Weekly Market Update (April 20, 2025)

Market Hedwig
Apr 19
2 min read

HIGHLIGHTS

US equities dropped slightly this shortened week, after a volatile two weeks. US dollar weakened further driven by the ongoing trade war. Gold hit another new high again.

ECB: The European Central Bank cut rate by 25bps again, which is the seventh time since last year. The officials claimed that it is in response to the escalating uncertainty, such as the global trade war and the increasing likelihood of recession.

China: Q1 GDP in China reported 5.4% growth, beating market expectations. It is mainly driven by the consumer subsidies and front-loaded shipments ahead of tariffs. However, markets expect a slowdown because of the trade war impact.

Commodity: Gold was up 4.6% this week and reaching a new all-time high. Markets expect gold prices continue to rise because of the high demand from central bank and the ETF inflows driven by the recession risk. For oil, OPEC adjusted down its oil demand forecast this year in response to the trade war. WTI oil went up by 4.8% this week.

MARKETS

Nasdaq	16,286.45	-2.62%
S&P 500	5,282.70	-1.50%
Dow	39,142.23	-2.66%
10-Year	4.33%	-16bps
Brent	67.68	+5.77%
DXY	99.23	-0.55%

*Data as of market close. 5-day change ending on Friday.

VIEW FROM THE STREET

Equity

UBS: About 60% of individual investors hold a bearish outlook and expect stock prices to drop in the coming 6 months. Historically, bearish sentiment served as a contrarian indicator, with 27% average return in S&P500 in 12 months following the sentiment readings exceeding 60%.

Bank of America: Fundamentals of equal-weighted index are attractive, including P/E ratio and dividend yield. These suggest that the index is currently undervalued, and could be a good entry level. Broader corporate earnings growth should become more apparent, and the broad portfolio exposure to value, defensive and cyclical stocks is more important.

Fixed Income

Morgan Stanley: The proposed budgets, debt ceiling discussions and tax bills are likely to increase the debt of US. This is indicated by the steepening treasury yield curve, with front-end anchored and long-term rate rising. 2Y/10Y spread has widened more than 30bps in 7 days. Higher rates, higher credit spreads and higher recession risks will increase the cost of capital.

UBS: Investors at the long-end of the yield curve are recommended to be cautious of the volatility related to the policy and the unwinding of technical hedge fund’s basis trades.

Economy

Goldman Sachs: The unexpectedly high tariff is likely to raise inflation and slow growth. Fed’s policy will prioritize long-term price stability to maintain the strength of job market.

Morgan Stanley: US GDP is likely to drop due to lost sales to China. Also, a 150bps decline in GDP is expected because of the uncertainty of global tariff impact.

KNOWLEDGE TRANSFER

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DISCLOSURE

This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.