Global markets closed last week on a positive note, driven by hopes that the United States and China may resume tariff negotiations, macroeconomic data, and strong earnings from American corporations. As a new week begins, investor focus has shifted to the U.S. Federal Reserve’s (Fed) upcoming interest rate decision, while domestic markets in Türkiye await the release of April’s inflation figures.
According to Bloomberg HT’s survey, completed on April 28 and based on expectations from 24 institutions, Türkiye’s April monthly inflation rate is anticipated to be 3.25%. The median forecast for annual inflation stands at 38.20%. In March, monthly inflation was 2.46%, and annual inflation was recorded at 38.10%.
U.S.-China Tariff Dialogue Boosts Risk Appetite
Markets were uplifted by the possibility of the U.S. negotiating tariffs with China. Any updates on this front have become a focal point for investors. Despite concerns over inflation and recession, macroeconomic data released during the week also influenced expectations regarding Fed policies.
The U.S. economy shrank for the first time since 2022, intensifying scrutiny on the Fed’s next moves. Analysts will closely monitor Fed Chair Jerome Powell’s comments following the announcement of the central bank’s interest rate decision on Wednesday.
Despite stronger-than-expected non-farm payroll data and a steady unemployment rate at 4.2%, expectations for the Fed’s first rate cut have shifted from June to July. The average hourly earnings rose by 0.2% to $36.06.
U.S. GDP Contracts, Inflation-Driven Concerns Mount
The U.S. Department of Commerce reported that the economy contracted by an annualized 0.3% in Q1 2025, contrary to projections of 0.2% growth. The contraction was attributed to increased imports and reduced government spending. In contrast, the economy grew by 2.4% in Q4 2024 and 2.8% for the full year.
Former President Donald Trump commented on the data, claiming it reflected the economic legacy of current President Joe Biden.
Markets React: Mixed Performance in Commodities and Equities
The U.S. 10-year Treasury yield closed the week at 4.31%. Gold prices fell by 2.3% to $3,241 per ounce, while the dollar index rose by 0.5% to 100. Brent crude oil dropped 6.9%, ending the week at $61.3 per barrel.
The New York Stock Exchange saw strong gains: the S&P 500 rose by 2.92%, the Nasdaq gained 3.45%, and the Dow Jones increased by 3%.
Corporate earnings bolstered investor sentiment. Microsoft reported a 13% YoY revenue increase to $70.1 billion, and a net income of $25.8 billion, up 18%. Meta’s revenue surged by 16% to $42.3 billion. Apple’s revenue increased by 5% to $95.4 billion, with net profit at $24.8 billion. CEO Tim Cook noted that global tariffs could add $900 million to the company’s costs this quarter. Amazon also impressed, with net sales up 9% to $155.7 billion and net income reaching $17.1 billion.
Key upcoming U.S. economic data includes:
- Monday: S&P Global and ISM services PMI
- Tuesday: Trade balance
- Wednesday: Fed interest rate decision and Powell’s speech
- Thursday: Wholesale inventories and jobless claims
European Markets Watch Tariff Talks and Await BoE Decision
European stocks also posted gains last week, with optimism surrounding U.S.-China trade talks and developments in the Russia-Ukraine conflict. Focus will shift this week to the Bank of England’s (BoE) policy decision.
Eurozone GDP in Q1 2025 grew by 0.4% quarter-on-quarter, surpassing expectations. Annual inflation held steady at 2.2%, slightly above the forecast of 2.1%. The unemployment rate remained at 6.2% in March.
The Eurozone manufacturing PMI rose to 49, marking the fastest increase in three years. Electricity outages across the region also drew attention.
Upcoming European data includes:
- Tuesday: Producer Price Index (PPI), HCOB services PMI
- Wednesday: Retail sales (Eurozone), factory orders (Germany)
- Thursday: Industrial production (Germany), BoE interest rate decision
Markets in the UK will remain closed on Monday due to a public holiday.
Asian Markets Hopeful on U.S.-China Dialogue
Asian equities, excluding China, largely rose last week amid renewed optimism for U.S.-China trade negotiations. The Chinese Ministry of Commerce signaled that talks were being considered, boosting hopes for diplomatic resolutions.
Japan’s central bank maintained its interest rate at 0.5% and projected moderate economic growth. Credit rating agency S&P Global revised China’s GDP growth forecast for 2025 and 2026 downward to 3.5% and 3.0%, citing the negative impact of tariffs.
Japan’s unemployment rate in March was 2.5%. Industrial production fell by 1.1% month-on-month and 0.3% year-on-year, while retail sales decreased by 1.2% monthly but rose 3.1% annually.
China’s April manufacturing PMI dropped to 49, indicating contraction. Services and composite PMIs were 50.4 and 50.2 respectively. However, the Caixin manufacturing PMI surprised positively at 50.4.
This week’s key Asian data includes:
- Tuesday: China Caixin services PMI
- Friday: China trade balance
Note: Markets will be closed on Monday in China (Labor Day) and Tuesday in Japan (holiday).
Türkiye Markets Await Critical Inflation Report
In Türkiye, Borsa Istanbul’s BIST 100 index dropped by 2.81% last week to 9,167.58. The Treasury and Türkiye’s Central Bank implemented new policies aimed at increasing the share of the Turkish lira in the financial system. Export revenue conversion requirements were raised to 35%, and foreign exchange conversion support increased to 3%.
The Central Bank also reinstated Turkish lira targets for corporate deposits and raised required reserve ratios for foreign currency deposits. Interest paid on lira-denominated reserves was increased.
Bloomberg HT’s inflation survey showed April’s monthly inflation expectations range from 2.50% to 4%, and annual expectations range from 37.19% to 40%.
USD/TRY rose by 0.39% last week, closing at 38.5770.
Türkiye’s key economic calendar includes:
- Monday: Inflation data (TÜIK)
- Tuesday: Real effective exchange rate (REER) based on CPI
- Thursday: Treasury cash balance
- Friday: Industrial production figures
Would you like a visual chart summarizing these key global and domestic indicators?
Source: Bloomberght/ Prepared by: İlayda Gök