April 27, 2025

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Notable market news this past week (27-Apr-25)

Here is the Skeptivest roundup of the latest market headlines for the week

🇺🇸 Recession risks persist, but easing trade tensions lift markets

Recession Warnings Intensify...: The IMF pegs the probability of a US recession at 40%, Bloomberg’s median forecaster at 45%, and Polymarket at 55%, while Southwest’s CEO claims it has already begun. In Europe, the ECB remains optimistic, but Germany faces risks from tariffs.

...But there are signs of trade tension de-escalating: Treasury Secretary Scott Bessent and President Trump signaled potential tariff relief, with policymakers reportedly considering suspending certain 125% tariffs. Bessent believes the tariff tit for tat between the US and China is unsustainable and will lead to an imminent deescalation, he told investors at a closed-door JPMorgan Chase event. Hopes for new trade deals within weeks are growing. Market sentiment improved as Trump backed away from threats against Fed Chair Powell, while a Fed official hinted at a possible June rate cut. Markets now price in four rate cuts for the rest of 2025.

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☕️ Quick fire happenings to note

🌏 Global macro

• Trump faces growing disapproval as markets eye trade relief: Polls show 70% of Americans fear tariffs will fuel inflation, Trump's approval rating has slipped to 45%, and most disapprove of his efforts to expand executive power.
• American consumer sentiment dips: Consumer sentiment dropped 8% from March to April, driven by inflation fears, according to the University of Michigan survey. Inflation expectations surged to their highest level since 1991, with consumers concerned about the impact of tariffs. Major retailers are forecasting potential shortages of goods in the coming weeks if tariffs on Chinese imports remain unchanged.
• China moves to ease trade strain and support growth: China may suspend its 125% tariff on some US goods amid mounting economic pressures. The Politburo pledged new monetary tools and financing measures to boost technology, consumption, and trade.
• China warns of retaliation over harmful US trade deals: China’s commerce ministry warned nations not to strike trade deals with the US that harm China’s interests, threatening to take reciprocal countermeasures if they do. This statement comes as countries attempt to make concessions to avoid President Trump’s tariffs, with no deals finalized yet.
• Fed signals potential June rate cut: Cleveland Fed President Beth Hammack suggested that "clear and convincing data" could trigger a rate move, hinting at a possible rate cut in June depending on economic conditions. While tariffs could stoke inflation, the threat to economic growth, including a 45%-60% recession risk, may push the Fed to cut rates to stimulate the economy. Investors raised the likelihood of a June rate cut to 65%, as Treasury yields fell, buoyed by hopes of easing trade tensions and Fed independence.
• Yale prepares major private equity sale amid liquidity pressures: Yale plans to offload up to $6 billion of private equity and venture assets, in what could rival 2023’s record University of Pennsylvania transaction. The move reflects funding pressures from federal grant cuts, slower private market exits, and potential endowment tax changes, alongside a broader desire for more cash flexibility.
• UK wealth exodus accelerates amid tax hikes: Rising taxes on private equity, inheritances, and capital gains are driving wealthy individuals to move abroad. Real estate moguls Ian and Richard Livingstone have moved their residency to Monaco; Goldman Sachs vice chairman Richard Gnodde is relocating to Milan.

🏦 Individual stocks/companies

• Apple accelerates shift to India for iPhone production: Apple aims to produce most US-bound iPhones in India by end-2026, requiring roughly double the current output.
• Deliveroo in talks over £2.7 billion buyout proposal from DoorDash: DoorDash offered 180 pence per share for Deliveroo, valuing it at £2.7 billion ($3.6 billion); Deliveroo’s board is inclined to recommend the deal, pending final terms. The acquisition would give DoorDash access to 10 new markets without major regulatory hurdles, complementing its 2021 purchase of Wolt. ‍
• ServiceNow (+24.47% past 5 days) jumps on strong earnings and raised guidance: Shares surged after ServiceNow posted results above analyst expectations, driven by strong demand for AI-powered enterprise software. Growth was notably fueled by rising adoption in the government segment. The company raised its full-year subscription revenue guidance slightly to $12.64–$12.68bn.
• Duolingo soars (+17.56% past 5 days) on analyst upgrade and AI potential: Morgan Stanley initiated coverage with an "overweight" rating and a $435 price target, citing strong user growth and expanding profit margins. The firm highlighted potential gains from AI innovations, including Duolingo’s Max subscription tier, which offers ad-free, AI-enhanced learning. The Max tier positions Duolingo for significant improvements in monetization, fueling investor optimism.
• LVMH (-15.33% past 1 month) CEO Arnault calls for US-EU free trade amid slump: The luxury giant saw a 24% drop in shares this year, partly due to investor concerns over US tariffs and a 5% sales decline in its fashion division, exacerbated by weak demand in China. Despite trade tensions, Arnault pointed to the European Commission, blaming its bureaucratic nature for stalling US-EU trade negotiations and calling for a free trade agreement to protect luxury sectors. Arnault warned that without a favorable trade deal, LVMH might be forced to move production to the US, despite challenges with its Texas facility.

🇸🇬 Singapore related

• Housing and cost of living dominate election campaigns in Australia and Singapore: 1) PM Wong's government is using cash handouts and welfare programs to address high living costs following the pandemic, as opposition parties gain ground; 2) In Australia, Soaring rents, high interest rates, and persistent inflation are key issues as PM Albanese seeks re-election, with both major parties pledging support for first-time home buyers amid a national housing shortage. 3) Both countries are seeing gradual political changes, with younger politicians rising to prominence in Singapore and the opposition gaining influence in Australia.