Market Watch: Markets rally as Trump’s stance softens

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Matthew Boxall of Team Asset Management offers this week’s market review
FOR the first time in what feels like forever, US markets recorded a five-day winning streak, the longest of the year for the S&P 500, as a combination of corporate earnings and a de-escalation of the ongoing tariff wars boosted investor sentiment.
Trump’s comments remained a key influence once again for the direction of risk assets this week. After calling Fed chair Jerome Powell a “loser”, and urging action in the form of swift interest-rate cuts on Monday, “The Donald” steadily walked back his aggressive rhetoric.
President Trump’s softened stance on Chinese tariffs, saying they would “come down substantially, but it won’t be zero”, followed warnings from major US retailers over rising prices and product shortages. However, China’s Foreign Affairs Ministry denied that negotiations were taking place, a position that is keeping many investors on edge.
Turning to the US’s northern neighbour, former Bank of England governor Mark Carney’s Liberal Party won Canada’s federal election on 28 April, securing a stunning comeback against Pierre Poilievre’s Conservatives. The victory was driven by a united backlash against Trump’s tariffs and the accompanying threat of becoming America’s “51st state”.
While investors absorbed the latest tariff headlines, the corporate earnings season began in earnest, with early reports from major names including Tesla and Alphabet, Google’s parent company.
Tesla’s first-quarter results disappointed, with revenue down 9% year-on-year to $19.3 billion and profits falling 71% to $409 million. Vehicle deliveries dropped 13%, while automotive revenue slid 20%, hit by weaker demand, factory upgrades and steep discounts. Tariffs and brand damage linked to Elon Musk’s political ties also weighed heavily.
Still, there were bright spots: Tesla’s energy storage business surged 67% and free cashflow turned positive. Although guidance for 2025 was deferred, Musk’s promise to refocus on Tesla and scale back his government role lifted shares significantly. Investors are now pinning hopes on new affordable models, the upcoming Robotaxi launch and Tesla’s ambitious push into AI and autonomy.
Alphabet delivered stronger-than-expected results last quarter, posting $90 billion in revenue, up 12% year-on-year, and $34 billion in profit, a 46% jump. Growth was broad-based, with YouTube ad sales meeting expectations and Google Cloud revenue rising 28%.
Still, challenges remain. A slowing global economy could see advertisers tighten budgets, just as AI tools threaten Google’s dominance in search. Alphabet, however, has deep pockets, planning to invest $75 billion into AI this year, increasing its capital spending expectations for the year, which helped boost sentiment towards AI-related stocks.
As markets marched higher, investors didn’t hesitate to lock in profits on gold, seemingly rotating back into equities. The yellow metal briefly soared above $3,500 to set a new all-time high, only to retreat below $3,300 as tariff tensions began to ease.
For gold, uncertainty continues to be a double-edged sword. On one hand, lingering concerns over US-China relations are keeping demand for safe-haven assets elevated. On the other, even the slightest suggestion of a thaw, no matter how politically spun, is enough to cool the rush into risk-off trades.
Bitcoin surged, climbing above $95,000 and marking its best performance since late 2024. Strong inflows into US-listed bitcoin ETFs and a $3.6 billion crypto fund backed by Cantor Fitzgerald and SoftBank helped drive the rally. Bitcoin’s growing role as a store of value came into sharper focus, as investors sought protection against inflation and market instability.
Looking ahead, corporate earnings will remain firmly in focus, with hundreds of companies set to report results. Wall Street is preparing for an exceptionally busy week, highlighted by announcements from four members of the “Magnificent Seven”: Apple, Microsoft, Meta Platforms and Amazon.
On the macro side, first-quarter GDP figures for the euro area, as well as France, Italy and Germany individually, are scheduled for release. Meanwhile, the US core personal consumption expenditures price index for March, the Federal Reserve’s preferred measure of inflation, will also be published, along with employment data, which will indicate whether companies are surviving the ongoing tariff wars or have been forced to retrench their workforce.