Global Equities Rally While Gold Slumps Amid Trade Truce and Economic Crosswinds
Global stock markets saw a broad-based rally on Friday, capping off a largely positive week for equities as a U.S.-China trade truce, upbeat corporate earnings, and falling bond yields spurred investor confidence. The Dow Jones Industrial Average climbed 0.78%, while European and Asian markets also closed higher. In contrast, gold prices tumbled, marking their biggest weekly loss since November, as safe-haven demand weakened.
Investors embraced a risk-on sentiment, cheering signals of improving trade relations and resilient earnings data across the U.S. and Europe. However, not all indicators were rosy. U.S. consumer sentiment fell in May, housing data disappointed, and inflation expectations ticked higher—highlighting the complex economic landscape that continues to shape market behavior.
📈 U.S. and Global Stock Markets Surge
Wall Street ended the week on a high note, driven by optimism surrounding global trade dynamics and corporate earnings.
- Dow Jones Industrial Average: +331.99 points (+0.78%) to 42,654.74
- S&P 500: +41.45 points (+0.70%) to 5,958.38
- Nasdaq Composite: +98.78 points (+0.52%) to 19,211.10
The MSCI All-Country World Index, a barometer of global equity performance, rose 0.5%, signaling broad investor confidence. Gains in European and Asian markets further confirmed the risk-on tone, with the STOXX 600 closing higher for a fifth straight week.
🌍 Europe and Asia Follow Wall Street’s Lead
- The pan-European STOXX 600 index finished up 0.4%, extending its win streak on the back of strong corporate earnings and reduced trade tensions.
- MSCI’s Asia-Pacific Index (ex-Japan) climbed over 3% this week, showing strong investor appetite for equities in emerging markets.
Strategists like Nabil Milali from Edmond de Rothschild emphasized that a trade truce between the U.S. and China has “significantly reduced the risk of a global recession” — a major factor boosting confidence in global equities.
💹 Corporate Earnings: A Surprise to the Upside
The earnings season continued to deliver upside surprises. According to LSEG data, Q1 results in Europe are now expected to beat previous estimates, a reversal from earlier pessimism.
This improving earnings backdrop supported the market rally and played a pivotal role in Europe’s sustained performance. Even sectors previously lagging, such as industrials and consumer goods, showed resilience.
🏦 Bonds Rally as Inflation and Housing Data Disappoint
Despite the equity market rally, there were signs of economic weakness under the surface:
- U.S. single-family housing starts dropped 2.1% in April.
- U.S. import prices rose unexpectedly, driven by higher capital goods costs.
- One-year inflation expectations surged in the University of Michigan consumer sentiment survey, indicating future price pressures.
- Consumer sentiment dipped again in May, highlighting growing concern over President Trump’s aggressive trade policy and its economic ramifications.
These factors pushed Treasury yields lower:
- The 10-year yield fell to 4.443%, extending Thursday’s drop, reflecting increased demand for bonds as a hedge against uncertainty.
📉 Gold Prices Post Biggest Weekly Drop Since November
While stocks rallied, gold suffered, with spot gold falling 1.38% on Friday to $3,195.16/oz, and U.S. gold futures down 1.2%.
The yellow metal’s decline marked its largest weekly loss since November, underscoring reduced safe-haven demand amid improving risk appetite.
Why Did Gold Fall?
- Improved market sentiment on trade reduced demand for gold.
- Rising real yields and expectations of Fed easing weighed on gold’s appeal.
- Stronger dollar added further downward pressure.
🛢️ Oil Futures See Weekly Gains Despite Volatility
Oil markets experienced a roller-coaster week:
- Brent crude closed up 1.4%, supported by the trade truce.
- However, mid-week losses of 2% were sparked by:
- Rising OPEC+ supply pressures.
- Hopes of a potential Iran nuclear deal, which could increase global oil supply.
Despite the gains, oil prices remain at relatively low levels, providing additional support for stocks and bonds.
💵 Currency Markets & Fed Expectations
- The U.S. Dollar Index edged higher, reflecting investor caution and slightly better-than-expected U.S. data.
- EUR/USD remained stable around 1.11.
- USD/JPY rose 0.19% to 145.94, tracking treasury yields.
Fed rate expectations shifted following soft U.S. core retail sales and a decline in producer prices. The market is now pricing in 57 basis points of rate cuts this year, up from 49 bps, as inflation concerns persist but growth remains fragile.
❓ Frequently Asked Questions (FAQs)
1. Why did global equities rise this week?
Equities rose due to a combination of positive corporate earnings, a temporary trade truce between the U.S. and China, and improved investor sentiment in Europe and Asia.
2. What caused gold prices to drop this week?
Gold fell due to reduced safe-haven demand, higher real yields, and expectations of future interest rate cuts. The rally in stocks also diverted capital away from gold.
3. How did the U.S. housing market perform in April?
U.S. single-family housing starts fell 2.1%, reflecting weakness caused by higher mortgage rates and the lingering effects of tariffs on building materials.
4. What were the key economic concerns this week?
Rising inflation expectations, weaker consumer sentiment, disappointing housing data, and uncertainty over trade policy were major concerns.
5. What is the outlook for oil prices?
Oil prices rose for the week but remain volatile. Factors include rising OPEC+ production, potential Iranian supply, and global demand concerns.
⚠️ Disclaimer
📌 The content in this article is provided for informational and educational purposes only and should not be considered financial advice or investment recommendations. Market conditions are subject to change, and all investments carry risk, including the loss of principal. Always consult with a licensed financial advisor before making any investment decisions. 💼📉
