Weekly house view

Weekly house view | Farewell Warren

The CIO's view of the week ahead.

The week in review

Stock markets rose on the week, erasing their falls since ‘Liberation Day’ on 2 April thanks to better-than-expected earnings and a more conciliatory tone between the US and China. The Q1 reporting season in the US was marked by 62% of companies beating expectations. European results were less favourable due to foreign exchange impacts. Notably, a US tech giant warned that tariff-related costs could cost it USD 900 mn this quarter.

Moreover, widely revered investor Warren Buffett, announcing he will retire at the end of the year, is leaving his conglomerate with almost a third of its assets in cash after net sales of stocks over the past 10 quarters. Buffett also took aim at President Trump, saying "trade should not be a weapon”. Notably, the US merchandise-trade deficit widened to a record USD 162 bn in March, driven by companies importing goods to get ahead of tariffs.

The S&P 500i rose 2.9% on the week (in USD). The 10-year Treasury yield rose 5 bps to 4.31%. Safe-haven gold lost 2.4%. In oil markets, eight OPEC+ members, including Saudi Arabia and Russia, decided to increase supply by 411,000 barrels a day in June. WTI crude fell 8.7% on the week.

Politics

Trump finished 100 days in office with a 41% popularity rating and after issuing 137 executive orders in that time. The next most was Joe Biden, his predecessor, with 41. Incumbents won elections in Australia and Canada and local votes in the UK pointed to a three-way race in the next general election.

Key data

US Q1 real GDP contracted by 0.3% annualized, marking the first decline since Q1 2022, primarily due to a significant rise in imports and inventories. Non-farm payrolls rose by 177,000 in April (consensus: 138,000), although this came after a downwardly revised 185,000 gain in March (down from 228,000 in the first release), so overall broadly in line. The unemployment rate remained stable at 4.2%. The ISM manufacturing index fell to 48.7 in April, signaling contraction as businesses cited the impact of tariffs. Euro area Q1 GDP grew 0.4% quarter-on-quarter, more than expected. In China, the April NBS manufacturing PMI fell to 49 from 50.5, with new export orders dropping to their lowest level since the pandemic. The Bank of Japan halved its growth projection to 0.5% for this fiscal year.

i Source: Pictet WM AA&MR, Thomson Reuters.Past performance, S&P 500 Composite (net 12-month return in USD): 2020, 18.4%; 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%.
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