US markets: Earnings and easing trade tensions spark optimism

U.S. equity markets extended their upward momentum, with the S&P 500 Index posting its second consecutive weekly gain and closing out its ninth straight day in positive territory. The Nasdaq Composite surged by 3.42%, fuelled by robust earnings from major technology firms. Small and mid-cap stocks also saw a fourth week of gains, reflecting broad-based investor confidence.

Early in the week, sentiment was buoyed by signs of de-escalating trade tensions. The White House announced a rollback on certain tariffs related to autos and parts, while Commerce Secretary Howard Lutnick hinted that a significant trade deal was approaching finalization. Investors welcomed these developments as a potential boost to global growth.

Later in the week, attention shifted to corporate earnings. Nearly 40% of the companies in the S&P 500 by market capitalization reported quarterly results, including several from the influential “Magnificent Seven” tech group. Despite some caution in forward guidance due to ongoing global uncertainty, investors remained upbeat, encouraged by the ability of firms to navigate slower growth and supply chain disruptions.
The economic data was mixed. Job openings fell to 7.2 million in March, the lowest since September, suggesting a potential cooling in labour demand. Private payroll growth also slowed significantly, according to ADP. However, Friday’s official jobs report painted a brighter picture, with employers adding 177,000 jobs in April — beating expectations and holding the unemployment rate steady at 4.2%.
Meanwhile, the U.S. economy contracted by 0.3% in the first quarter — its first decline since 2022 — primarily due to a rise in imports and reduced government spending. Despite this, consumer spending rose 0.7% in March and inflation remained flat month-over-month, indicating potential resilience in domestic demand.

Bond markets reacted to the data, with Treasury yields rising after Friday’s jobs report. Municipal bonds rallied, while investment-grade corporates gave back some recent gains. High-yield bonds found support amid low issuance and ongoing investor interest.

European markets: Economic growth surprises, but outlook cautious

European Markets Sparkle as Tariff Fears Wiggle Out

The STOXX Europe 600 took a nice upward nibble, climbing +3.44% as worries over trade tariffs started to fade.

Country‑by‑Country Snapshot

Germany (DAX): surged +4.63% – a proud performance from the autobahn nation.
Italy (FTSE MIB): ticked up +4.13%, proving the pizza‑midway charm still works in the stocks.
France (CAC 40): went up +3.57%, still drooling over baguettes and croissants.
United Kingdom (FTSE 100): rose +2.15%, a decent, though not “London Bridge”‑grade, climb.

Eurozone Growth Beats Expectations

Economic momentum is picking up: the €‑zone’s GDP shot up +0.4% in Q1 – double what it was in Q4 and nailing analyst forecasts. Noteworthy sources of the boost include:

Spain and Italy: delivered stronger‑than‑expected gains.
Germany and France: returned to modest growth after a lull.
Ireland: boasted an impressive +3.2% GDP jump, though big corporates can distort those numbers.

Inflation Still Keeps Its Tempter on the Edge

The headline inflation rate stabilized at 2.2%, while core inflation — which strips food and energy wiggles — rose to 2.7%, beating market expectations and keeping bank policy hats on standby.

Sentiment Slipped In While Business Looks Wary

The European Commission’s Economic Sentiment Gauge slid to 93.6, its lowest since December, and consumer mood remains murky. Bottom line: growth is alive, but looming trade and inflation concerns might shrug shoulders in upcoming months.

UK Housing Market Looks a Bit Sidelined

Nationwide’s house‑price index wavered -0.6% in April as fresh buyers pulled back after a tax‑benefit fizzed out. Mortgage approvals for new borrowers also fell for a third straight month.

Business Barometer Drains in April

Lloyds Bank’s business gauge dipped 10 points to 39%, feeding fears about tariff impacts and growing wage bills. The vibes? Mixed nerves across the UK’s economic ground.

Asia-Pacific: Japan gains, China faces headwinds

Asia’s Stock Playground: Japan’s Bullish Bounce vs. China’s Sliver of Pain

Japan – The BoJ is Still the Chill Captain

Nikkei 225 climbed 3.15%, grabbed a quick win.
The Bank of Japan keeps the key rate at 0.50% – basically, “we’re still extra-friendly”.
They’ve lowered their 2025‑26 forecasts for the economy and inflation—so yes, the ball isn’t bouncing fast, but they’re staying patient.
Manufacturing dipped, industrial output and retail sales both fell short of the hype. Expectations weren’t met.
“Don’t sweat it”, the BoJ says, because the labour market is tighter and wages are on the rise, keeping domestic demand lit.

China – A Slight Shake‑Up, But A Whisper of Good News

CSI 300 and the Shanghai Composite took gentle steps down after a holiday‑shortened week.
Manufacturing PMI slid to 49 – the lowest since last December.
Non‑manufacturing flagging: obviously the economy’s feeling a bit sluggish.
On a brighter note, the Ministry of Commerce is open to reviving trade talks with the U.S., and there are whispers that some American goods might be tolled off the tariff list. Trade tension could dissipate, giving investors a breather.
China’s 2025 growth target of 5% remains precarious, yet analysts say the government still owns the fiscal toolbox to pull some extra support if needed.

What’s the Bottom Line?

Asia’s markets are walking on a tightrope: Japan’s headline looks solid, but the details show a slower-than‑dreamrun economy. China’s numbers are less rosy, but diplomatic chatter might tweak the outlook. The next few months will be the real test of how each side handles today’s hurdles.