The US economy contracted for the first time since 2022, with rising trade tensions and slowing private payroll growth prompting expectations of rate cuts later this year. European and Australasian markets gained, supported by resilient corporate earnings and inflation data that lifted hopes for monetary easing. However, global uncertainty around the trade war continued to weigh on sentiment.
The Commerce Department’s advance GDP report showed the US economy contracted for the first time since 2022, raising concerns about economic health. A key driver was businesses front-loading imports to avoid expected tariff costs, inflating activity in prior quarters. President Trump called for patience, saying tariffs would eventually lead to economic growth. Despite the weak GDP print, the DOW, S&P 500, and NASDAQ gained +0.4%, +0.2%, and +0.1% respectively. Private payrolls growth slowed faster than expected in April, while the personal consumption expenditure index met forecasts, with US consumer spending rising 1.8%. Energy led losses, falling -3% as growth concerns weighed on oil demand expectations. Super Micro Computer slumped -15.2% after cutting its third-quarter guidance, citing falling AI investment and delayed customer spending. In rates markets, the US two-year Treasury yield slid -3 bps to 3.63%, while the 10-year yield lost -1 bp to 4.17%.
European equities rose, with London’s FTSE 100 adding +0.4% to secure its thirteenth consecutive winning session, as investors responded favourably to mixed corporate earnings. Despite recent gains—mostly driven by optimism around US trade deals—the FTSE 100 fell -1.4% in April. Meanwhile, the Stoxx 600 jumped +0.5%, recovering earlier losses and finishing the month down just -1.3%. The Eurozone economy grew unexpectedly in the first quarter, while inflation declined. The medical equipment sector led gains, rising +4.1% after Smith+Nephew maintained its full-year sales forecast and climbed +5.8%. Copper prices fell over -3%, dragging industrial metal miners down -4.2%. Glencore dropped -7.4% after reporting a 30% fall in first-quarter copper production.
Australian equities booked a fifth-straight gain, with the ASX 200 adding +0.7%. Optimism followed data showing trimmed mean inflation rose +0.7% in the March quarter—its slowest annual pace since late 2021—bringing it within the RBA’s 2%–3% target band for the first time in over three years and raising rate cut expectations. CSL rose +2.3% after receiving EU approval for its Sparsentan drug to treat Berger’s disease. Asian markets were mixed. China adopted new laws to support the private sector and shift its stance on tech firms. Hong Kong’s Hang Seng added +0.5%, while the Shanghai Composite and CSI 300 fell -0.2% and -0.1% respectively. Japan’s Nikkei 225 jumped +0.6%, while Korea’s Kospi shed -0.3%. In New Zealand, the NZX 50 fell -1.0%.
WTI Crude lost -3.7% falling to US$58.16/bbl, while Gold shed -0.4% to US$3,304.46/oz and Iron Ore dipped -0.1% to US$99.86/MT.