Weekly market commentary

Market review

This week got off to a blazing start. In the later hours of Sunday evening, constructive updates emerged from trade discussions between the two largest economies in the world, the US and China. US Treasury Secretary Scott Bessent announced that “substantial progress” had been made during their “very important trade talks”. As Monday came and investors revelled in the newfound positivity, equity markets took off. The S&P 500 finished the day 3.2% up, reapproaching levels not seen since before “Liberation Day”. Chinese onshore and offshore equity markets were also up 1.2% & 3.0% respectively. 

Tuesday brought further details of the discussions, with both countries agreeing to slash their tariffs on each other by 115%. This further fuelled the rally, adding nearly another 1.0% to the S&P 500. 

However, as could be expected in such a typical risk-on event, bonds and other defensive assets, such as gold, did not fare quite as well. Yields on US, UK and German 10 year government bonds rose around 0.1% in tandem with the rise in equities, and were continuing to edge higher over the course of the week, until softer than expected Producer’s Price Inflation (PPI) and stable jobless claim numbers out of the US, on Thursday afternoon, led to a slight reversal with yields rallying about 0.1%. Gold also sharply sold off, declining from its record high of $3,500 per ounce in April, to just over $3,200 on Thursday. 

Away from tariffs and global trade, there were some key macro data releases this week. The UK economy grew 0.7% in Q1, with surprise growth of 0.2% vs analyst expectations of 0.0%. US inflation data for April declined from 2.4% to 2.3% ahead of analyst expectations, although the core inflation figure, which strips out the volatile food & energy components, remains slightly elevated and unchanged at 2.8%. 

The majority of US and European companies have now delivered their Q1 earnings. Whilst companies have, on average, beat analyst expectations, guidance for the rest of the year is becoming increasingly uncertain as corporates look to quantify the impact of tariffs and evolving trade policy.

Outlook

The economic environment has been resilient so far. The recent 90-day pause in targeted tariff implementation, now reinforced by a partial rollback of US-China tariffs, has offered a temporary reprieve for world leaders and policymakers. We expect markets to remain volatile as more countries look to pivot their efforts to negotiate and strike deals with the US.

Movers table