Global Equities Advance on Trade Talks and Fed Caution
Equity markets ended higher on Wednesday, driven by renewed hopes for progress in US-China trade relations. Talks are scheduled to resume this weekend in Geneva, fuelling optimism that even a temporary easing of tariffs could alleviate global trade tensions. The Dow Jones Industrial Average climbed by 0.7%, the S&P 500 added 0.4%, and the Nasdaq Composite rose 0.25%.
Meanwhile, the Federal Reserve kept interest rates unchanged at 4.25%-4.50% during its May 2025 meeting, marking the third consecutive decision to hold rates steady. Fed Chair Jerome Powell signalled a cautious approach, noting that inflation risks and employment dynamics warrant a wait-and-see stance. Bond yields declined, with the 10-year US Treasury yield falling to 4.28%, while the US dollar initially strengthened before reversing gains the following day.
Asian Markets Climb Despite Geopolitical Tensions
Asian equity markets mostly advanced on Thursday as China introduced easing measures to offset tariff-related pressures. The policy move helped boost market sentiment alongside optimism over US-China trade talks. However, gains were modest amid escalating tensions between India and Pakistan. Technology shares led the region’s performance, particularly chipmakers and internet firms, following reports that the US government may ease restrictions on AI chip exports.
European Equities Slip on Earnings Disappointments
European markets traded lower despite encouraging eurozone retail sales data. The DAX fell by 0.5%, the CAC 40 declined by 0.9%, and the FTSE 100 slipped 0.4% as investors reacted to mixed corporate earnings. Novo Nordisk lowered its full-year sales growth forecast, BMW reaffirmed its 2025 outlook, and Siemens Healthineers raised its earnings forecast, even while navigating tariff challenges.
US-UK Trade Deal on the Horizon
President Trump announced plans to unveil a major trade agreement with the United Kingdom on Thursday. Although the deal has not yet been finalised or confirmed, it represents the first major trade initiative since the introduction of reciprocal tariffs in April. While the UK is not subject to those tariffs, significant duties are still expected to remain in place for various goods.
Currency and Oil Markets React to Mixed Signals
The US dollar index weakened to 99.6 after the Federal Reserve’s dovish tone and ahead of the critical US-China trade talks. The euro appreciated to 1.1328 against the dollar, which also softened against the British pound, Australian dollar, and New Zealand dollar. Oil prices recorded slight gains on Thursday, supported by optimism over potential trade deals. However, broader concerns about sluggish demand and increasing OPEC+ production kept oil near four-year lows.
Earnings Drive US Equities
Disney shares soared over 10.5% after posting robust earnings. Revenue increased by 7% to $23.6 billion, and adjusted earnings per share reached $1.45. Despite macroeconomic challenges, Disney expressed confidence in its streaming and theme park operations, forecasting a 16% increase in earnings for the full year.
MercadoLibre also impressed investors with $5.9 billion in revenue, a 44% rise in net profit, and 126% sales growth in Argentina on a foreign-exchange neutral basis. Its fintech division expanded rapidly, with a 75% increase in its credit portfolio, driving shares up 8% in after-hours trading.
Uber reported first-quarter revenue of $11.53 billion, a 14% increase, though it fell short of expectations. Nevertheless, upbeat guidance for the next quarter and strategic partnerships with Trendyol Go and Pony AI reassured investors. Shares are up 38.7% year-to-date, reflecting positive sentiment about Uber’s global growth trajectory.
Carvana posted solid quarterly results, generating $4.23 billion in revenue, a 38% increase year-over-year, and reporting net income of $373 million. This figure included a $158 million gain related to changes in the fair value of warrants. Despite less impressive core profitability, the company remains optimistic about future growth.
Applovin exceeded Wall Street expectations, delivering earnings of $1.67 per share on revenue of $1.48 billion. The company also revealed plans to divest its mobile gaming business in a $400 million cash deal, which includes a 20% stake in Tripledot Studios. The transaction is expected to close in the second quarter of 2025.
Alphabet faced a sharp decline, with shares falling more than 7%, wiping out around $150 billion in market value. The selloff followed reports that Apple plans to introduce AI-powered search in Safari, potentially threatening Google’s lucrative position as the default search provider.
Netflix introduced a major overhaul to its TV app, including a new homepage design and the rollout of AI-powered search functionality on iOS devices. This innovation aims to improve content discovery and user engagement.
Advanced Micro Devices received a bullish upgrade from Bank of America, which raised its price target from $105 to $120, citing a strong product roadmap and continued growth potential despite headwinds from China and competitors.
Marvell Technology, on the other hand, faced a downgrade from Cantor Fitzgerald, which slashed its price target from $125 to $60. Concerns over its custom silicon business and the loss of major clients like Amazon and Microsoft weighed on the outlook.
Global equity markets remain supported by easing trade tensions and robust corporate earnings, even as geopolitical risks and tariff uncertainties continue to pose challenges. Investors should continue to prioritise portfolio diversification to navigate this complex environment and manage potential volatility.
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