A week of fear and anxiety ahead for the markets - Europe's trade war intensifies as data pile up
It's been a volatile week: last Monday the whole world was watching the oil prices and the news from the Middle East after US President Donald Trump's decision to send US bombers to destroy Iran's nuclear facilities, joining the series of strikes launched by Israel! Then, by Tuesday, it was clear that Iran was trying to de-escalate the conflict, and since then there has been a fragile and seemingly fragile ceasefire between the parties.
The S&P 500 and the Nasdaq rose to new historic highs on Friday, despite recent statements by President Donald Trump that the United States will break off trade talks with Canada.
The S&P 500 index closed up 0.52% at 6,173.07 points, and reached a daily high of 6,187.68 points, setting a new record.
The Nasdaq also rose 0.52% to close at a new all-time high of 20,273.46 points. The Dow Jones also had a strong day, up 1%.
Stock markets in Asia and Europe initially reacted optimistically on Friday to the news that the US and China had agreed on a trade framework and that the Trump administration expects to reach an agreement with ten more countries soon.
European stock markets closed the week higher, with the Stoxx Europe 600 index up 1.1%, while among national indices, the UK's FTSE 100 was up 0.7%, Germany's DAX 1.5% and France's CAC 40 1.8%.
Among the best performing sectors, surprisingly given the past few months, were automotive stocks, but the banking sector also performed strongly, with Barclays and Deutsche Bank shares rising to ten-year highs. European markets were thus mainly driven by easing global trade tensions and rising investor confidence on Friday, the question is how Trump's statements on Friday night will play out in the first days of the week,
after the deadline for tariff war talks between the European Union and the United States is 9 July and there is no sign of an agreement between the parties so far.
The BUX index closed the week up 0.27% on Friday at 97,975.3 points, an increase of 260 points. The positive close marked the end of a more buoyant day, after a series of slight declines in the middle of the week. The Hungarian stock market came close to its historic high on several occasions, but always fell just short. Compared to the beginning of the week, the share price basically only moved sideways.
The biggest loser of last week: the dollar
While the dollar started the week with a strong rally on the back of investor flight from the conflict in the Middle East and rising oil and gold prices (which are typically still traded in dollars), it then slipped to multi-year lows against major rival currencies.
The USD index was little changed on Friday, closing at 97.36 points,
but was down 1.4% on the week, the biggest weekly decline since 19 May.
The euro strengthened by 0.05% to close at $1.1705 and is up 1.57% for the week, reaching a level not seen since September 2021, at 1.1754 on the day.
Although the pound sterling weakened slightly by 0.19% to 1.3701 on Friday, it still rose by 1.85% on the week, its best performance since 19 May.
The dollar also weakened against the Swiss franc, falling 0.06% to 0.80 francs, a weekly fall of 2.26% - the biggest since 7 April.
The dollar has also weakened significantly against the forint this week, with the USD/HUF exchange rate closing at 340.74 on Friday evening, 27 June, down 0.34% on the day. The weekly decline was 2.59%, and since the beginning of the year the US currency has weakened by more than 14% against the forint.
The dollar fell steadily from around HUF 352 at the beginning of the week, and on Friday it reached a low of HUF 339.43, which is not only a weekly low, but a low for more than two years.
The last time the forint was this strong against the dollar was in the spring of 2022.
The forint also strengthened against the euro this week, with the EUR/HUF exchange rate closing at 398.90 forints on Friday evening, 27 June 2025, down 1.10 forints or 0.28% on the day. A gradual depreciation of the euro was observed during the week, with the exchange rate hovering near 404 forints at the beginning of the week, before gradually falling below the 398 forint level.
However, the euro has already weakened by 3.05% against the forint since the beginning of the year, indicating that the Hungarian currency seems to be stabilising against the euro - at least during the period of international calm and lower turnover that characterises the summer months.
What are we looking out for this week?
It's hard to predict what we'll really be looking out for this week in an age of uncertainty. Traditionally in the summer, macro data can bring bigger moves in illiquid markets, but Donald Trump's second presidency has already taught investors to trade in a hectic, hellishly fast-moving environment. So far, the US head of state has always backed out of trade conflicts: announcing tariffs and restrictions, then suddenly giving in to his partners to reinvigorate negotiations. Monday or Wednesday could therefore see the usual scenario in the talks with Canada.
The question is what will happen in the talks with the European Union: the deadline is supposed to expire on 9 July, EU producers could get a 50% special tariff on top of the existing 25% car and metal levies, but the deadlines could be extended again.
If we were to bet, it seems likely that there will be quite a few give-and-take in the EU-US round of talks this week.
On Monday, the first day of the week, industrial producer prices will be released in Hungary, which could be an important predictor of domestic inflationary pressures - especially through the pricing of industrial export-oriented sectors. On the same day comes the National Bank of Hungary's (MNB) Financial Accounts Statistics, which will show in detail the structure of fiscal financing and the evolution of public debt. On the international front, the UK GDP revision could help to clarify the UK's recession risks, while in Germany, May inflation and retail sales could give a picture of the strength of consumption. The Italian inflation data could also be important in terms of the degree of consistency of the price increase trend across the euro area. In the second half of the day, the Chicago PMI from the US may show how the US manufacturing sector reacts to the trade policy reversal and changes in labour costs.
On Tuesday, a barrage of data will be released for Asian, European and US markets. In Japan, the Tankan index and PMI data will reflect the outlook for industrial production and business sentiment, while in China, the Caixin PMI will provide an indication of how international demand and domestic recovery have affected manufacturing. Germany's unemployment statistics are already part of the European economic sentiment, complemented by the EU inflation forecast and the June consumer price index - particularly important for the ECB's expected interest rate decisions. In the afternoon, in the US, the ISM manufacturing index will provide a picture of US industrial activity, which could be a key indicator for markets after earlier weakness. This is particularly important in a week when investors have driven stock market indices to new record highs, while Trump's trade policy statements point in the opposite direction.
Labour market data releases will continue on Wednesday, with the euro area unemployment rate for May highlighting the extent to which the slowdown in growth is being felt in employment. Meanwhile, in the US, the focus turns to the housing market, as the number and change in mortgage applications is a good indicator of interest rate sensitivity alongside inflation. This will be followed by the ADP employment report, which is often treated by the market as a forecast compared to the official labour market data that is usually released on Friday - except that this Friday will be a stock market holiday in the US, adding to the weight of Thursday's macro data swell.
On Thursday morning, another Chinese Caixin PMI will be released, which will provide a picture of the state of the services sector - important as the structural transformation of China's economy has shifted from manufacturing to services in recent years. In addition to the German services PMI, several key data are coming simultaneously from the US: June wage dynamics, non-farm payrolls, the trade balance and weekly jobless claims. The combination of these - especially the wage and labour market statistics - could have a significant impact on expectations for the Fed's interest rate path. In the afternoon, the ISM services index and industrial order books will also be released, which could shed light on the current state of the business cycle.
Thursday could effectively be the most important day of the week for markets, as stock markets will be closed on Friday for US Independence Day.
Friday will see a lull in international activity, but the morning will see the June German industrial orders statistics, a leading indicator of the future performance of the export-oriented German economy. The number could be particularly exciting now, with the possibility of an escalation of the EU-US tariff war back on the agenda and European companies increasingly complaining about a slowdown in external demand. If the order book is surprisingly weak, it could even shake the optimistic expectations that have been supporting European stock markets so far. But if it does surprise to the upside, it could reinforce last week's positive market sentiment - at least until Monday morning.
The market is therefore waiting for the data in a sensitive environment: if the macro data confirm a growth path that avoids recession but is not very steely, this could further strengthen equity markets. If, on the other hand, the figures surprise, especially on the inflation or employment front, the volatility of stock prices could increase again. This could be particularly important in the final week before the EU-US trade negotiations, where the deadline for tariff increases is approaching and more and more market participants are expecting sharper rhetoric and even new measures.
Cover photo (for illustration purposes only): Getty Images
