Week (April 21 - 25) in Review: Financial Leaders

• Gold Volatility: Gold (XAUUSD) prices surged to a record high of $3,500 per ounce early in the week but then crashed by $200 as geopolitical risks subsided.
• Equity Market Rebound: Major U.S. stock indices, including the S&P 500 (SPY) and Nasdaq Composite (NDAQ), initially fell sharply due to political uncertainty but ended the week with strong gains, exiting correction territory.
• Currency Fluctuations: The U.S. dollar weakened early in the week but later strengthened as trade tensions eased. The euro (EURUSD) briefly crossed $1.15 before retreating to near $1.13, while the British pound (GBPUSD) reclaimed $1.33 after a brief pullback.
• Cryptocurrency Rally: Bitcoin (BTC.X) surged to a two-month high of $94,000, driven by improved risk sentiment following President Trump’s moderated stance on trade and monetary policy.
• Corporate Earnings: Alphabet (GOOGL) reported strong AI-led earnings, with its stock jumping 5%. Tesla’s (TSLA) stock also rose despite a significant profit drop, as investors focused on its upcoming low-priced electric vehicle.

Overview

The week of April 21-25, 2025, was characterized by significant volatility in financial markets, primarily driven by President Trump’s fluctuating rhetoric on Federal Reserve Chair Jay Powell and U.S.-China trade relations. Early in the week, markets reacted negatively to Trump’s threats to remove Powell and impose high tariffs on Chinese goods, leading to sharp declines in U.S. stock indices and a surge in safe-haven assets like gold and the Japanese yen. However, as Trump softened his stance later in the week, markets reversed course, with equities rallying and safe-haven assets retreating. This week highlighted the market’s sensitivity to political developments and the ongoing uncertainty surrounding trade policies and monetary decisions.

Financial Markets Weekly Recap

Equities

• Market Indices: The S&P 500 rallied 2% for the week, exiting correction territory after an initial 2.4% drop earlier in the week. The Nasdaq Composite gained 2.7%, marking its third consecutive day of gains exceeding 2% since April 2001. The Dow Jones Industrial Average (DIA) rose 1.2% but remained in correction, needing to reach 41,410 to exit.
• Sector Performance: Tech stocks, particularly in the semiconductor and AI sectors, led the rebound. The "Magnificent Seven" tech stocks, including Tesla, Nvidia (NVDA), Amazon (AMZN), and Meta (META), initially declined but later recovered as policy jitters cooled.
• Corporate Highlights:
  • Alphabet (GOOGL): Shares surged 5% after reporting blowout earnings, with Q1 revenue of $90.23 billion (up 12% YoY) and EPS of $2.81, beating estimates. AI initiatives, including Google Cloud’s 28% revenue growth, were key drivers.
  • Tesla (TSLA): Despite a 71% drop in Q1 profit and a 9% revenue decline to $19.3 billion, Tesla’s stock rose over 5%. Investors focused on the company’s upcoming low-priced electric vehicle, expected to start production in the first half of 2025.

Currencies

• U.S. Dollar: Initially weakened to a three-year low, with the dollar index dropping below 98, but later rebounded as trade tensions eased. The dollar’s performance was influenced by Trump’s tariff retreat and his commitment not to fire Fed Chair Powell.
• EUR/USD: The euro briefly crossed $1.15 for the first time in four years but later fell to near $1.13, losing 2.3% in valuation over two days. The retreat was driven by a stronger dollar as trade optimism reduced the need for safe-haven hedges.
• GBP/USD: Sterling resumed its upside swing, reclaiming $1.33 after two down days. The pound’s strength was supported by a softer dollar and cooling UK inflation, which fell to 2.6% in March.
• USD/JPY: The dollar-yen pair approached long-term support at ¥139.90, with a potential double-bottom formation. Rising political risks initially drove risk-off flows into the yen, but the dollar later stabilized as tensions eased.

Commodities

• Gold (XAU/USD): Gold prices hit a record high of $3,500 per ounce early in the week, driven by safe-haven demand amid Trump’s attacks on Powell and trade war fears. However, prices crashed by $200 (over 5.5%) as Trump softened his stance, unwinding safe-haven bets. Gold ended the week at $3,300 per ounce.

Cryptocurrencies

• Bitcoin (BTC/USD): Bitcoin surged to a two-month high of $94,000, up from $87,000 earlier in the week. The rally was fueled by Trump’s more upbeat comments on trade and monetary policy, which boosted risk-on sentiment. Ethereum also gained, trading around $1,800 after a 12% jump.

Economic Indicators and Policy Developments

• Policy Uncertainty: Trump’s initial threats to fire Fed Chair Powell and impose 145% tariffs on Chinese goods triggered market volatility. However, his later comments dialing back these threats, including stating he had “no intention” of firing Powell and that tariffs on China would “come down substantially,” calmed markets.
• Upcoming Data: Investors are closely watching upcoming economic releases, including the Fed’s preferred inflation gauge (PCE) and April’s nonfarm payrolls, which could influence future monetary policy decisions.

Market Performance Summary

Summary

The financial markets experienced a rollercoaster week, with initial turmoil giving way to relief rallies as President Trump moderated his stance on both monetary policy and trade relations with China. Equity markets, particularly tech-heavy indices, recovered strongly, while safe-haven assets like gold saw sharp declines. Currencies fluctuated in response to shifting expectations, and cryptocurrencies benefited from the improved risk environment. Corporate earnings, especially from tech giants like Alphabet, provided positive surprises, while Tesla’s resilience despite weak results highlighted investor focus on future growth prospects.

Looking Ahead

• Economic Data: Key releases include the Fed’s preferred inflation gauge (PCE) and April’s nonfarm payrolls, which will provide insights into inflation and labor market trends.
• Corporate Earnings: Continued focus on tech sector performance, with upcoming reports from other major companies.
• Policy Developments: Any further comments from President Trump on trade or monetary policy could continue to drive market sentiment.

Central Bank Actions: The Federal Reserve’s next meeting will be closely watched for interest rate decisions and guidance on future policy.
Disclaimers and Limitation