8 billion, largely due to lower interest payments and reduced subsidies. Despite the surplus, the year-to-date fiscal balance remains in deficit at P411.5 billion, reflecting sustained public spending to support economic activity.
  
  
• The (BSP) has cautioned that monetary policy alone may not suffice to shield the Philippine economy from trade shocks, particularly those stemming from recent U.S. tariff measures. BSP Deputy Governor Zeno Ronald R. Abenoja emphasized the need for broader, coordinated strategies, as trade disruptions can have lasting effects. Despite concerns, inflation eased to 1.4% in April, giving the BSP flexibility for policy adjustments. Experts also advocate for structural reforms to enhance the country’s resilience to trade disruptions. Rafaelita M. Aldaba, a former Trade Undersecretary pointed out that the Philippines is well-positioned to attract manufacturing and production relocations, particularly in electronics, light electric devices, and other sectors.

Philippine Bonds

Philippine Bond yields mixed amid bets on monetary easing and rising treasury yields.

• The BTr increased its T-bill award to P28.6 billion, surpassing the initial P25 billion offer, as rates declined following signals from the BSP regarding potential rate cuts. Investor demand was strong, with total bids reaching P84.3 billion, more than three times the amount offered. The 91-day T-bill was awarded at an average rate of 5.468%, down 4.7 bps from the previous auction. The 182-day T-bill fetched 5.551%, lower by 6.1 bps, while the 364-day T-bill saw a slight dip to 5.694%, down 0.8 bps. Analysts attribute the easing rates to expectations of further BSP rate cuts, with Governor Eli M. Remolona Jr. hinting at two more 25-bps reductions this year. The government continues to tap local debt markets to finance its budget deficit, with plans to raise ₱260 billion in May through T-bills and Treasury bonds.
  
  
• The BTr successfully raised 19.8 billion through a partial award of reissued 20 year treasury bonds. The bonds originally issued in 2020, now with 13 years and 8 months remaining fetched an average interest rate of 6.473%. Despite investor bids totaling P34.5B, 1.1 times the offer – the BTr limited the awarded amount to mitigate the impact of rising yields. The uptick in yields was attributed to the recent increases in US treasury rates influenced by Moody’s downgrade of US credit and anticipated US fiscal stimulus measures. A decline in investor participation in this auction prompted the BTr to reject higher yields to control costs. On a positive note, economists highlight easing inflation, strengthening Philippine peso and declining global oil prices as favorable conditions which could lead the BSP to implement two interest rate cuts before the year ends.

FWD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

Sources: (1) https://www.bworldonline.com/stock-market/2025/05/28/675572/pse-index-back-above-6400-on-bargain-hunting/ (2) https://www.bworldonline.com/top-stories/2025/05/27/674900/monetary-policy-not-enough-to-shield-phl-from-trade-shocks/ (3) https://business.inquirer.net/527504/govt-holds-back-on-t-bond-issuance-to-curb-interest-rate (4) https://www.bworldonline.com/banking-finance/2025/05/27/674781/btr-hikes-t-bill-award-as-rates-drop-on-bsp-bets/ (4) https://www.bworldonline.com/top-stories/2025/05/28/675312/ng-posts-p67-3-b-surplus-in-april/ (5) https://www.msn.com/en-us/money/markets/us-consumer-confidence-rebounds-after-five-straight-months-of-declines-amid-tariff-anxiety/ar-AA1FzQgd?ocid=BingNewsSerp (6) https://edition.cnn.com/2025/05/25/business/trump-eu-tariff-delay

Disclaimer: The purpose of this article is to inform and should not be taken as an advice or offer to purchase securities. Seek professional advice before making a decision based on this presentation. Information given does not represent the views of FWD and its agents and employees.