Global equity markets continued to recover this week driven by stronger-than-expected corporate earnings and de-escalation in trade conflicts. Major trade deals were reported to be close to completion and President Trump selectively rolled back the tariffs on automobiles and parts. On the other hand, Japan’ finance minister revealed plans to leverage holdings of U.S. treasuries in the trade negotiations with the U.S. European GDP expanded over the first quarter while U.S. GDP contracted, driven by higher imports. The U.S. threatened sanctions on countries importing Iranian oil. The announcement was pushed by a breakdown in the U.S. and Iran nuclear talks. The U.S. and Ukraine signed a minerals deal giving the U.S. access to mineral resources sans any formal security guarantees. Secretary of State Marco Rubio was appointed to the role of interim National Security Adviser to replace Mike Waltz, following multiple highly publicized information leaks during his brief tenure. The republicans are finding the extension of Trump’s 2017 Tax Cuts and Jobs Act to be an uphill task.

Global Updates
  • The MSCI All Country World Index was higher this week, as all major global equity markets continued to recover from the global selloff in April. The American, European, U.K. and Asian stock markets continued to register gains driven by mixed corporate earnings reports and the gradual softening in the Trump administration’s tariff stance. China also expressed its willingness to negotiate with the U.S. 
  • The Eurozone GDP growth rate for the first quarter of 2025 was stronger-than-expected at 0.4%, outperforming the U.S. economy which contracted due to higher imports. 
  • Eurozone inflation came in at 2.2%, same as March inflation and above the European Central Bank’s (ECB) target rate of 2%. The higher-than-expected inflation is unlikely to deter the ECB from further lowering its policy rates.
  • French bank Societe Generale reported 6.6% higher revenues of 7.1 billion euros and at least a 100% growth in its net income to 1.61 billion euros for the previous quarter, due to gains from asset sales.  
  • Japan’s finance minister Katsunobu Kato revealed that Japan plans to leverage its $1 trillion holdings in U.S. treasuries in the trade tariff negotiations with the U.S. 
  • China expressed its willingness to negotiate trade barriers with the Trump administration, even as President Trump ruled out a reduction of China tariffs in the immediate future. 
  • President Trump’s threat of sanctions on Iran drove up oil prices this week. President Trump threatened secondary sanctions on countries buying Iranian oil after the U.S.-Iran nuclear negotiations were postponed this week.
U.S. Equity
  • The S&P 500, Dow Jones and Nasdaq indices rose this week, bolstered by strong corporate earnings and the Trump administration’s increasingly accommodative stance on tariffs.   Commerce Secretary Howard Lutnick also hinted that a major trade deal was close to being finalized. The decline in job openings was offset by higher-than-expected non-farm payroll numbers. 
  • The Bureau of Labor Statistics reported a higher than expected 177, 000 jobs added to the nonfarm payrolls in April, driven by hiring in healthcare, transportation and warehousing. 
  • The U.S. GDP contracted by 0.3% in the first quarter of 2025, due to weak domestic demand and higher imports. 
  • Amazon’s first quarter Earnings Per Share (EPS) of $1.59 on a revenue of $155.7 billion beat estimates. Amazon’s guidance for the second quarter was tempered by tariff uncertainty. The weak growth in its cloud division and Jeff Bezos’ plans to offload shares worth $4.8 billion also weighed on the company’s stock.  
  • Meta’s 16% growth in first quarter revenues came to $42.31 billion and the 35% higher net income of $16.64 billion exceeded expectations. Meta has also issued an in-line guidance for the upcoming quarter, despite economic uncertainty.  
  • Eli Lilly reported a higher-than-expected revenue of $12.73 billion and adjusted EPS of $3.43 for the first quarter driven by the sales of its weight loss drugs. The company confirmed its previous full-year revenue guidance in the $58 to $61 billion range but lowered its profit forecasts due to losses in equity investments and higher R&D charges.
  • Microsoft reported a 13% jump in its fiscal third quarter revenues to $70.07 billion, resulting in a net income of $3.46 per share. The strong earnings growth was driven by the 21% growth in the revenue to $26. 75 billion from Microsoft’s Intelligent Cloud division. 
  • Berkshire Hathaway has appointed Vice Chairman Greg Abel to succeed legendary investor Warren Buffet as the CEO of Berkshire Hathaway. 
  • Apple posted a 4% jump in its revenue to $95.4 billion for the previous quarter and a 7% higher EPS of $1.65. Apple anticipates $900 million additional costs in the upcoming quarter due to tariffs. Currently consumer electronics have been granted a temporary exemption from tariffs. Apple has announced a $100 billion share repurchase program and raised its dividend by 4%.
Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index edged higher this week.
  • The U.S. 10-year Treasury yield was slightly higher at 4.318% and the yield on the 2-year note edged up to 3.84% over the week. 
  • The U.S. Dollar Index appreciated to 99.98 this week. Warren Buffet cautioned investors to diversify their currency holdings to manage currency risks emerging  from a persistent U.S. fiscal deficit.

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