All eyes on US GDP coming up soon….
Tension is building in the markets are investors await the first estimate of how the US economy fared in January to March this year.
The official estimate of US GDP for Q1 2025 is due in just under 30 minutes (8.30am on the East coast of the US, or 1.30pm in the UK).
The data is expected to show a slowdown – or worse – across the US economy over the quarter. Estimates range from annualised growth of 1.7%, to an annualised contraction of 1.5%.
If GDP falls, then the US would be on the brink of a technical recession (defined as two quarters of negative growth in a row).
The US expanded by 2.4% per year in the final quarter of 2024.
There’s concern that a surge in imports in the last quarter could weigh on growth, after data yesterday showed the US trade in goods deficit widened sharply in March.
Analysts at French bank BNP Paribas have revised down their estimate for US Q1 real GDP growth to -0.6% quarter-on-quarter, from a previous forecast of +0.4%, “mainly due to March data showing a wider goods trade deficit”.
Key events
GSK ‘well-prepared’ for Trump tariffs
Joanna Partridge
British pharma company GSK said it was “well-prepared” for any possible tariffs imposed by Donald Trump on the pharma sector.
“As far as tariffs are concerned, we start from a position of strength,” GSK’s chief executive Emma Walmsley told reporters as the company announced its first quarter results.
Walmsley said:
“Obviously there’s still some fluidity here. We’re watching it very carefully, but we are well-prepared, have been working on that for some time, to navigate and mitigate.”
The pharma sector has been holding its breath in the face of threatened tariffs from the US. The sector has been largely exempt from duties under a 1995 World Trade Organization (WTO) agreement, designed to keep medicines affordable.
Walmsley made clear that the US was GSK’s “number one market” for investment as well as for “innovation commercially … where we invest in R&D … in manufacturing” and in business development.
She said GSK had “reset” its supply chain in 2022 when it separated its consumer healthcare business from the rest of the group to form Haleon, a separate listed company, rather than responding to the threat of tariffs.
She added:
“When we went through the demerger, there was an enormous amount of work to make very intentional, deliberate choices to reset our supply chain for regional resilience and dual sourcing and quite a bit of flexibility.”
GSK broke ground on its sixth factory in the US earlier this month, she said.
It came as the company reported a 4% rise in sales in the first three months of the year to £7.5bn, ignoring currency movements, and reconfirmed its guidance for the rest of the year.
All eyes on US GDP coming up soon….
Tension is building in the markets are investors await the first estimate of how the US economy fared in January to March this year.
The official estimate of US GDP for Q1 2025 is due in just under 30 minutes (8.30am on the East coast of the US, or 1.30pm in the UK).
The data is expected to show a slowdown – or worse – across the US economy over the quarter. Estimates range from annualised growth of 1.7%, to an annualised contraction of 1.5%.
If GDP falls, then the US would be on the brink of a technical recession (defined as two quarters of negative growth in a row).
The US expanded by 2.4% per year in the final quarter of 2024.
There’s concern that a surge in imports in the last quarter could weigh on growth, after data yesterday showed the US trade in goods deficit widened sharply in March.
Analysts at French bank BNP Paribas have revised down their estimate for US Q1 real GDP growth to -0.6% quarter-on-quarter, from a previous forecast of +0.4%, “mainly due to March data showing a wider goods trade deficit”.
Caterpillar has also flagged that tariffs could hurt its sales this year.
Reuters has the details:
The industrial giant gave investors two different scenarios for its annual forecast, in a sign of how difficult it was for companies to plan around U.S. President Donald Trump’s chaotic tariff policies.
Shares of Caterpillar rose 1.5% in premarket trading, after the company forecast an improvement over its prior expectations under a scenario that excluded tariff impact.
Including tariffs, Caterpillar said it expects annual sales and revenue to be slightly down from 2024, but in line with its prior expectations.
The company said it expects an additional tariff-related cost headwind of between $250 million and $350 million in its second quarter.
Moody’s Analytics fears that eurozone growth will all-but fizzle out in the second half of 2025.
Following the 0.4% rise in GDP in the first quarter, Kamil Kovar, associate director and senior economist at Moody’s Analytics,says:
“Today’s eurozone GDP numbers confirmed the region’s economy is in a relatively solid state as it enters choppy waters. Output rose 0.25% in the first quarter if we exclude volatile Irish data, and 0.35% when those are included.
Growth was likely driven by private consumption, while inventories also contributed to the increase, and net exports were a drag. The start of the tariff war in April will heavily weigh on economic activity. We expect a slowdown in the second quarter and almost no growth in the year’s second half.
Construction equipment maker Caterpillar has reported a sharp drop in sales in the last quarter.
Caterpillar, seen as a bellwether to the health of the global economy, has reported a 10% drop in sales and revenues for the first quarter of 2025 to $14.2bn.
The firm, which makes diggers, bulldozers and trucks, also missed profit expectations. It has blamed changes in dealer inventories, a sign that its customers cut back in anticipation of weaker demand.
Co-op forced to shut down part of IT system after hack attempt
Sarah Butler
The Co-op has been forced to shut down parts of its IT system after discovering an attempted hack only days after the fellow retailer Marks & Spencer faced a serious cyber incident.
In a letter to staff sent on Tuesday and seen by the Guardian, the mutual said it had “taken steps to keep systems safe” so had “pre-emptively withdrawn access to some systems for the moment”.
The group owns more than 2,000 grocery stores, and more than 800 funeral parlours as well as legal and financial services businesses.
It said the measures to protect its systems included the shutdown of some business services for teams running stores and its legal services division.
The Co-op said all its stores, including rapid home deliveries, and funeral homes were trading as usual.
Anxiety over the economic outlook is weighing on the oil price, at the end of its worst month in over three years.
US crude has dipped below the $60/barrel level for the first time since 11 April this morning, down almost 1% today.
Brent crude is down a similar amount, at $63.66/barrel.
So far this month, Brent and WTI have lost around 15% and 16%, respectively, the biggest percentage drops since November 2021.
Harry Woolman, analyst at Validus Risk Management, agrees that the eurozone economy benefitted from a jump in activity ahead of the new US tariffs:
“Eurozone Q1 GDP data – released this morning – came in above expectations at 0.4% quarter-on-quarter versus 0.2% forecasted. The release will lend some near-term relief to European policymakers, who have had to contend with heightened volatility on the back of tariff uncertainty.
Worth noting that this morning’s print also captures the period immediately prior to Donald Trump’s ‘Liberation Day’ on 2nd April, thus, the positive news has to be taken with a grain of salt. Likely, growth is being front loaded amid tariff headwinds, with consumers and importers bringing forward consumption ahead of the implementation of reciprocal levies.”
Recent cuts to eurozone interest rates helped the economy beat expectations in the last quarter, says Sam Miley, Managing Economist and Forecasting Lead at the Centre for Economics and Business Research.
“The Eurozone economy surpassed expectations in Q1, with growth accelerating to 0.4%. This expansion was likely supported by the European Central Bank’s ongoing monetary loosening, as well as exporters increasing activity prior to the implementation of tariffs from the US.
Despite the stronger performance in Q1, the outlook for the currency bloc remains weak, driven by geopolitical uncertainty and poor domestic demand conditions. Cebr projects the Eurozone economy to grow by just 0.8% this year, far below its long-term trend.”
Veteran emerging-markets investor Mark Mobius has revealed that most of his holdings are currently in case.
Mobius is keeping to the sidelines while trade war-related uncertainty rumbles on.
He told Bloomberg TV today:
“At this stage, cash is king. So 95% of my money in the funds are in cash.
Right now, we’ve got to keep the cash and be ready to move when the time is right.”
Veteran emerging-markets investor Mark Mobius has kept the bulk of his funds’ holdings in cash given that the trade-related uncertainty is likely to persist for up to six months https://t.co/AFairHvFpz
— Bloomberg (@business) April 30, 2025
Xi says China’s economy should adapt to external changes
Over in Shanghai, Chinese President Xi Jinping has called for action to adjust to changes in the international environment facing China – a nod to the US trade war.
Xi also urged policymakers to grasp strategic priorities and making sound plans for the country’s economic and social development, according to state-run news service Xinhua.
Xi made the remarks while chairing a symposium in Shanghai on economic and social development during the 15th five-year plan period from 2026 to 2030.
Xinhua reported:
The remarks came as China revs up efforts to fulfill the targets set in the 14th Five-Year Plan (2021-2025) in the final year of its implementation and to formulate the next five-year plan.
Eurozone growth rises to 0.4%
Newsflash: growth has accelerated across the eurozone in the first quarter of this year.
Eurozone GDP rose by 0.4% in the January-March quarter, twice as fast as the 0.2% growth recorded in October-December.
Statistics body Eurostat reports that Ireland (+3.2%) recorded the highest increase compared to the previous quarter – that was flattered by the activity of multinationals based in the republic for tax reasons, followed Spain and Lithuania (both +0.6%).
Hungary (-0.2%) was the only Member State that recorded a decrease compared to the previous quarter.
Taiwan’s GDP boosted by pre-tariff surge in exports
Growth has surged in Taiwan, thanks to a scramble to buy its technology exports before new US tariffs came in.
Taiwan’s GDP rose at an annualised rate of 9.67% in the first three months of this year, which indicates quarterly growth of almost 2.5%.
Compared to a year ago, gross domestic product grew by 5.37%, the fastest rate since the first quarter of 2024.
The GDP report says:
Due to the strong demand for electronic information and communication products, real exports of goods and services grew by 20.11% (yoy). Imports also grew by 23.66% (yoy).
Taiwan is a major producer of semiconductors, and has benefitted from the jump in demand for high-powered chips to support artificial intelligence systems.
German economy returns to growth
Germany has followed France’s lead, and returned to growth.
The German economy grew by 0.2% in the first quarter of the year, new data shows, following a 0.2% contraction in the last three months of 2024.
Germany’s Federal Statistical Office, Destatis, also reports that household final consumption expenditure and capital formation were both higher than in the previous quarter.
However, Destatis also reports that GDP in the first quarter of 2025 was 0.4% lower than a year ago.
Here’s the details:
Gross domestic product (GDP), 1st quarter of 2025:
-
0.2% on the previous quarter (price, seasonally and calendar adjusted)
-
-0.4% on the same quarter a year earlier (price adjusted)
-
-0.2% on the same quarter a year earlier (price and calendar adjusted)
Italy beats forecasts with 0.3% growth
The Italian economy grew by 0.3% in the first quarter from the previous three months, preliminary data shows.
That’s slightly stronger than the 0.2% growth expected by economists.
On a year-on-year basis, first quarter gross domestic product in the euro zone’s third largest economy was up 0.6%, national statistics bureau ISTAT said.
ISTAT reports that agriculture, forestry and fishing and industry all grew, while services stagnated.
As in France, inventory building added to GDP while trade made a negative contribution.
Thailand cuts interest rates in face of trade war
Thailand’s central bank has cut interest rates, in a sign of concern that the US trade was could hurt its economy.
The Bank of Thailand’s monetary policy committee voted 5-2 to reduce the one-day repurchase rate by a quarter of one percentage point, to 1.75%, the lowest level in two years.
The central bank warned that the Thai economy is projected to expand at a slower pace than anticipated, with more downside risks due to uncertainty in major economies’ trade policies and a decline in the number of tourists.
Announcing today’s decision, it explained:
The U.S. trade policies and potential retaliations from major economies will cause significant changes in the global economic, financial, and trade landscape. This process is only beginning and subject to high uncertainties, with the global economy likely to grow at a slower pace.
The situation is expected to be prolonged, leading to structural changes and lower efficiency in global trade and production. The unpredictable nature of future global trade policies of major economies continues to pose significant challenges in assessing the economic and inflation outlook going forward.
Aston Martin limits imports to US due to Trump tariffs
Joanna Partridge
The British sportscar maker Aston Martin is limiting imports to the US in the face of Donald Trump’s tariffs.
Aston Martin, known for producing the cars driven by James Bond in the spy films, said it was “currently limiting imports to the US while leveraging the stock held by our US dealers”.
The US is the key market for the lossmaking carmaker, which generated about a third of its £1.6bn revenue for 2024 in the country. It said on Wednesday it was “carefully monitoring the evolving US tariff situation” and would “respond to changes in the operating environment as they materialise”.
Fellow carmakers Stellantis and Mercedes have withdrawn their financial guidance for the year this morning, blaming the uncertainty around changing US policy on import levies.
Barclays bank has set aside more cash for bad debts due to worries over the US economy and a mounting global trade war.
Its latest financial results show that Barclays has increased its provisions for loans expected to turn sour to £643m, up from £513m. This was largely due to £74m put by for “elevated US macroeconomic uncertainty”.
Barclays says:
The Group continues to monitor the heightened uncertainty in the near-term macroeconomic outlook, especially in the US.
The bank also reported a 19% rise in pre-tax profits to £2.72bn for the three months to March 31.
Finland’s economy has managed modest growth in the last quarter.
Gross domestic product in Finland rose by 0.1% in January to March from the previous quarter, the country’s statistics office reported this morning.
