USA
U.S. equity markets surged during the week, driven by a landmark de-escalation in trade tensions with China. The Dow Jones Industrial Average jumped over 1,100 points, while the S&P 500 and Nasdaq gained 3.3% and 4.4%, respectively. The U.S. and China agreed to reduce tariffs for 90 days, alleviating fears of a prolonged trade war. On the macro front, April's nonfarm payrolls rose by 177,000—exceeding expectations—while initial jobless claims dropped to 228,000, signaling a resilient labor market. The unemployment rate remained at 4.2%. Meanwhile, inflation held steady at 2.4% YoY in April, suggesting stable price pressures. However, Q1 GDP showed a 0.3% contraction, reflecting weaker government spending and increased imports. PMI data showed modest expansion in manufacturing with a reading of 50.7, supporting the rebound in sentiment.
Europe
European markets mirrored the positive global tone, buoyed by the trade breakthrough between the U.S. and China. Major indices such as the STOXX Europe 600, FTSE 100, DAX 40, CAC 40, and IBEX 35 posted weekly gains, helped by improved global risk appetite and hopes for stronger trade flows. Macroeconomic indicators offered mixed signals: Eurozone Q1 GDP expanded by 0.4%, reflecting some resilience despite weak manufacturing. Headline inflation stayed at 2.2%, still above the ECB’s 2% target. The unemployment rate across the Eurozone remained stable at 6.2%. PMI data, however, revealed ongoing industrial weakness, with the April manufacturing PMI at 49.0, still in contraction territory. ECB officials warned that rising protectionism may limit the scope for further monetary easing, keeping investors cautious on the region’s longer-term trajectory.
Japan
Japanese equities posted modest gains, as global optimism lifted sentiment despite domestic headwinds. The Nikkei 225 and TOPIX rose slightly, supported by the tariff truce between the U.S. and China, which benefits Japan’s export-oriented economy. However, Japan’s domestic data showed renewed weakness. Preliminary forecasts suggest a 0.2% annualized contraction in Q1 GDP, dragged down by weak household spending and rising imports. The unemployment rate rose slightly to 2.5%, while the job-to-applicant ratio stood at a still-tight 1.26. April’s manufacturing PMI remained in contraction at 48.7, though up slightly from March. Inflation climbed to 4.0% YoY in January (latest available), driven by energy and food prices. The Bank of Japan remains cautious, with limited room for stimulus amid rising cost pressures and fragile consumption trends.
China
Chinese markets staged a relief rally after the U.S.-China tariff rollback was announced. The Shanghai Composite and Hong Kong Hang Seng Index both climbed, supported by expectations of a rebound in export activity and easing global tensions. Although official April economic data was limited during the week, the agreement to slash tariffs (from 145% to 30% on U.S. imports, and from 125% to 10% on Chinese exports) is expected to boost China’s manufacturing and trade sectors. Investor confidence improved markedly, especially in tech and industrial sectors, which had suffered under prior tariff regimes. The move also alleviated fears of a prolonged economic slowdown, even as the government continues to support the economy through infrastructure spending and credit easing. Forward-looking indicators now point to a stabilization in activity, though structural challenges remain.