Weekly Recap Fundamental Analysis: U.S. Markets Rise for the Second Week Following Trade Negotiations
Key Takeaway
Global financial markets experienced a notable rebound during this , thanks to easing trade tensions and robust corporate earnings. Investor sentiment improved as China signaled openness to U.S. trade discussions, and strong performances from tech giants like Microsoft and Meta Platforms bolstered confidence.
After a tumultuous April marked by escalating U.S.-China trade tensions and extreme market volatility, signs of potential de-escalation between the two countries emerged. China’s Commerce Ministry indicated openness to negotiations regarding the 145% tariffs imposed by the U.S., as long as unilateral tariffs are canceled. This development enhanced investor sentiment, which led to gains in major U.S. indices (S&P 500, Nasdaq, and Do Jones)
In the U.S., GDP in the first quarter of 2025 contracted by 0.3%, mainly due to increased imports and inventory accumulation. However, consumer spending and business investments remained solid. The job market showed weakness as jobless claims numbers came higher than expected.
In Europe, stock markets rallied on optimism over potential U.S.-China trade agreement. The FTSE 100 showed strength, driven by rising stocks and easing trade tensions. Eurozone inflation remained at 2.2% in April, despite expectations of a decrease, with core inflation rising to 2.7%. Despite the slight increase, the European Central Bank is expected to proceed with interest rate cuts, focusing on unstable economic activity.
The Bank of England is anticipated to initiate a series of interest rate cuts, potentially reducing rates by up to one percentage point over the next six months, in response to weakening economic growth projections.
In Asia, stock markets saw gains, with indices like Hong Kong’s Hang Seng and Taiwan’s benchmark rising significantly, following China’s indication of considering U.S. efforts to negotiate over tariffs. The Japanese yen fell to a three-week low, while the U.S. dollar strengthened, marking its second consecutive weekly gain fueled by renewed trade optimism.
Corporate earnings were a major contributor in this week’s movements. Microsoft and Meta Platforms reported strong earnings, driven mainly by advancements in cloud computing, AI, and advertising revenues.
However, Apple exceeded earnings expectations, but warned of a $900 million cost from new tariffs, highlighting the impact of trade policies on the company’s performance.
In the commodities and currencies markets, oil prices edged higher at the beginning of the week, before reversing course and heading for a negative week. Gold prices fell this week as demand for safe haven assets decreased. The U.S. dollar strengthened against some of the major currencies.
