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Stock markets in the US and Asia rebound on trade optimism, while the IMF cuts its growth forecasts

Equity indices in New York jumped on Tuesday after the previous session saw significant drops in major indices following President Trump's call for preemptive interest rate cuts and his criticism of Fed Chair Jerome Powell. Meanwhile, Trump reassured markets that he has no intention to fire Powell. Tesla posted disappointing earnings results, but the shares rose nearly 5%. On a negative note, the IMF lowered its 2025 growth forecast for the US, as well as for the global economy, amid the ongoing trade tensions.

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

Macroeconomic data
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US equity indices rebounded on Tuesday, with the Dow Jones Industrial Average rising 2.7% to 39,186.98 points. Statements from US Treasury Secretary Scott Bessent regarding potential tariff negotiations with China buoyed investor sentiment. The Nasdaq 100 and S&P 500 also saw gains of 2.6% and 2.5%, respectively. Tesla shares rose 4.6% despite disappointing quarterly results, while Netflix hit a record high, climbing 5.3%.

US President Donald Trump reassured markets on Tuesday by stating he has no plans to dismiss Federal Reserve Chair Powell. Trump dismissed media speculation about Powell's job security and expressed his desire for more aggressive interest rate cuts. However, he noted that a lack of action on rate cuts would not be catastrophic.

Tesla reports 20% revenue drop

Tesla's first-quarter earnings report on Tuesday revealed a 20% decline in automotive revenue, falling to USD 14 billion from USD 17.4 billion a year ago. Total revenue decreased by 9% to USD 19.34 billion, missing market expectations. Net income plummeted 71% to USD 409 million, attributed to factory updates and lower selling prices. Tesla's stock has dropped 41% this year, reflecting challenges from trade policies and competition. Elon Musk commented that he will not step down from DOGE but reduce his commitment.

Asian stock indices surge on easing trade tensions

Hong Kong stocks led Asia-Pacific markets higher on Wednesday, driven by hopes of de-escalation in US-China trade tensions. The Hang Seng Index gained 2.5%, while the Hang Seng Tech Index surged 3.2%. The rally followed comments by US President Trump indicating that final tariffs on Chinese exports would be significantly lower than previously suggested. Major indices across Japan, India, South Korea, and Australia also posted gains, reflecting improved investor sentiment. In Singapore, inflation stays at four-year lows as city-state prepares for election.

IMF cuts US and global growth forecast for 2025

The International Monetary Fund (IMF) reduced its 2025 US growth forecast to 1.8% from 2.7%, citing trade tensions following US President Trump’s announcement of new tariffs on 2 April. The IMF also raised the US recession risk to 40%, up from 25% in October 2024. Additionally, the IMF increased its US inflation forecast to 3% for 2025, reflecting persistent price pressures in the services sector and recent tariff impacts. Global growth projections were also lowered to 2.8%, down 0.5 percentage points from the previous estimate.

US home price growth decelerates

Growth in real estate prices in the US have decelerated to 0.2% in March, the lowest rate since December 2022, according to Redfin's report on Monday. This marks a decline from the typical monthly gains of 0.4% to 0.6% since mid-2022. Annual growth also slowed to 4.6% from February's 5.1%, continuing an 11-month trend. The slowdown is attributed to reduced homebuying demand amid economic uncertainty and new tariffs.

Euro-area consumer confidence declines

Consumer sentiment in the eurozone declined by 2.2 points to -16.7 in April, according to a flash estimate by the European Commission on Tuesday. This follows a reading of -14.5 in March. Economists had anticipated a smaller drop to -15.5. Consumer sentiment in the broader European Union also fell, decreasing by 2.1 points to -16.0.

Corporate news in focus: Quarterly figures from AT&T, Boeing, Boston Scientific, IBM, Lam Research, NextEra Energy, Philip Morris, ServiceNow, and Texas Instruments.

Economic data in focus: Trade balance eurozone (11:00), Bank of England Quarterly Bulletin (14:00), US new residential sales (16:00).

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