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- Equities: Equity markets continue upward trend, supported by resilient labour market and corporate earnings
- Credit: Speculation over a radical US debt restructuring plan has resurfaced; even as the likelihood of implementation remains low, bond investors should stay anchored in a credit duration barbell strategy
- FX: Ongoing improvements in market sentiment may help extend the USD rally, though a sustainable recovery in the USD to prior peaks is unlikely, given recent US data weakness and lingering tariff concerns
- Rates: Combination of rate cuts and increased fiscal support is likely to lead to steeper yield curves across DMs and Asia with Japan remaining an exception
- The Week Ahead: Keep a lookout for US Change in FOMC Rate Decision; China CPI
Related Insights
US equity rally facing crossroads: Labour market strength vs tariff-driven earnings headwinds. US equities posted their ninth consecutive day of gains, driven by a more optimistic macroeconomic outlook and optimism around US-China trade negotiations. The April payrolls report showed job growth of 177k, slightly below prior months, though still indicating resilience in the labour market with the unemployment rate holding steady at 4.2%. This has led to market expectations of a less aggressive rate hike trajectory, while the Federal Reserve is expected to maintain interest rates at current levels this week. On the trade policy front, while some progress in negotiations with China was noted, the ongoing tariff uncertainty remains a significant risk, particularly for sectors exposed to trade policies. More concrete progress is likely needed for sustained gains in markets and the broader economy.
Earnings from Meta and Microsoft fuelled strong momentum in the tech sector with continued capital expenditure growth in AI reinforcing investor confidence in the sector’s resilience. Looking forward, while earnings remain robust, cautious guidance from some sectors, along with lingering macro uncertainties, may continue to induce volatility in the short term.
Topic in focus: Global tech – Secular AI investment anchors constructive Big Tech outlook despite near-term uncertainty. After bottoming on 4 Apr amid reciprocal tariff concerns, Big Tech rebounded 22% in less than a month, fuelled by delayed tariff enforcement and broad-based earnings strength which eased market fears of a protracted trade disruption. As of 1 May, over half of technology companies have reported—with 91% beating earnings expectations—well above the 76% surprise rate across the S&P 500. Big Tech stood out with a 100% beat rate and 29% y/y earnings growth. However, several major firms withheld forward guidance, citing ongoing geopolitical tensions, regulatory uncertainty, and limited visibility around consumer demand and potential supply chain normalisation.
Despite macro headwinds, the long-term outlook for global tech remains highly compelling, powered by sustained AI-driven investment. Leading hyperscalers Microsoft, Amazon, and Alphabet have all reaffirmed their robust capital expenditure plans for 2025—collectively exceeding USD250bn. Notably, Meta has raised its 2025 capex guidance to USD68bn, underscoring its deepening commitment to AI initiatives. Nvidia is also preparing a USD500bn investment in onshore AI infrastructure, while the Middle East has pledged over USD100bn for the remainder of the decade to accelerate its AI capabilities. These long-term capital commitments—spanning East to West—signal that AI development is a broad-based, multi-year structural tailwind for the comprehensive technology ecosystem. In the broader technology universe, we recommend maintaining diversification across key verticals and regions—anchored by the robust CIO I.D.E.A. framework—and staying focused on trendsetters and price makers with proven profit resilience.
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