Weekly Market Review: 05th May 2025

In the US, equity markets remained mostly calm last week, responding more to domestic economic data than to geopolitical trade developments. This does not mean, however, that trade tensions have eased. Treasury Secretary Scott Bessent stated that China would need to de-escalate its own position before any negotiations could begin between the two countries. The US and Ukraine also signed a long-awaited minerals deal last week, granting the US access to Ukraine’s critical mineral resources. However, it will be Ukraine that determines which natural resources are extracted under a “reconstruction investment fund”, which will be split equally between the two countries. For the first decade following the fund’s establishment, all profits will be reinvested in Ukraine. Equity markets were largely focused on the US domestic economy and corporate earnings. The unexpected contraction in Q1 GDP pulled equities lower on Wednesday, as increased imports weighed on overall economic growth. It was also a notable week for mega-cap earnings, with four members of the “Magnificent 7” reporting Q1 results. Microsoft beat revenue expectations, largely due to its cloud computing division, Azure, which grew by 33% over the quarter. Within this growth, AI accounted for 16%, helping to alleviate investor concerns that significant AI-related expenditure might not translate into business returns. Overall, Microsoft’s revenues rose to $70.1bn – nearly $2bn ahead of estimates. Meta, meanwhile, posted Q1 revenues of $42.3bn and net income of $16.64bn, a 35% year-on-year increase. For the week, the S&P 500 and NASDAQ ended higher, rising by 2.43% and 3.25% respectively.

In Europe, markets were relatively flat as investors continued to monitor trade relations between the US and its key partners while digesting recent economic and corporate data. The nationwide electricity outage in Spain and Portugal on Tuesday had limited market impact, as it was attributed to extreme weather rather than malicious activity. Economically, the Eurozone surpassed expectations for Q1 2025, with GDP rising by 0.4%. However, this figure was driven by one-off growth occurrences across the bloc rather than broad-based expansion. Ireland’s 3.2% quarterly growth contributed significantly to the headline rate. On the corporate front, earnings were reported across a broad range of industries. Iberdrola, Europe’s largest utility company based in Spain, posted stronger-than-expected results and stated that US tariffs would have no “significant” impact on its performance. Airbus, the French aircraft manufacturer, reported a 6% year-on-year revenue increase in Q1, delivering 136 aircraft during the quarter. Meanwhile, global private-equity and investment company, KKR, stated that the EU is undergoing a “renaissance” as an investment destination, citing the effects of US tariffs, the Draghi report, and rising public spending in countries such as Germany. For the week, the Eurostoxx50 and STOXX 600 rose by 2.02% and 2.68% respectively.

In the UK, the FTSE 100 climbed on the back of strong corporate earnings from some of the country’s largest firms. Positive results came from HSBC, the UK’s biggest bank, as well as from GSK and Rolls-Royce. On the downside, BP, Lloyds, and Glencore all missed expectations, capping overall gains. The index closed the week up 1.85%.