Market index returns

Week to date since May 7, 2025 as of May 14, 2025

Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.

Market commentary:

Global equity markets cheered as China and the U.S. turned down tariff temperatures. Cooler heads prevailed as the previous tariff levels created an effective embargo and risked bringing global growth to its knees. The reduction in tariff levels between the two countries helps avoid the worst-case scenario, nonetheless U.S. tariffs on China are still 30 percentage points higher versus the start of the year. The extent of the damage on the economy remains to be seen and will likely be felt in the upcoming months yet for now the market is willing to look through this near-term disruption. Corporate earnings held in well for the first quarter; however, many earnings outlooks and growth expectations for the rest of 2025 were reduced. The energy and consumer discretionary sectors saw expectations fall into contractionary territory.

The Real Asset Index trailed global equities as the technology sector led the broader market. Consumer discretionary, communications, and energy also outperformed, while health care, consumer staples, utilities, and real estate lagged with negative performance. Health care stocks remained in focus as the U.S. government continued to pressure the sector by proposing changes to drug pricing and a possible Department of Justice investigation into UnitedHealth Group’s Medicare Advantage practices. Within the Real Asset sectors, Natural Resource Equities and Commodity Futures outperformed with positive performance. U.S. Treasury Inflation-Protected Securities (TIPS) also outperformed on a relative basis, despite posting negative returns. Performance of the Real Asset Index was held back by negative returns from the Global Infrastructure and Global Real Estate sectors.^[1]

The improvement in risk sentiment can be viewed across our dashboard as the VIX, an index that measures the expected volatility of U.S. stocks, continued to ease as it ended the period at 18.6, down 21% from the prior week. Credit spreads also continued to tighten during the period, with investment grade spreads falling 10 basis points (bps) and high yield spreads falling 53 bps. The U.S. dollar strengthened slightly to 101, rising 1.4%, as measured by the DXY Index. Oil prices took a step up to $63.15 per barrel, an increase of 8.7%. Inflation breakevens increased as the 5-year rose 10 bps to 2.44% and the 10-year rose 11 bps to 2.38%. Gold prices cooled 6% to $3,177 per ounce.^[1]

Why it matters: We continue to monitor economic data, as well as sentiment indicators, as they could eventually feed through to the hard data. Capital markets cheered the U.S./China trade news, but tariffs will still be higher than they were previously, and we are already a third of the way through the 90-day reciprocal tariff pause with only one narrow deal announced between the U.S. and the UK. 

This week we will review the latest U.S. survey and jobs data, as well as a Fed decision and findings from its recent consumer survey. 

• Inflation: The U.S. CPI data prints came in lower than expected for April. Headline and core inflation (ex-food and energy) were at 0.2% month-over-month (MoM), below expectations of 0.3%, and a touch higher than the previous reading of -0.1% (headline) and 0.1% (core). Shelter continued to be a heavy factor as it rose 0.3% for the month, accounting for more than half of the increase for the headline measure. Energy also rose as increases in natural gas and electricity outweighed the decline in gasoline.^[2]
• Sales: U.S. retail sales growth slowed for April, to 0.1% (advance) MoM, coming in below expectations, and below the previous revised reading of 1.7%. The details hinted towards a possible pullback in China-related goods as the largest contractions were seen in four categories: 1) Sporting Goods, hobby, book, and music stores, 2) Misc. stores, 3) Health & Personal stores, and 4) General Merchandise stores. The Producer Price Index (PPI) for Final Demand contracted -0.5%, down from -0.4% in the previous month and below expectations.^[3] Other PPI measures which exclude food, energy, and/or trade all showed similar declines MoM and year-over-year.^[2] 
• U.S. Jobs: Initial jobless claims for the period ending May 10 came in at 229k, which was equal to the prior revised reading of 229k, and near the 4-week moving average of 230.5k. Continuing claims rose to 1881k for the period ending May 3, which was higher than the prior revised reading of 1872k.^[4]

Real Assets, Real Insights: This week we look at a successful REIT IPO in the Middle East, a stalled wind project, and a halt to cattle imports at the southern U.S. border.

• Dirhams for Dubai (Real Estate): A successful IPO launch for Dubai Holdings generated about $487 million selling a 12.5% stake in Dubai Residential REIT. Dubai’s ruler has been looking to privatize more parts of its investment conglomerate. The REIT was the city’s first listing for 2025, which capitalized on one of the second-best performing property markets of the first quarter, following Seoul. The residential REIT manages 35,700 units and has a gross asset value of $5.88 billion. Next up for the privatization drive is a commercial property portfolio to be listed soon.^[1]
• Political Risk (Infrastructure):  As we discussed in prior reports, Norwegian company Equinor ASA, has been forced to halt work on a wind project in the U.S. The CEO met with top White House officials in the past week but received no indication of when the halt might be lifted. The company’s Empire Wind project, designed to provide 54 turbines to power 500,000 homes, was halted in April and is costing the company $50 million a week to keep it on hold. A prompt decision is needed on whether to kill the project and lose most of its $2.7 billion investment on the $5bn project. The company also operates fossil fuel projects, currently holding roughly 100 oil & gas leases in the Gulf, and has worked in the U.S. for nearly 40 years. The country needs increased energy generation as highlighted in the recent Short Term Energy Outlook (STEO) by the U.S. Energy Information Administration. The EIA noted that U.S. power consumption will hit record highs in 2025 and 2026. The projected power demand will rise to 4,205 billion kilowatt hours (kWh) in 2025 and 4,252 billion kWh in the following year, from a record 4,097 billion kWh in 2024.^[1]
• Where's the beef? (Commodities): The U.S. is halting imports of cattle, horses, and bison at the southern border due to an outbreak of New World screwworm in Mexico. The suspension was enacted on Sunday May 11th. The screwworm is a fly that eats the flesh on open wounds on animals. The U.S. was already facing a supply shortage of cattle due to a historically low herd size and this action will only exacerbate the situation . Imports were first banned in November after initial reports, but this was lifted in February. Feeder cattle futures rose to record highs of $3.05 per pound after gaining 15% year to date as investors price in higher supply risks for 2025.^[1]