Week (April 28 - May 2) in Review: Financial Leaders

Key Points

• Gold Prices: Gold (XAU/USD) prices fluctuated significantly, initially hovering near $3,300 before diving 2% to $3,8, driven by positive US-China trade signals and the US-Ukraine minerals deal.
• Equities: The S&P 500 (SPY) logged its fifth consecutive winning session but ended April with a third straight losing month, down 7.3% in Trump's first 100 days—the worst start since 1973. The Nasdaq Composite (QQQ) surged 1.5% on strong Big Tech earnings but faced pre-market volatility.
• Currencies: GBP/USD hit a three-year high above $1.3440 due to dollar weakness, while USD/JPY rose over 1% as the Bank of Japan (BoJ) kept rates flat, citing Trump tariffs.
• Cryptocurrencies: Bitcoin (BTC.X) stabilized around $94,000, poised for a 13% monthly gain in April, supported by risk appetite and favorable crypto conditions.
• Economic Data: US nonfarm payrolls (NFP) showed strong hiring with 177,000 new jobs, but Q1 GDP contracted 0.3%, raising recession concerns.

Overview

The financial markets this week were dominated by trade negotiations, corporate earnings, and key economic data releases. Gold prices saw volatility as markets reacted to US-China trade talk uncertainties and later to positive trade progress hints. Equity markets were mixed, with the S&P 500 struggling despite a late-week recovery, while the Nasdaq surged on strong earnings from Big Tech. Currency markets were influenced by central bank decisions and trade policies, with GBP/USD reaching multi-year highs and USD/JPY climbing on BoJ inaction. Cryptocurrencies remained resilient, with Bitcoin maintaining stability amid broader risk-on sentiment. Economic indicators painted a mixed picture, with robust hiring data offset by a contraction in Q1 GDP, highlighting ongoing economic uncertainties.

Financial Markets Weekly Recap

Equities

• S&P 500 (SPY): The index ticked up a mere 3 points to log its fifth consecutive winning session, holding near 5,520, but ended April with a tough win, marking its third losing month in a row. It was down 7.3% in Trump's first 100 days, the worst start to a presidential term since 1973. Investors remained cautiously optimistic ahead of heavyweight earnings from the Magnificent Seven.
• Nasdaq Composite (QQQ): Futures fell by as much as 1% in pre-market trading on Monday, but the index surged 1.5% on Thursday, driven by strong Big Tech earnings, particularly from Meta (META) and Microsoft (MSFT). The Dow Jones Industrial Average rose 0.2%, and the S&P 500 gained 0.6%, marking its seventh straight win.
• Individual Stocks:
  • Spotify (SPOT): Shares slumped 8% in pre-market trading despite solid Q1 results, with profit up 14% to €225 million and revenue up 15% to €4.19 billion. A cautious Q2 outlook, forecasting 689 million monthly active users below expectations, weighed on the stock.
  • Super Micro Computer (SMCI): Stock crashed 18% after Q3 revenue guidance of $4.5-$4.6 billion missed the $5.4 billion consensus, and EPS guidance of 29-31 cents fell short of 53 cents. The stock was on track to wipe out all 2025 gains.
  • Starbucks (SBUX): Shares fell 7% after Q1 EPS of 41 cents missed the 49-cent estimate, with global same-store sales declining 1% and North America transactions down 4%. The stock is down nearly 8% year-to-date.
  • UBS (UBS): Stock rose 3% after reporting a $1.7 billion Q1 profit, topping the $1.3 billion forecast, with markets unit revenue up 32% to $2.5 billion and wealth management net new money at $32 billion.
  • Microsoft (MSFT): Shares surged 7% in after-hours trading after Q4 EPS of $3.46 beat the $3.22 estimate, and revenue of $70.1 billion topped the $68.4 billion consensus. Azure growth was 33% year-over-year, with cloud revenue at $42.4 billion.
  • Meta (META): Stock climbed 6% after Q1 EPS of $6.43 beat the $5.23 estimate, and revenue of $42.3 billion topped the $41.3 billion consensus. Ad pricing rose 10%, and annual capex guidance was raised to $64-$72 billion.
  • Apple (AAPL): Shares slid 4% in after-hours trading after Q2 revenue of $95 billion slightly beat the $94.5 billion estimate, but tariffs were expected to add $900 million to costs in Q2. iPhone sales rose 2% to $46.84 billion, while Greater China revenue fell 2%.
  • Amazon (AMZN): Stock fell 4.3% despite Q1 revenue of $155.7 billion beating the $149.8 billion estimate, with profit at $17.1 billion. Q2 operating income guidance of $13-$17.5 billion was below some forecasts, and AWS growth of 17% slightly missed consensus.

Currencies

• GBP/USD: Sterling hit a three-year high above $1.3440, gaining over 1% or 160 pips, driven by dollar weakness. A potential double-top formation suggests resistance at $1.3440, with support around $1.27. Upcoming US economic data, including GDP and PCE inflation, will test dollar strength.
• USD/JPY: The yen sank over 1% to the dollar as the BoJ kept rates flat at 0.5%, citing Trump tariffs, pushing USD/JPY above ¥144.50. Japan’s inflation has remained above the 2% target for three years, adding pressure on the yen.

Commodities

• Gold (XAU/USD): Prices initially held near $3,300, down 5.5% from a $3,500 peak on April 22, due to conflicting US-China trade signals. On Thursday, gold dived 2% to $3,220, the lowest in two weeks, driven by Trump’s trade progress hints, the US-Ukraine minerals deal, and a resurgent dollar. The focus shifted to Friday’s NFP report for interest rate cues.

Cryptocurrencies

• Bitcoin (BTC.X): Traded flat around $94,000, on track for a 13% monthly gain in April after a 25% Q1 decline. The $94,000 level is a key battleground, with a break above $95,000 potentially targeting $98,000-$100,000. Support came from risk appetite, a softer dollar, and cooling tariff fears.

Economic Indicators and Policy Developments

• US Nonfarm Payrolls (NFP): April hiring was strong at 177,000 new jobs, above the 133,000 consensus, though down from March’s revised 185,000. The unemployment rate held at 4.2%, aligning with expectations. Stock futures reacted positively, with S&P 500 futures up 1%, Nasdaq futures up 0.8%, and Dow futures up 360 points. The data may delay hopes for rate cuts, with wage and inflation metrics critical for the Fed’s next move.
• US GDP: Q1 GDP contracted 0.3%, a sharp slowdown from the prior quarter’s 2.4% expansion, fueling recession fears and contributing to a midday dip in the S&P 500.
• Bank of Japan (BoJ): Kept interest rates unchanged at 0.5%, citing Trump tariffs, leading to a weaker yen. The BoJ indicated rate hikes would depend on meeting forecasts, despite inflation above 2% for three years.

Looking Ahead

• Corporate Earnings: Investors will monitor ongoing earnings, focusing on how tariffs and economic conditions shape guidance, particularly for companies exposed to international trade.
• Economic Data: Upcoming releases, including PCE inflation and further jobs data, will provide critical insights into the US economy’s trajectory and potential Fed actions.
• Central Bank Policies: Decisions from major central banks, especially in response to trade developments and domestic economic indicators, will remain pivotal.

Geopolitical Developments: Progress in US-China trade talks and the implications of the US-Ukraine minerals deal will continue to influence market sentiment, particularly for commodities and currencies.

Disclaimers and Limitations