Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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Weekly market recap & what's ahead - 5 May 2025
Koen Hoorelbeke
Investment and Options Strategist
Weekly Market Recap & What's Ahead
5 May 2025 (recap 28 April to 2 May 2025)
Key Takeaways
- Equities rallied strongly on robust earnings and trade tensions easing.
- VIX volatility declined steadily, signaling improved market sentiment.
- Bitcoin held steady around $95K with strong ETF inflows.
- US Treasury yields rose sharply post strong April jobs data.
- Oil prices fell significantly as OPEC+ increased production amid demand worries.
- The USD showed strength against the JPY and EUR; significant moves seen in Asian currencies.
Market Recap (28 April to 2 May 2025)
Headlines & Introduction
Markets experienced strong momentum driven by solid earnings, particularly in technology sectors, and easing concerns around global trade tensions. Strong economic data from the US employment report boosted market optimism, while volatility significantly decreased. The upcoming Federal Reserve interest rate decision and major corporate earnings announcements will be closely watched in the week ahead.
Equities
Global equities experienced strong gains, buoyed by solid corporate earnings, especially from tech giants Microsoft (+6% post-market on April 30) and Meta (+35% quarterly profit increase, April 30). Apple's shares dropped 4.2% after earnings (May 2), impacted by tariffs and slowing China sales. Amazon also forecasted challenges ahead, citing tariff pressures (May 2). European stocks saw sharp increases with STOXX 50 +2.42% (May 2) as markets anticipated easing US-China tensions.
Volatility
Volatility significantly reduced with the VIX declining to 22.68 on May 2 (-7.8%), signaling lower market anxiety. Traders, however, remain cautious ahead of the upcoming Fed rate decision and significant earnings announcements.Digital Assets
Bitcoin stabilized near $95,000 (May 2), supported by continued institutional ETF buying. Ethereum showed resilience with modest gains, while crypto-linked stocks like Coinbase (+1.8%) and MicroStrategy (+3.35%) benefitted from positive sentiment and inflows.Fixed Income
US Treasury yields sharply rebounded, with the 10-year yield rising to 4.31% on May 2, following stronger-than-expected April jobs data. High-yield credit spreads tightened significantly, reflecting robust market risk appetite.Commodities
Brent crude fell towards four-year lows near $61 (May 2), impacted by increased OPEC+ production and ongoing global demand concerns. Gold prices weakened slightly, stabilizing around $3,200 amid reduced market volatility and a stronger US dollar.Currencies
The US dollar ended strong against the JPY, touching 145.92 on May 2 due to the dovish BoJ stance. Significant currency shifts occurred in Asian markets, notably with the Taiwan dollar appreciating sharply against USD by 6% on May 2, reflecting increased volatility in Asian forex markets.Looking Ahead (5 to 9 May 2025)
- Monday: Palantir, Vertex Pharmaceuticals, Ford earnings; US ISM Services PMI (April).
- Tuesday: AMD, Ferrari, Arista Networks earnings; US trade deficit (March).
- Wednesday: Fed interest rate decision; earnings from Uber, Disney; consumer credit (March).
- Thursday: Shopify, Coinbase earnings; initial jobless claims (Week ending May 3).
- Friday: Fed speakers’ remarks including New York Fed President John Williams and others.
Investors should brace for continued volatility with the Federal Reserve's interest rate decision and key corporate earnings likely to be significant market movers. Keeping an eye on macroeconomic data releases and geopolitical developments will be crucial for informed trading decisions.
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