Global stock markets bounced well last week and enjoyed their best week in over 2 years. US stocks (and US tech in particular) led the rebound and were propelled higher by a trifecta of good corporate earnings (notably Alphabet), a softened stance on tariffs and a U-turn from President Trump as regards not wanting to fire the Chairman of the Federal Reserve! Alongside this, there was some decent economic data too: notably around the US jobs market. This week sees earnings season heat up, with some of the big US tech heavyweights reporting along with big index names in the UK market.
Last week
- Global stock markets posted a very strong week.
- US shares led the way, with US tech rallying hard on a softened stance from the US administration and good corporate earnings.
- US economic data was mixed, but jobs data showed signs of holding up.
- UK economic data continued its strong recent run.
- Bonds posted decent gains, with yields falling and spreads narrowing.
This week
- As has been the case for some time, the Trump Administration will remain a key watchpoint for markets!
- Corporate earnings feature heavily both in the US and UK
- In the UK we have Astrazeneca, HSBC and BP reporting tomorrow, GSK and Barclays on Wednesday, Lloyd’s on Thursday and Shell, Natwest and Standard Chartered on Friday.
- In the US, Coca-Cola, Starbucks, Microsoft, Meta, Apple and Amazon (amongst others) all report this week.
- Friday sees the monthly release of US jobs numbers (non-farm payrolls) as well as Eurozone inflation data. Economists, as surveyed by Bloomberg, are expecting 130,000 new jobs to have been created in the US in April and for the Unemployment rate to remain at 4.2%.
| Equities and Oil | Last week (%) | YTD (%) |
|---|---|---|
| WTI Oil | -1.6 | -12.1 |
| Global | 3.8 | -7.4 |
| UK | 1.8 | 3.2 |
| US | 4.1 | -11.3 |
| Japan | 1.4 | -7.1 |
| Europe ex UK | 2.8 | 7.9 |
| Emerging | 2.4 | -4.5 |
| Bonds, Gold and Currencies | Last week (%) | YTD (%) |
|---|---|---|
| Gold | -0.7 | 18.9 |
| Sterling Corporates | 0.9 | 1.4 |
| GBP vs Japanese Yen | 1.2 | -2.9 |
| GBP vs USD | 0.1 | 6.4 |
| UK Government Bonds | 0.7 | 2.0 |
| High Yield | 1.3 | 1.4 |
Source: Bloomberg
More details:
- Global stock markets recorded their best week since February 2023, rising by c3.8%. This bounce was led by US stocks and, in particular, US Technology and Consumer Discretionary stocks: 2 of the areas most hard hit in the recent sell-off.
- What changed? Last week saw a softening in trade tensions and a U-turn from President Trump in his stance towards US Fed Chair Jerome Powell. Additionally, there was some decent US economic data as well as some good earnings numbers from US companies.
- The bond market appears to be restraining the Trump administration and appeared to mark a rowing back of the more extreme trade policies. The US 10-year Treasury yield getting above 4.4% on Monday 21st April coincided with US Treasury Secretary Scott Bessant saying that the ongoing tariff showdown with China is “unsustainable” and that he expected a “de-escalation” in the trade war. This was later backed up by President Trump saying (about China) “we’re going to live very happily together and ideally work together”.
- President Trump followed up the softening stance on tariffs by saying that he had “no intention of firing” Fed Chair Jerome Powell. This came just 4 business days after a post on Truth Social where Trump had said “Powell’s termination cannot come fast enough”. This change in tack was seen by the markets to cement the independence of the US Federal Reserve, which was taken positively by both stocks and bonds.
- Corporate earnings (which are the biggest driver of long-run stock returns!) also came in strong last week. Despite having played second fiddle to geopolitics of late, the US earnings season is moving along well and is on track for its 7th consecutive quarter of positive earnings’ growth. About 36% of US companies have reported results thusfar and the blended growth rate of earnings (as per Factset data) is 10.1%. This is higher than the 7.2% growth rate that was expected back at end March 2025.
- Alphabet was the biggest name that reported earnings last week and it rose well on the numbers and helped drive gains in tech stocks. Alphabet beat expectations on both earnings and revenue and stuck with its planned AI spend commitment for the year. Alphabet had indicated (back in February) that they plan to spend c$75billion this year on CAPEX. Keeping commitment to this number (alongside the 49% YoY growth in earnings!) combined with evidenced growth in use of its AI tool (AI overviews) helped investors renew faith in US tech and the AI trade, with Nvidia up 8.9% on the week. Worth also noting is that valuations have come back a lot in this space, with Alphabet now trading on a 1 year forward P/E of c16 times.
- US economic data was mixed last week. On the positive side, the number of new people filing for unemployment benefits in the US was pretty much bang in line with the 4-week moving average: i.e. we didn’t see a spike in layoffs. On the less positive side, business survey data (Services PMI) showed signs of slowing (but still growing), and house sales data was poor. This fits the dynamic we’ve been in of survey data being weak but hard data (notably the jobs market) holding up well.
- UK economic data continued its strong recent run, with retail sales coming in a lot stronger than expected. This follows earlier data points this month which have shown economic growth surprise to the upside and inflation surprise to the downside.
- Bond markets posted some decent gains last week and bond yield curves flattened. The gains were driven by yields falling on increased confidence in the US Administration (and therefore investors demanding less of a premium for holding US debt) and this fed through across all markets at the longer-end of yield curves.
The value of investments and the income from them can go down as well as up and you could get back less than you invested. Past performance is not a reliable indicator of future performance.
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