The Trump administration was said to be “actively” talking with Beijing on tariffs, although this was denied by China. US stocks had initially sold off at the start of the week, following increased criticism of Federal Reserve Chairman Jerome Powell from Trump. However, they later recovered with the President stating that he has no intention of firing Powell. For the week the S&P 500 added 4.6%, the Dow Jones Industrial Average was up 2.5% while the tech-heavy Nasdaq Composite advanced 6.7%, returning to positive territory for the month. The major indices are now close to recovering their losses since Liberation Day.
Amongst companies reporting earnings, which have so far mostly been overshadowed by tariff concerns, Alphabet moved higher on beating first quarter revenue and profit expectations, helped by its search business. Technology companies were some of the strongest gainers for the week, and this week will see Amazon, Apple and Meta announce their earnings. Fellow Magnificent Seven member, Tesla surged 18% in its best week since November. The electric vehicle maker got a boost on news that CEO Elon Musk would be stepping back from his role at the Department of Government Efficiency, as well as a new framework designed to loosen restrictions on self-driving cars. Treasury yields declined on hopes of an easing of trade tensions as well as weaker economic data. Meanwhile the dollar index rose and saw its first weekly gain since mid-March.
European markets saw gains for the week, helped by hopes for a reduction in trade tensions. The STOXX 600 added 2.8% in its second consecutive weekly increase, led by the automobiles and parts index which jumped 5.7% owing to its tariff sensitivity, closely followed by basic resources. Regional indices also notched rises, seeing the German DAX up 4.9% and Italy’s FTSE MIB rising 3.8%. Earnings releases over the week were generally positive and fed in to gains. The latest eurozone Composite Purchasing Managers’ Index dropped to 50.1 in April, just clinging on to expansionary territory, with tariff worries creeping in.
Chinese equities were supported by hopes that the government would step up stimulus measures for the economy in response to the tariff threat. The Hang Seng index added 2.7% while on the mainland the Shanghai Composite rose a more modest 0.6%. Over in Japan, the Nikkei 225 was up 2.8% over the week, whilst the yen weakened against the dollar. Tokyo inflation came in hotter than expected in April, raising expectations of further rate hikes from the Bank of Japan. US Treasury Secretary said that trade talks with Japan and also South Korea, were productive, with a another round this week. While a possible deal is still awaited, the Japanese government announced emergency relief measures to help ease the tariff impact.