US stocks advanced during the week, driven by optimism that trade tensions with China may ease and by better-than-expected corporate earnings (73% beat consensus). The Nasdaq Composite led gains, with small- and mid-caps also rising for a 3rd straight week. However, economic data signaled slowing momentum: S&P Global’s Flash PMI showed US business activity growth at a 16-month low, with services slowing sharply. Durable goods orders surged 9.2% in March, mainly due to a spike in transportation equipment orders. Meanwhile, home sales plunged 5.9% in March, the steepest drop since 2022, amid high mortgage rates. Consumer sentiment also declined for the 4th straight month, with inflation expectations for the year ahead jumping to 6.5%, the highest since 1981.
European stocks also climbed, helped by Trump’s signals of easing trade tensions. The STOXX Europe 600 rose 2.8%, with Germany’s DAX jumping 4.9% and France’s CAC 40 up 3.4%. ECB officials suggested recession risks remain low despite slower growth, although Germany cut its 2025 GDP forecast to stagnation from earlier 0.3% growth. Bundesbank President Nagel warned that trade tensions could tip Germany into a mild recession. Eurozone business activity slowed slightly in April but stayed barely expansionary (PMI 50.1). In the UK, retail sales surprised on the upside in March, though consumer confidence weakened, and the IMF lowered its 2025 growth forecast.
