Market Review 28th April 2025
- Simplicity News Desk
- 12 hours ago
- 5 min read
Everything you need to know, Simplified!
Summary
Wednesday marks the one-hundredth day of Trump’s second term, with 137 executive orders signed so far, surpassing Roosevelt’s record
Trump’s push to restore US manufacturing dominance underpins the ongoing trade war, aimed at rebalancing trade deficits and strengthening economic security
High tariffs and the move toward economic autarky (self-sufficiency) are not sustainable, but negotiation and targeted tariff reductions could lay a better path forward
US equities, particularly tech, have been hit by trade tensions but market sentiment is improving; a de-escalation could lift equities while bond yields may soften particularly if the economy slows
Financial markets found firmer footing last week, buoyed by easing trade tensions, strong earnings, and reduced fears over the Federal Reserve (Fed) independence
Economic hard data remains robust, with the US Economic Surprise Index ticking higher, but soft data indicators like business sentiment continue to lag
Bond yields declined last week with 10-year yields in the US and UK both down 0.09%, while a weaker US dollar softened US equity returns for UK investors
This week, eurozone and US Gross Domestic Product (GDP) data are expected to show slowing growth, while US Nonfarm Payrolls are projected to weaken, reflecting the early impact of tariffs and rising economic caution.
Market Review
Trump’s second - term 100 days
Wednesday will mark the one-hundredth day of Trump’s second term. The first 100 days of a Presidency are often the most transformational, but some more than others. During President Franklin D. Roosevelt’s first 100 days he enacted a torrent of executive orders and all 15 of his major legislative priorities were passed in Congress helping to bring about a sharp economic recovery from the depths of the great depression. He also put the wheels in motion to end Prohibition. In fact, it was Roosevelt that first popularised the scrutiny of a President’s first 100 days.
President Roosevelt set the record for the number of executive orders signed in the first 100 days at 99. Trump has signed 137 so far. His ambitions are arguably greater than Roosevelt’s.
In 2000 the US was the world’s manufacturing hub responsible for a quarter of global manufacturing. Today China is responsible for 30%, equal almost to the next five countries combined; the US, Japan, Germany, Korea and Mexico.
Trump aims to bring manufacturing back to the US, driven by several motivations including to balance unsustainable trade deficits (as President, Lincoln purportedly said “I do not know much about the tariff, but I know this much, when we buy manufactured goods abroad, we get the goods and the foreigners get the money”), for national security, to provide tax revenue or simply because America has long endured ‘unfair’ trade terms.
The trade war has sparked a lively debate around global supply chains and a bout of volatility across financial markets with the US bearing the brunt of the shock. The new order introduces a significant degree of uncertainty and although high tariffs and a push for economic autarky aren’t sustainable long-term, a potential path forward lies in negotiation, lowering tariffs, and embracing a more targeted approach. Ultimately, global trade and economies thrive on cooperation, not isolation.
On the markets, while US equities have taken a hit, particularly in tech, there is a lot to be positive about, especially if trade tensions ease. Bond yields may rise in the short term if the global economy remains resilient and trade policies reignite inflation, but a long-term de-escalation or economic slowdown should lead to lower yields. Markets have stabilised following the post ‘Liberation Day’ correction and last week the embers of recovery shone bright.
Last week summary
Financial markets managed to recover their poise last week led by the US and tech, buoyed by reports of de-escalating trade tensions, with constructive headlines pointing towards progress not only with China, but also several other trading partners. Corporate earnings provided another source of support, with a solid majority of reporting companies surprising positively versus expectations.
Fears over Trump attempting to oust Jerome Powell subsided following Trump’s reassurances. Nonetheless tensions between the White House and the Fed are likely to persist. Trump has been verbally targeting the Fed and may be building the narrative to blame Chair Powell if the US slips into recession. For now, the hard data continues to point to a robust economic performance, with the US Economic Surprise Index ticking higher, but there remains a stark divergence with the soft data (surveys and sentiment), which is still notably weak.
Bond markets found firm footing too, particularly at the longer end of the curve. UK and US 10-year yields fell 0.09% a piece. In Foreign Exchange, dollar weakness remained a dominant theme which meant US equity market returns were slightly softened for UK investors.
Overall, despite lingering political and economic uncertainties, investor sentiment showed a modest but welcome improvement. As financial conditions stabilise, there is hope that a more orderly environment can prevail, although renewed volatility remains an ever-present risk.
The week ahead
Wednesday: First quarter eurozone GDP
Our thoughts: Eurozone GDP for the first quarter is expected to show growth of 0.2%, matching the fourth quarter of last year but trailing last year’s pace.
Wednesday: First quarter US GDP
Our thoughts: Economic growth in Q1 is projected to have slowed to 0.4%, down from 2.4% in Q4 last year. The main drag is expected to come from a wider trade deficit, as businesses and consumers front-loaded purchases ahead of the tariff hikes.
Friday: US Nonfarm Payrolls
Our thoughts: Job growth is expected to have slowed in April, with forecasts pointing to an increase of 130k, down from 228k the prior month. The slowdown is likely to be most visible in transportation and logistics, leisure and hospitality, and government hiring. Several factors are at play, including the early impact of tariff announcements, a federal hiring freeze, and broader signs of business caution.
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