Busy data of earnings and economic data

General market commentary

Equity markets extended their positive momentum on Tuesday, with the S&P 500 marking its sixth consecutive day of gains, supported by strong corporate earnings and growing expectations of easing trade tensions. The U.S. administration’s decision to reduce tariffs on auto parts and exempt U.S. automakers from steel and aluminium tariffs provided a boost to cyclical sectors such as financials and materials. Earnings reports were generally better than expected, with Honeywell surging 5.4% after posting strong first-quarter results, Sherwin-Williams rising 4.8% on solid performance, and Pfizer climbing 3.2% after a surprise increase in earnings. These results helped alleviate some concerns about the broader economic outlook, especially as the Cboe Volatility Index (VIX) has eased from its early April peak, although it remains elevated compared to its long-term average, indicating that market uncertainty still lingers. Additionally, bond yields continued to fall, with the U.S. 10-year yield dropping to 4.17%.

Despite the rally, investor sentiment remains somewhat cautious, with U.S. consumer confidence falling to a 13-year low in April, driven by concerns around income prospects and the impact of tariffs. Job openings for March also declined to 7.2 million, approaching pre-pandemic levels, although they still modestly exceed the number of unemployed, suggesting that the labour market remains relatively balanced. Meanwhile, home price growth showed signs of slowing, and oil prices fell nearly 3% as ongoing tariff concerns clouded demand prospects. Looking ahead, markets will focus on the upcoming U.S. nonfarm payroll report, with expectations of a slowdown in job growth. While the recent rally in equities reflects optimism, further gains will likely depend on tangible progress in trade negotiations. In this environment, maintaining a long-term investment strategy and a diversified portfolio remains crucial for investors as markets navigate these global economic and policy uncertainties.

Latest market and economic update

Asian equity markets were mostly this morning, as investors reacted to weak factory activity data from Japan and China, alongside rising geopolitical tensions in India and South Korea. While some markets, like Hong Kong, saw modest gains, the broader region was largely muted, with concerns over trade tariffs and domestic political unrest weighing on sentiment.

U.S. equity futures edged lower overnight, with investors weighing economic data and corporate earnings ahead of a busy week, as trade tensions showed signs of easing. The market remained cautious as key reports on consumer confidence, job openings, and inflation, along with earnings from major tech companies, are due later this week.

European equity indices were mixed yesterday, with Germany's DAX rising 0.8%, the UK's FTSE 100 up 0.6%, and France's CAC 40 falling 0.2%, as investors digested quarterly earnings and trade uncertainty. Key market movers included Deutsche Bank's strong profit growth, BP's profit slump, and HSBC's reduced stake in Bank of Communications, while concerns over global trade tensions and oil price declines also weighed on sentiment.

The US dollar index held steady around 99.2 on Wednesday as investors awaited key data, including the March PCE price index and Q1 GDP estimate. Against the euro, the dollar traded at 1.1372, reflecting stable performance amid concerns over upcoming tariffs.

Oil prices remained subdued today, with concerns over U.S. trade policy and global economic growth weighing on demand, while weak Chinese manufacturing data added to the pessimism. Prices were on track for steep monthly losses, pressured by a build-up in U.S. oil inventories and rising supply fears, as OPEC+ and Russia-Ukraine ceasefire talks remained key focal points.

China’s factory activity contracted at the fastest pace in 16 months in April, with the official PMI dropping to 49.0, indicating weak domestic demand amid escalating U.S. tariffs. Despite fiscal support and stimulus efforts, analysts expect slower growth, with revised forecasts predicting a weaker recovery than initially anticipated.

U.S. President Donald Trump renewed his criticism of Federal Reserve Chair Jerome Powell, implying he knew more about interest rates and suggesting Powell was not performing well. This rhetoric raised concerns about the Fed's independence, particularly as Trump continues to push for rate cuts amidst ongoing economic challenges and his trade policies.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Samsung Electronics lowered its business outlook for the current quarter, citing U.S. tariffs on demand for key products like smartphones and chips, while warning of increased uncertainty in its semiconductor division. Despite a slight rise in first-quarter profit, the company faces challenges from tariff policies and AI chip export controls, prompting shifts in its production strategy.

Visa surpassed Wall Street profit expectations for the second quarter, driven by an 8% rise in payment volumes and a 9% increase in revenue, alongside a $30 billion share repurchase plan. The company raised its annual net revenue growth forecast, with an adjusted profit of $5.4 billion, exceeding analyst predictions.

Booking Holdings exceeded first-quarter profit and revenue expectations, posting an adjusted profit of $24.81 per share, far surpassing analysts' estimate of $17.33, with revenue rising 8% to $4.76 billion. The company also saw a 7% increase in room nights and a 7% rise in gross bookings, but highlighted uncertainties due to geopolitical and macroeconomic factors.

Super Micro Computer's shares dropped 15% after it lowered its third-quarter guidance due to delays in customer platform decisions, pushing sales into the fourth quarter. The revised forecast for net sales of $4.5 billion to $4.6 billion and diluted earnings per share of $0.16 to $0.31 fell well short of analysts' expectations, sparking concerns over the company's short-term performance.

Snap announced it will not provide a second-quarter financial forecast due to economic uncertainty, with U.S. tariffs affecting global markets and ad budgets, causing its shares to drop 14.4%. Despite growing its subscription service and active user base, the company faces increasing competition in attracting small business advertising spend.

Starbucks reported disappointing global sales and profit, with North American same-store sales falling 1% in Q2, as inflation and economic uncertainty dampened demand. CEO Brian Niccol highlighted a long-term turnaround plan focused on improving service speed, delivery, and customer experience, though it may take three to six months for traffic to reaccelerate.

Mondelez exceeded Wall Street profit expectations for the first quarter, benefiting from price hikes on its chocolates and biscuits, along with new product launches and heavy promotional spending. However, the company faces uncertainty due to potential impacts from U.S. tariffs on product prices and expansion into emerging markets.

Spotify's second-quarter profit forecast fell short of market expectations due to employee salary-related taxes, despite strong subscriber growth. The company reported a 15% rise in first-quarter revenue to €4.19 billion and saw a 12% increase in premium subscribers, with positive outlooks for user growth in Latin America and the Asia-Pacific region.

PayPal exceeded Wall Street expectations for first-quarter earnings and maintained its full-year profit forecast despite global economic uncertainties, including tariff concerns. The company reported 6% growth in branded checkout transactions and is focusing on expanding high-margin businesses, though investor concerns remain over competition and growth in checkout services.

General Motors withdrew its 2025 forecast due to uncertainty surrounding U.S. President Trump's global trade tariffs, despite reporting stronger-than-expected first-quarter results. The company raised its revenue by 2.3% to $44 billion but saw net income fall by 6.6%, with GM pausing its share buyback programme until more clarity on tariffs is achieved.

Pfizer's first-quarter revenue fell 8% to $13.72 billion, missing expectations, mainly due to declining Paxlovid sales, but adjusted earnings of 92 cents per share beat forecasts. The company reaffirmed its full-year guidance, expecting adjusted earnings of $2.80 to $3.00 per share on revenue of $61 billion to $64 billion, while focusing on cost-cutting and future product launches to drive growth.

Royal Caribbean raised its annual profit forecast following strong bookings for high-end cruises and lower fuel costs, with first-quarter earnings surpassing estimates. Despite broader macroeconomic uncertainties, the company benefited from rising demand for leisure travel, particularly among millennials and Gen Z, while revenue rose 7.3% year-on-year to $4 billion.

Sherwin-Williams exceeded Wall Street's profit expectations for the first quarter, driven by higher prices for industrial paints, with net sales rising 2.3% to $2.94 billion. Despite a challenging global demand environment and tariff impacts, the company reaffirmed its full-year profit forecast of $11.65 to $12.05 per share, though it expects demand softness to continue in several markets.

Rheinmetall reported a 46% rise in first-quarter sales, driven by strong demand in its defence segment, surpassing analyst expectations. The company maintained its 2025 revenue and earnings forecast, while noting that recent geopolitical developments could further boost market potential, with adjustments to guidance expected later in the year.

Adidas refrained from raising its 2025 financial forecasts despite strong first-quarter results, citing uncertainty around U.S. import tariffs, which has made planning difficult. While sales rose in Europe and Greater China, U.S. sales were up only 3%, and the company is focusing on mitigating tariff impacts and expanding in other global markets.

HSBC’s first-quarter profit fell 25% due to the absence of one-off gains from the previous year but exceeded analysts' expectations, and it announced a $3 billion share buyback. The bank's adjusted profit rose 11%, driven by strong performances in its Wealth and capital markets divisions.

Deutsche Bank posted a 39% rise in first-quarter profit, driven by strong revenue growth in its global investment banking division, particularly in bond and currency trading. Despite some challenges, including a writedown in leveraged finance and provisions for tariff impacts, the bank exceeded analysts' expectations and remains on track to meet its 2025 targets.

Porsche's margins fell sharply in the first quarter, prompting it to revise its 2025 outlook downward due to weak demand in China, slower EV adoption, and U.S. tariffs. The company now expects lower revenue and profit margins, while also halting plans to expand high-performance battery production amid a decline in Chinese electric vehicle sales.

Lufthansa maintained its 2025 financial guidance, expressing optimism about the upcoming summer season despite macroeconomic uncertainties and trade tensions. The airline reported a 15% improvement in first-quarter losses, with revenue up 10% year-on-year, though it acknowledged weakness in U.S. bookings and revised down its capacity growth forecast for the fourth quarter.

Amazon denied a report that it planned to display import charges for goods on its main website in response to U.S. tariffs, clarifying that the idea was considered for its low-cost Haul division before being rejected. The confusion caused a 2% drop in Amazon’s shares, but the company quickly regained ground, with the White House accusing it of a political act after the report emerged.

Hims & Hers Health announced a long-term collaboration with Novo Nordisk to offer the Wegovy obesity drug on its telehealth platform, starting this week. The partnership aims to combine Novo's treatments with Hims & Hers' scalable access to quality care, alongside other healthcare products and services.

United Parcel Service plans to cut 20,000 jobs and close 73 facilities due to a 50% reduction in shipping volume from Amazon and ongoing restructuring. The company also faces challenges from President Trump's tariffs, impacting global trade, with UPS projecting a drop in operating margin and slower growth from reduced volume in China-linked e-commerce businesses.

Activist investor Engine Capital, which owns 1% of Lyft, is pressuring the ride-sharing company to explore strategic alternatives, including a potential sale, and criticised its board for lacking financial expertise. In response, Lyft defended its strategy, highlighting its European expansion and recent buyback programme, while rejecting Engine's call for changes to its share structure and governance.

Upcoming data and events

Today's key economic releases in the US include the ADP services report, Q1 GDP, Core PCE Price Index, pending home sales, and EIA energy inventories. On the earnings side, companies such as Microsoft, Meta Platforms, Qualcomm, Caterpillar, and Humana are due to report today.

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