By Jamie McGeeverORLANDO, Florida, May 14 (Reuters) - TRADING DAYMaking sense of the forces driving global marketsBy Jamie McGeever, Markets Columnist Eyes turn to PowellThe powerful rise in risk and growth assets lost some steam as U.S. stocks ended mixed and oil slipped on Wednesday, although the losses were minimal, suggesting investors aren't ready to call a halt to the rally just yet.In my column today I look at the 'Global South', and how its time to shine may be now if the era of 'U.S. exceptionalism' forces a major shift in global capital and investment flows. More on that below, but first, a roundup of the main market moves.I'd love to hear from you, so please reach out to me with comments at jamie.mcgeever@thomsonreuters.com. You can also follow me at @ReutersJamie and @reutersjamie.bsky.social. Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.EU ready to take slow road in U.S. trade talks in pursuit of bigger dealHow Trump's trade war has evolvedHistoric U.S. budget alarm replaces tariff anxiety: Mike DolanECB supervisors press banks on dollar funding over Trump concerns, sources sayTencent says resilient to U.S. chip curbs after revenues rise Today's Key Market MovesThe Dow falls 0.2% and the S&amp;P 500 rises only 0.1%, but it means the index clocks a two-month closing high and is now flat year-to-date. A remarkable round trip.U.S. tech powers ahead though, lifting the Nasdaq 0.7%. Some huge single stock moves, including Super Micro Computer +16%, and Nvidia, Tesla and AMD all up more than 4%.Japan's Topix falls 0.3% to snap a 13-day winning run, its longest streak in nearly 16 years.Hong Kong's main and tech stock indexes rise more than 2% on strong Tencent earnings. Alibaba announces Q4 results on Thursday.Oil falls 0.8% on surprisingly strong U.S. inventory build. S&amp;P 500 completes 2025 round tripThe feelgood factor from the U.S.-China trade truce at the weekend continues to ripple through world markets, although the positive impact on prices is understandably fading.From a Wall Street perspective at least, now that the S&amp;P 500 has recouped most of its losses and is now virtually flat for the year, it is an ideal juncture for investors to draw breath and assess the landscape.From a technical perspective, key equity indices are comfortably above the 200-day moving averages so the longer-term upward momentum would appear to be in place.Markets will be more balanced than they were a month ago. If anything though, the risk is some investors could now be leaning too heavily 'long' stocks - the Nasdaq is up 30% from its April 7 low - and 'short' bonds. A speech on the economy from Fed Chair Jerome Powell on Thursday might be pivotal for short-term direction. A Fed rate cut by September is now no longer fully priced into the rates futures curve, and traders barely see 50 basis points of easing this year. Contrast this with the depths of the tariff tantrum in early April when 100 bps of rate cuts this year, starting as early as June, was the consensus view.The more hawkish shift hasn't completely dented U.S. or global risk appetite though, as it has been driven by a sudden improvement in the economic outlook rather than a surge in inflation expectations. That said, U.S. fiscal concerns are back on investors' radar again.Figures from China earlier on Wednesday, meanwhile, showed that bank lending tumbled more than expected in April, underscoring the weakness of the domestic economy and the impact of heightened trade tensions with the United States.But these tensions have cooled considerably, and investors will have more positive, forward-looking signposts for direction. The news flow over the last 48 hours will have given them cause for cautious optimism.E-commerce retailer JD.com topped market estimates for quarterly revenue on Tuesday, Tesla plans to start shipping components from China to the U.S. for the production of Cybercab and Semi trucks soon, and Tencent Holdings' Q1 earnings beat forecasts. Tencent President Martin Lau also said stockpiles of AI chips should protect it from U.S. restrictions.Chinese and Hong Kong equities outperformed on Wednesday, with Hong Kong's headline and tech indexes rising more than 2%.Meanwhile, Thursday's calendar is overflowing with earnings results, policymaker speeches and economic data that could potentially move markets around the world. Perhaps the most important of them all will be Powell's remarks, his first public comments since last weekend's 'Geneva convention'. Calling the 'Global South', your time is ... now?The era of 'U.S. exceptionalism' may be over – and with it the Washington-led world economic and financial order of the last 50 years. This leaves investors with a big question, how will this reshape capital flows?The most obvious destination is Europe, home to the world's second-largest economy and second-biggest reserve currency, where markets are deep and liquid and the rule of law reigns supreme.The so-called 'Global South' may seem less attractive. Its 100-plus disparate countries, excluding China, carry the typical smorgasbord of emerging market risks, including political instability, legal concerns and policymaking credibility.But the global economic and investment landscape is changing rapidly and perhaps irrevocably, and investors may be skittish about once again finding themselves over-concentrated in any one region. Investors with long-term horizons and high risk thresholds may therefore increasingly consider boosting their allocations to this enormous and varied 'bloc'.These countries have long punched below their financial market weight. But could they be poised to benefit from a global capital reallocation shift?That's among the findings in a report published last week by Deutsche Bank strategists, 'The Global South: A strategic approach to the world's fourth bloc'.&#34;The time for the Global South is now,&#34; states the report, which broadly defines the bloc as the 134 member countries of the G77 group of nations, excluding China, Russia, Singapore and a few others, adding in Mexico, Turkey and some central Asian countries.Some numbers here are worth noting. The group is home to almost two-thirds of the world's working age population, produces 40% of the world's energy and key transition metals, accounts for a quarter of global trade, and has attracted nearly a quarter of all inward FDI over the past decade.Indeed, the Boston Consulting Group says foreign direct investment in the Global South in 2023 totaled $525 billion, surpassing FDI into advanced economies of $464 billion.And while it is far too early to say how countries will align politically, economically, or militarily in the years ahead, there are already signs of rotation of capital into the Global South and away from China. Deutsche Bank's report notes that foreign investment into the Global South has held relatively steady in recent years while flows into China have collapsed to near zero. DIVERSIFICATION AND VALUE GENERATIONChina's economic rise in recent decades has been one of the most astonishing in human history. In 1990, China accounted for only 2% of developed economies' GDP. By 2021 that figure had reached 33%, almost matching the Global South's then share.But China's growth rates have stalled, especially since the pandemic. The International Monetary Fund forecasts China's share of advanced economies' GDP will end this decade around 35%, while the Global South's share will rise to a new high of 40%.&#34;In the event the U.S. trade war remains concentrated against China, the Global South could evolve into ... a source of diversification and value generation for investors,&#34; Deutsche Bank's analysts argue.From an equity allocation perspective, there is a lot of space to grow. The Global South made up a mere 11% of global market capitalization at the end of last year, with two countries - India and Saudi Arabia - accounting for more than half this share. If the dominance of U.S. equities wanes - they currently make up more than 70% of global market cap - even a tiny reallocation to this group could have a big impact on valuations in these countries.The risks, however, are manifold and many were on display during the market turbulence sparked by U.S. President Donald Trump's tariffs. Figures released by the Institute of International Finance last week showed that portfolio flows to emerging markets came to a &#34;standstill&#34; in April.While the Trump administration is rolling back its initial plan to slap enormous tariffs on much of South East Asia, investors may still be anxious about plowing too much capital into countries that could yet get caught in the U.S. crosshairs.&#34;The current environment differs fundamentally from past episodes. This is not an exogenous shock but a deliberate policy action with structural objectives. As a result, the scope for rapid normalization is limited,&#34; the IIF said.But what really matters here are not &#34;rapid&#34; moves, but the structural changes in the global economy that the U.S. administration's unorthodox policies may have catalyzed.It's good to remember that Chinese exports to 'conductor economies' in the Global South have doubled since Trump's first trade war in 2018. Given how unreliable the U.S. now appears, it is reasonable to assume that both China and Europe may be seeking to further diversify their export markets.So perhaps the time is not 'now' for the Global South, but it could be coming soon. What could move markets tomorrow?Alibaba earningsEuro zone industrial production (March)Euro zone GDP (Q1, flash estimate)UK trade (March)UK industrial production (March)UK GDP (Q1, preliminary estimate)European Central Bank's Piero Cipollone and Francois Villeroy de Galhau speak at conference in ParisBank of England's Swati Dhingra speaks in BrusselsFederal Reserve Chair Jerome Powell speaks in WashingtonU.S. PPI inflation (April)U.S. retail sales (April)U.S. industrial production (April)U.S. Philly Fed business index (May) Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. World trade is shifting to 'Global South' - Boston Consulting Group https://tmsnrt.rs/43cvj07<figure class="image"><img src="https://pub.pbkrs.com/uploads/2025/4d1edab45730c8c04e702a08facb9bb5?x-oss-process=style/lg" width="1225" height="779" original-src="https://pub.pbkrs.com/uploads/2025/4d1edab45730c8c04e702a08facb9bb5"/></figure>'Global South' footprint in global economy set to grow further https://tmsnrt.rs/44DVzTw<figure class="image"><img src="https://pub.pbkrs.com/uploads/2025/44b7d2dddbb5c69876c64187a64c8ac5?x-oss-process=style/lg" width="647" height="494" original-src="https://pub.pbkrs.com/uploads/2025/44b7d2dddbb5c69876c64187a64c8ac5"/></figure>Key equity markets' performance YTD https://tmsnrt.rs/3ZjfvYa<figure class="image"><img src="https://pub.pbkrs.com/uploads/2025/367dda28522dac251e7cb1a661141cec?x-oss-process=style/lg" width="1905" height="806" original-src="https://pub.pbkrs.com/uploads/2025/367dda28522dac251e7cb1a661141cec"/></figure>(By Jamie McGeever; Editing by Nia Williams)((jamie.mcgeever@thomsonreuters.com; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net/))

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The S&P 500 has completed a round trip to 2025, closing flat year-to-date after a mixed trading day. The Dow fell 0.2%, while the Nasdaq rose 0.7%, driven by strong performances from tech stocks. Despite a slight dip in oil prices, the market sentiment remains positive following a U.S.-China trade truce. Investors are cautious ahead of Fed Chair Jerome Powell's upcoming speech, which may influence short-term market direction. Economic indicators show a mixed outlook, with concerns over U.S. fiscal issues and weak Chinese bank lending.

- U.S. stocks showed mixed results as investors remain optimistic despite minimal losses, with a focus on the potential shift in global capital flows towards the 'Global South' amid declining U.S. exceptionalism.  
- The 'Global South' encompasses over 100 countries and is gaining attention for its economic potential, producing 40% of the world's energy and attracting significant foreign direct investment, surpassing advanced economies in 2023.  
- As the global economic landscape evolves, investors may increasingly diversify their portfolios, although risks remain due to political instability and the impact of U.S. trade policies.

TRADING DAY-S&P 500 completes 2025 round trip