The markets look for guidance. The TPP midweek trading update.

What next for global equities?

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Major European equity indices edged higher in tight trading ranges Wednesday, as investors waded through a deluge of quarterly corporate earnings ahead of the release of key regional growth data. The FTSE 100 was a little behind, but all were faring better than the U.S. market which was down nearly 2% at lunchtime.

The pan-European Stoxx 600 index recorded a sixth straight positive session on Tuesday, extending its longest winning streak since January, as a turbulent April draws to a close.

That said, this benchmark index is still on track to register a monthly loss of around 1.5% as investors digested the uncertain trade outlook brought around by U.S. President Donald Trump’s ever-changing tariff announcements. April was a torrid month for equities and one we’d all rather forget.

Quarterly corporate earnings are back in focus, with a number of Europe’s senior companies reporting their results during the session.

Mercedes-Benz reported that its net profit fell sharply in the first quarter of 2025, and pulled its earnings guidance for 2025 amid, oh yes, once again: ‘uncertainty over the impact of the U.S. tariffs on car imports’.

Fellow German auto giant Volkswagen followed suit, reporting a substantial drop in first-quarter profit, adding that the U.S. tariffs could weigh further on its outlook – turns out, it’s a difficult time to be in the import/export business! Good luck to you all, our thoughts go out to you – this is not your fault.

French oil major TotalEnergies reported a 17% drop in adjusted net income for the first quarter, after oil prices fell and margins for refining fuels in Europe struggled to recover from a steep collapse in 2024.

On the flip side, in the UK Barclays reported better than expected top and bottom line, boosted by stronger investment bank performance.

The bank lifted bad loan provisions in response to macroeconomic uncertainty in the U.S. as it also reported a better-than-expected 19% rise in pre-tax profit to £2.7bn. Credit impairment charges increased to £643m from £513m a year ago, primarily driven by a £74m adjustment for “elevated US macroeconomic uncertainty” and the impact of the Tesco Bank acquisition.

Luxury carmaker Aston Martin is limiting exports to the U.S. in response to President Donald Trump's tariffs and also posted narrower-than-expected first-quarter losses.

Glencore reported a sharp decline in copper production during the first quarter on Wednesday, while output of cobalt and steelmaking coal rose strongly, supported by higher grades and recent acquisitions.

Consumer healthcare giant Haleon reiterated its full-year guidance on Wednesday, despite an increasingly “challenging and uncertain” macroeconomic backdrop. The owner of Sensodyne toothpaste, Centrum vitamins and Panadol, among others brands, said revenues in the three months to March grew 3.5% on an organic constant currency basis, to £2.85bn, boosted by increases in both prices and volumes. On a reported basis, revenues fell 2.3%.

There was also a slew of economic data for investors to pore over on Wednesday.

German retail sales fell less than expected in March, dropping by 0.2% compared with the previous month, instead of the forecast 0.4% decrease, while French gross domestic product rose a meagre 0.8% on an annual basis in the first quarter.  

Growth data for the wider eurozone bloc as well as German inflation numbers are due later Wednesday, and are likely to support the case for further rate cuts by the European Central Bank, with markets expecting another round of easing in June.

UK house prices registered the biggest decline in almost two years in April after a tax break for buyers expired and consumer confidence tumbled in response to US tariffs, according to one of Britain’s biggest mortgage lenders.

Nationwide Building Society said the average value of a home dropped 0.6% to £270,752 after being flat the previous month. Economists had predicted a 0.1% gain. Prices were 3.4% higher year-on-year.

It was the first monthly decline in prices in eight months and the largest since August 2023, when they also fell by 0.6% as the Bank of England’s benchmark interest rate hit its peak.

The figures point to a challenging spring for the housing market, with already stretched buyers hit by a rise in stamp duty, a transaction tax, on April 1 and deteriorating economic prospects triggered by Donald Trump’s sweeping US tariffs. Consumer confidence dropped to the lowest level under the Labour government this month.

However, demand still could be propped up in the coming months by mortgage costs edging down in anticipation of more interest-rate cuts from the BOE.

“The market is likely to remain a little soft in the coming months, following the pattern typically observed following the end of stamp duty holidays,” said Robert Gardner, chief economist at Nationwide. He said activity is likely to pick up over the summer, aided by low unemployment, rising real wages and falling interest rates.

In the U.S., the economy contracted at the start of the year for the first time since 2022 on a monumental pre-tariffs import surge and more moderate consumer spending, a first snapshot of the ripple effects from President Donald Trump’s trade policy.

Inflation-adjusted gross domestic product decreased an annualised 0.3% in the first quarter, well below the average growth of about 3% in the prior two years, according to the government’s initial estimate published Wednesday.

The data highlight the scramble by companies to secure merchandise ahead of expansive tariffs, with net exports subtracting nearly 5 percentage points from GDP, the most on record, the Bureau of Economic Analysis report showed. A decline in federal spending also weighed on the figure.

US Economy Contracts For the First Time Since 2022

A surge in imports weighed on GDP as firms sought to front-run tariffs

Consumer spending, which accounts for two-thirds of GDP, advanced at a 1.8% pace, the weakest since mid-2023 but still better than economists had forecast. A gauge of underlying demand in the economy was solid, helped by the fastest growth in business equipment purchases since 2020.

The latest GDP figures showed imports surged an annualised 41.3%, the biggest advance in nearly five years. Because these goods and services aren’t produced in the US, they are subtracted from GDP. Many economists see the sharp widening of the trade deficit reversing in the second quarter, which would support a near-term rebound in growth.

However, looking further out, forecasters contend that the higher duties will cause a supply shock, challenging businesses and leading to a pullback in demand. Retaliatory tariffs would also discourage exports, setting up a tough backdrop for the rest of the year and making the odds of a recession essentially a coin flip.

“If the blowout on trade was the result of firms pre-buying imported inputs to beat the tariffs, the decay in the trade balance will reverse in Q2. That will generate some GDP growth,” Carl Weinberg, chief economist at High Frequency Economics, said in a note. “However, corrosive uncertainty and higher taxes, tariffs are a tax on imports, will drag GDP growth back into the red by the end of this year.”

The S&P 500 opened lower, and Treasury yields fell. In a social media post, Trump said the U.S. economy will “take a while” to show results of the current polices and blamed the stock market’s performance on his predecessor, Joe Biden. We aren’t really sure how that could be possible, but that’s what he’s going with.

Typically, imported merchandise moves into warehouses or directly to storefronts. However, the report showed business inventories contributed 2.25 percentage points to GDP during the quarter, the most since the end of 2021. The recent flood imports may instead show up in higher inventories in coming months, which could also provide a lift to second-quarter GDP.

Because swings in trade and inventories can sometimes distort overall GDP, economists prefer looking at final sales to private domestic purchasers for a better snapshot of demand. This measure increased at a 3% pace in the first quarter after rising an annualised 2.9% at the end of 2024.

Growth in consumer spending was driven by a broad-based advance in outlays for services and a pickup in nondurable goods.

Several surveys of consumer attitudes have plunged, raising doubts about the ability of households to provide much fuel for the economy. Low-income consumers are already facing hardships of high prices, while wealthier individuals have been set back by this year’s drop in stock prices.

The GDP report also showed government spending declined at a 1.4% pace, the first decrease since 2022 and restrained by an 8% drop in defence outlays. Trump temporarily paused military aid for Ukraine last month.

Not even separate data showing the Fed’s preferred inflation gauge stalled in March for the first time in nearly a year, amid strong consumer spending, were able to appease investors’ mood on Wednesday.

The Federal Reserve’s preferred inflation gauge stalled in March for the first time in nearly a year, and consumer spending was strong, a welcome reprieve before tariffs are expected to broadly drive up prices.

The personal consumption expenditures price index stagnated from February, according to Bureau of Economic Analysis data out on Wednesday. Excluding food and energy, the so-called core PCE was also unchanged, the tamest in almost five years.

Inflation-adjusted consumer spending climbed 0.7% last month after an upward revision to the prior month, suggesting households spent aggressively to get ahead of new tariffs.

The report earlier Wednesday also showed core PCE inflation accelerated to a 3.5% pace in the first quarter — the most in a year.

It’s hard to believe we’re only halfway through the week. Volatility continues and Europe is coping ok, but the U.S. market is all over the place. Nobody really knows what the impact of tariffs will be, or even what the tariffs themselves will be, so traders are buying in and selling out as best they can to build profits. Certainly, this is what is happening with a number of strategies at TPP. It’s important to stay in the market after a fall, but if you can actively trade the volatility as well, then your portfolio should recover and surpass its previous highs well before the global markets do.

If you would like more information on building your own portfolio with TPP, please do get in touch here, and one of our portfolio managers will be in touch. You can open an account with as little as £25,000, and you don’t have to be based in the UK. We have clients all over the world harnessing the wisdom of our experts.

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Disclaimer: The views expressed in this article are the author’s own and should not be considered in rendering any legal, business or financial advice. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions.

This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only.

Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to the corresponding past performance.

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