Global News Summary 28 April – 2 May 2025

Overview:
Markets stabilised during the final week of April as fears of an imminent global recession eased slightly. While diplomatic overtures between the US and China softened tariff rhetoric, economic data painted a mixed picture. US consumer sentiment remained weak, but job growth continued. China reaffirmed its fiscal stimulus path, and European inflation held firm. Investors recalibrated expectations for central bank action across major economies.

United States

• GDP: The US economy contracted by 0.3% in Q1 2025, reversing expectations of growth due to a spike in imports ahead of new tariffs and declining government spending.

• Jobs: 177,000 jobs were added in April. The unemployment rate held at 4.2%, while labour force participation rose significantly, indicating underlying strength.

• Wage Growth: Slowed to +3.8% YoY, easing inflation pressures.

• Inflation: Core PCE (as of March) stood at +2.8% YoY. April CPI data is expected mid-May.

• Debt Securities: Yields rose — 2Y Treasury up to 3.83%, 10Y at 4.30%, amid reduced Fed cut bets.

• Monetary Policy: Markets now anticipate the first Fed rate cut in July (delayed from June); a total of three cuts are priced in for 2025.

• AI Sector: Stocks like Microsoft and Nvidia gained, supported by strong earnings and increasing enterprise AI deployment.

• ESG: Global sustainable bond issuance remains strong, but ESG funds face mixed political reception, especially in select US states.

• Recession Watch: Despite the GDP contraction, robust job creation and cooling wage growth support a “soft landing” thesis, though risks remain.

United Kingdom

• GDP: Preliminary Q1 data is pending, but the UK is broadly stagnating, with weak private sector output and a £15bn overshoot in public borrowing.

• Jobs: Unemployment rose modestly to 4.4% in the 3 months to February. Labour market momentum has cooled.

• Inflation: CPI stood at 2.4% (March), with April data expected by 21 May.

• Stagflation Risk: Weak growth and persistent inflation heighten stagflation concerns.

• Policy: BoE is expected to cut rates soon, as warned by Governor Bailey. IMF also downgraded UK growth forecasts.

Eurozone

• Growth: Q1 GDP grew 0.4% QoQ, higher than earlier estimates.

• Inflation: April headline CPI at 2.2% YoY. Core CPI details pending.

• Monetary Policy: The ECB remains cautious, with Governing Council members signalling readiness to ease if inflation moderates further.

• Debt Markets: Sovereign bond yields moved higher on sticky inflation data and cautious ECB stance.

China

• GDP: Q1 GDP grew +4.5% YoY, supported by retail activity and infrastructure. However, export momentum weakened.

• Industrial Profits: Fell −2.7% YoY in Q1, showing continued pressure on manufacturers.

• Stimulus: The government rolled out a CNY 300 billion support package for consumption and infrastructure.

• Trade: China signalled willingness to resume talks if US softens tariffs. Beijing has stepped up engagement with ASEAN partners.

• Currency: The offshore yuan rebounded after previous declines.

Japan

• Unemployment: Held low but ticked up to 2.5%.

• Inflation: GDP deflator data is not yet available, but service prices remain elevated, and March CPI excluding fresh food rose +3.2% YoY.

• Activity: Manufacturing remained weak, while services showed mild recovery.

• Outlook: BoJ is expected to delay rate hikes due to global volatility and tariff impact.

Australia

• GDP: Q4 2024 grew +0.6% QoQ, with annual growth at 1.3%.

• Inflation: CPI rose to 3.2% YoY, driven by housing and energy prices.

• Jobs: Unemployment steady at 4.0%.

• Monetary Policy: RBA kept rates unchanged, monitoring inflation trajectory closely.

New Zealand

• GDP: Q4 2024 rose +0.4% QoQ.

• Inflation: CPI held at 2.5% YoY, within the central bank’s target.

• Rates: The Official Cash Rate (OCR) remains at 5.5%, with policy seen as balanced.

Canada

• GDP: Contracted −0.1% QoQ in Q1, impacted by falling exports and weak investment.

• Jobs: Unemployment climbed to 6.8%, highest among G7 economies.

• Inflation: CPI moderated to 2.1% YoY, well within the BoC’s 1–3% control band.

• Recession Warning: Early signs of contraction emerging, as flagged by IMF and domestic analysts.

Thematic Highlights

Global Growth

• Leaders: China (+4.5% YoY), US labour market resilience.

• Laggards: Canada (−0.1%), UK flat, EU modest.

• IMF Forecast: Global growth projected at +2.8% in 2025, with downside risks from debt and tariffs.

Labour Markets

• US: +177k jobs, stable participation.

• EU, UK, Japan: Labour conditions broadly steady.

• Canada: Deteriorating, unemployment up sharply.

Sovereign Debt

• Rising Yields: US 10Y at 4.30%, German Bund at 2.53%, UK Gilt at 4.51%.

• China: Domestic issuance surging to fund stimulus.

AI & Tech

• Market Size: Global AI market seen reaching $258bn revenue in 2025.

• Leaders: Microsoft, Nvidia, and US tech firms dominate on custom chips and cloud-based AI tools.

ESG & Sustainability

• Global AUM: Expected to hit $53 trillion by end-2025, ~33% of all managed assets.

• Trends: Green bond demand up, but regulatory fragmentation persists.

Recession & Stagflation

• Global Signals: Mixed — US and China expanding; UK, EU sluggish; Canada under pressure.

• Sticky Inflation: Japan, EU, and UK face stubborn core CPI.

• Central Bank Outlook: Most G7 central banks expected to wait until Q3/Q4 2025 before easing.