Market Wrap-Up – Volatility Ends with Strong Gains
Equity markets ended a highly volatile week on a strong footing, with Friday capping off the largest weekly gains for the S&P 500 and Dow Jones since November 2023, and the Nasdaq notching its best performance since late 2022.
Friday’s rally was driven by a combination of solid earnings from major U.S. banks-including JPMorgan Chase, Morgan Stanley, and Wells Fargo-and reassuring comments from Federal Reserve officials. Boston Fed President Susan Collins and New York Fed President John Williams both signalled the central bank’s readiness to support markets and maintain economic stability, helping restore investor confidence after a chaotic week of headline-driven swings.
Trade War Headlines Drive Wild Market Swings
Throughout the week, shares were whipsawed by the evolving trade conflict between the U.S. and China, with tit-for-tat tariff escalations dominating the narrative. The S&P 500 experienced its widest weekly trading range since March 2020, reflecting investor unease.
However, a tariff reprieve on European goods and expectations of possible de-escalation helped ease pressure. All 11 major sectors in the S&P 500 ended Friday in positive territory, with materials and technology leading the gains.
While the outlook remains uncertain and earnings guidance is under scrutiny, the market’s resilience suggests that some of the worst-case trade war scenarios may already be priced in, offering a glimmer of optimism for the weeks ahead.
Monday’s Economic and Market Update
Asian Markets Surge on Tariff Exemptions
Asian equities surged on Monday, led by a 2.7% rally in Hong Kong’s Hang Seng index, as tech shares gained on news of temporary U.S. tariff exemptions for electronics. Broader regional markets also advanced:
- Japan’s Nikkei 225 rose 1.5%
- South Korea’s KOSPI increased 1%
- Australia’s ASX 200 added 1.3%
Concerns over the ongoing U.S.-China trade tensions, however, persisted.
U.S. Futures and Fed Assurances Lift Sentiment
U.S. equity futures rose overnight, buoyed by the temporary exclusion of electronics from President Trump’s steep trade tariffs on China, although he warned of further tariffs on the sector.
The sentiment was supported by:
- Strong first-quarter earnings from major banks
- Assurances from the Federal Reserve
- Investor focus on upcoming earnings and tariff plans
European Equities Stay Subdued
European equities closed lower on Friday, with the STOXX 600 down for a third consecutive week, as volatility from U.S. tariff shifts deepened trade war fears.
Key movers included:
- A 1% decline in Germany’s trade-exposed index
- A 3.8% drop in Stellantis shares following weak Q1 shipments
- A 2.4% fall in BNP Paribas after reports of ECB opposition to its capital treatment deal
Currency and Commodity Market Insights
- The US dollar weakened this morning, continuing its decline from a three-year low, as investor confidence was shaken by tariff-related uncertainties and a sharp sell-off in U.S. Treasuries.
- The euro rose 0.3% to $1.1396, nearing its three-year high.
- Brent crude fell 0.3% to $64.56 a barrel
- West Texas Intermediate dropped by 0.3% to $60.75
Concerns over weaker demand and the U.S.-China trade war weighed on the oil market.
Trade Balance and Sovereign Ratings
- China’s trade surplus surged to $102.64 billion in March, driven by a 12.4% year-on-year rise in exports as exporters rushed to ship goods before steep U.S. tariffs took effect.
- Imports fell 4.3% year-on-year, highlighting weak domestic demand amid slowing growth and trade tensions.
- S&P Global upgraded Italy’s sovereign debt rating to BBB+ from BBB, citing improved public finances, resilient exports, and strong domestic savings.
- Italy’s growth remains sluggish, with a revised forecast of just 0.6% for 2025.
Notable Stock and Sector Movements
Tariff Exemptions and Bank Earnings Drive Moves
- The Trump administration temporarily excluded electronics from recently imposed tariffs, benefiting tech firms like Apple.
- However, smartphones, computers, and semiconductors could still face tariffs soon.
- Wells Fargo exceeded Q1 profit estimates by reducing costs and lowering provisions, but lowered net interest income forecast. Shares are down 11% YTD.
- JPMorgan Chase beat profit expectations, driven by record equities trading and strong fees. CEO Jamie Dimon warned of a 50% chance of global recession.
- Morgan Stanley reported EPS of $2.60 and revenue of $17.7 billion, led by $4.13 billion in equities trading.
Asset Managers, Tech, and Telecom Moves
- BlackRock’s AUM reached a record $11.58 trillion, despite a slight dip in net income to $1.51 billion.
- BNY Mellon exceeded profit forecasts, with assets under custody reaching $53.1 trillion, an 11% increase in net interest income, and 3% growth in fee revenue.
- TSMC shares rose 4% after China exempted its chips from tariffs; March 2025 net revenue rose 46.5% YoY.
Sector Investment and Upgrades
- Novartis plans to invest $23 billion in 10 new U.S. facilities, including six manufacturing sites and a research hub, creating 5,000+ jobs.
- Ecopetrol faces $2.76 billion in potential losses due to oil price drops; plans to expand natural gas sales and offshore supply.
- Citi cut forecasts for Nvidia and Marvell, citing reduced cloud capex and trade uncertainty.
- Bank of America upgraded American Express to “Buy”, despite reducing revenue and EPS targets.
- Evercore ISI upgraded Verizon, targeting $48, citing fibre growth and subscriber trends.
- UBS upgraded Newmont to “Buy”, with a $60 target, citing strong gold outlook and shareholder return potential.
Upcoming Market Events
Markets are bracing for key events including:
- OPEC Monthly Report
- Federal Reserve speeches
- Earnings from Goldman Sachs, M&T Bank, and Pinnacle Financial
For more information visit https://cc.com.mt/. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice.
