Global Markets Wobble Amid U.S.–China Trade Tensions, Inflation Watch, and Central Bank Shifts

Global markets were rattled by escalating U.S.–China trade tensions. The U.S. imposed tariffs up to 145% on Chinese imports, causing a sharp decline in Chinese exports to the U.S., while China redirected trade to other regions, boosting overall exports.

In the U.S., inflationary pressures are emerging, with expected increases in consumer prices tied to higher input costs from tariffs. The Eurozone surprised to the upside with Q1 GDP growth of 0.4%, although risks from the global trade environment remain.

China’s car sales continued rising, bolstered by government incentives, even as deflation concerns intensified. Japan likely entered a technical recession, with GDP projected to contract in Q1. Japanese policymakers hinted at more fiscal stimulus, though a tax cut was ruled out.

🇺🇸 United States

Last Week

• Inflation expectations rose, with April CPI seen increasing by 0.3% month-over-month. Rising tariffs raised concerns that costs could be passed through to consumers.
• President Trump floated lowering tariff levels on Chinese goods to 80% in a move interpreted as a negotiating gesture ahead of Switzerland trade talks.
• Market indices were mixed: S&P 500 slightly down, Nasdaq slightly up, and the Dow marginally higher. Treasury yields moved up, signaling inflation concerns.

This Week

• April CPI and PPI data will be key for markets to gauge the inflation trajectory.
• U.S.–China trade negotiations in Switzerland will be closely monitored for signs of easing tensions.

🇪🇺 Eurozone

Last Week

• Q1 GDP grew by 0.4%, exceeding expectations due to resilient domestic demand and preemptive stockpiling.
• Inflation data showed slowing headline rates in Germany, while core inflation held steady across the bloc.
• European equity markets posted modest gains, with the DAX advancing slightly.

This Week

• Key focus will be on industrial production and trade balance figures.
• The European Central Bank’s commentary on rate policy may reflect heightened global risks.

🇬🇧 United Kingdom

Last Week

• The Bank of England cut its key rate to 4.25% from 4.5%, citing tariff-related growth risks.
• Headline inflation slowed to 2.6%, but food prices continued climbing, reflecting persistent pressures in essentials.
• The FTSE 100 gained modestly following the rate cut and stable inflation print.

This Week

• April inflation and retail sales data will give insights into consumer behavior under new policy settings.
• Trade policy developments remain in focus as global tensions continue to shape the UK’s economic landscape.

🇨🇳 China

Last Week

• Exports rose 8.1% year-on-year in April despite a 21% drop in shipments to the U.S., thanks to a pivot toward emerging markets.
• Consumer and producer prices continued falling, highlighting deflationary headwinds and soft domestic demand.
• Chinese equity markets were flat, balancing trade data optimism with lingering deflation fears.

This Week

• Investors will monitor industrial production and retail sales for signs of internal economic momentum.
• China’s role in U.S. trade negotiations will be watched closely.

🇯🇵 Japan

Last Week

• Q1 GDP is expected to show a 0.2% annualized contraction due to weak domestic consumption and a surge in imports.
• The government signaled openness to new fiscal stimulus but ruled out reducing the consumption tax.
• The Nikkei 225 posted a modest decline as investors weighed economic risks.

This Week

• Machinery orders and producer prices will be watched for clues on manufacturing sector health.
• Policy signals from the Bank of Japan may hint at new easing measures.

🌍 EMEA (Europe, Middle East & Africa)

Last Week

• Germany’s economic institutes slashed 2025 growth forecasts to 0.1%, citing tariffs and global demand softness.
• The South African rand weakened as commodity prices declined and power issues persisted.
• Turkey kept its policy rate unchanged at 45% amid still-high inflation.

This Week

• Germany’s industrial production and Turkey’s current account data are in focus.
• Emerging market central banks may begin reacting to external price shocks and weak global trade.

🛢️ Commodities & 🪙 Cryptocurrencies

Commodities

• Oil: Brent crude traded near $82 as supply risks and global growth concerns offset each other.
• Gold: Slightly down on the week as a firmer dollar outweighed inflation hedging flows.
• Silver: Gained nearly 0.9%, supported by demand from industry and safe-haven interest.

Cryptocurrencies

• Bitcoin traded flat amid macro uncertainty, while Ethereum showed mild strength.
• Altcoins showed mixed performance, with Solana and Avalanche among weekly outperformers.
• Crypto investors remain cautious ahead of CPI data and global risk sentiment shifts.