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Stocks gain on trade optimism, even China denies ongoing trade talks with US

China's Ministry of Commerce denied trade negotiations with the US, despite recent indications from US representatives of potential easing in tensions, which was a key driver on Wall Street earlier in the week. However, stocks in the Asian-Pacific region mostly rose at the end of the week, following gains in New York. Google parent company Alphabet reported better-than-expected Q1 earnings, while other US companies are clearly feeling the pain from weak consumer sentiment and ongoing trade disputes. 

  • Date
  • Author Alessandro Fezzi, LGT Research Content & Publications
  • Reading time 5 minutes

US-China trade talks
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Asian stock indices climbed on Friday as investors evaluated a potential easing in the US-China trade war. The Hang Seng Index in Hong Kong rose 1.3%, and Japan's Nikkei 225 advanced 1.8% after reports suggested China might suspend its 125% tariff on certain US goods. Meanwhile, South Korea's Kospi increased by 1% amid hopes of a trade agreement with the US. This followed a third consecutive day of gains on Wall Street, driven by strong performance in tech stocks.

However, China's Ministry of Commerce stated on Thursday that there are no ongoing trade negotiations with the US, despite recent indications from the White House of potential easing in tensions. The ministry emphasised that the US must cancel all unilateral tariffs for any progress in trade relations, reflecting a shift in China's strategy towards prioritising its own needs. The US had recently imposed 145% tariffs on Chinese goods, to which China responded with countermeasures, escalating the trade conflict.

US indices rise on interest rate cut hopes

On the New York stock exchange, indices advanced on Thursday, driven by hopes of interest rate cuts following comments from Federal Reserve officials. The Nasdaq 100 surged by 2.8% to 19,214.40 points, while the Dow Jones Industrial Average increased by 1.2% to 40,093.40 points, and the S&P 500 gained 2% to 5484.77 points. Semiconductor companies like Texas Instruments and Lam Research saw over 6% gains, and Alphabet rose by 2.5% during trading, while IBM fell by 6.6% despite strong earnings.

Alphabet shares rise on revenue growth

Alphabet, the parent company of Google, reported first-quarter revenue of USD 90.23 billion and earnings per share of USD 2.81 on Thursday, surpassing analysts' expectations. The company's shares increased by over 5% in after-hours trading. Despite growing competition in AI, Alphabet's search and advertising units showed robust growth, contributing to a 12% year-over-year revenue increase. Additionally, Alphabet's net income rose 46% to USD 34.54 billion, driven partly by significant unrealised gains on equity securities.

Trade conflict leaves visible traces in company balance sheets

American consumer products maker Procter & Gamble revised its revenue and profit forecasts for the fiscal year 2024/25, citing weak consumer sentiment and ongoing trade disputes. The company now expects organic revenue growth of about 2%, down from the previous forecast of 3-5%, and adjusted earnings per share (EPS) growth of 2-4%, reduced from 5-7%. US pharmaceutical company Merck & Co lowered its profit outlook for 2025, pointing to the financial impact of ongoing trade tariffs. Merck now expects an adjusted EPS of USD 8.82 to 8.97, down from the previous forecast of USD 8.88 to 9.03.

US jobless claims rise slightly

Initial jobless claims in the US increased by 6000 to 222,000 last week, according to the Labour Department on Thursday. Economists had anticipated this rise, which still indicates a robust labour market. These figures are closely watched as they reflect overall employment trends in the world's largest economy. 

German GDP forecast slashed to zero

According to the Bundesbank's assessment, the international tariff conflict initiated by the US could lead the German economy into a renewed mild recession. In the best case, there would be stagnation according to the current forecast. "I cannot rule out that we may also get a slightly negative sign, meaning a mild recession for 2025," said Bundesbank President Joachim Nagel, adding "the phase of uncertainty is not yet over." The government has revised its GDP growth forecast from 0.3% to 0.0%, marking the third consecutive year without growth. The economic outlook is further dampened by global uncertainties, particularly due to US trade policies. Despite a predicted 1% growth for 2026, structural reforms and extensive investments are deemed essential to revitalise Germany's economic potential.

Corporate news in focus: Quarterly figures from AbbVie, Colgate-Palmolive, and BYD.

Economic data in focus: There are no major macroeconomic data points scheduled today.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.