Tech Rally Extends Gains as Alphabet Surges, While Tariff and Trade Headlines Stir Markets | Weekly Market Analysis

Key events this week:

Tuesday, April 29, 2025

• USA - CB Consumer Confidence (Apr)
• USA - JOLTS Job Openings (Mar)

Wednesday, April 30, 2025

• China - Manufacturing PMI (Apr)
• USA - ADP Nonfarm Employment Change (Apr)
• USA - GDP (QoQ) (Q1)
• USA - Chicago PMI (Apr)
• USA - Core PCE Price Index (MoM) (Mar)
• USA - Core PCE Price Index (YoY) (Mar)
• USA - Crude Oil Inventories

Thursday, May 1, 2025

• Japan - BoJ Interest Rate Decision
• USA - Initial Jobless Claims
• USA - S&P Global Manufacturing PMI (Apr)
• USA - ISM Manufacturing PMI (Apr)
• USA - ISM Manufacturing Prices (Apr)

Friday, May 2, 2025

• Eurozone - CPI (YoY) (Apr)
• USA - Average Hourly Earnings (MoM) (Apr)
• USA - Nonfarm Payrolls (Apr)
• USA - Unemployment Rate (Apr)

The S&P 500 closed out the week on a strong note, buoyed by robust earnings from Alphabet that reignited enthusiasm around artificial intelligence. The benchmark index gained 0.7% on Friday, locking in a weekly advance of over 4%, while the tech-heavy Nasdaq Composite jumped 1.3%, and the Dow Jones Industrial Average edged higher by 0.1%.

Alphabet's better-than-anticipated first-quarter earnings and the announcement of a massive $70 billion stock buyback pushed its shares up more than 1%, adding fuel to the broader tech rally. Investors were further encouraged by the company's renewed commitment to its artificial intelligence initiatives, reinforcing expectations for continued demand for AI-related chips and data center infrastructure.

However, Alphabet's momentum faced a slight drag as legal uncertainties resurfaced. Fresh court filings revealed that a federal judge had scheduled a hearing for early May to weigh potential remedies in the Department of Justice’s antitrust case, which accuses Alphabet of maintaining illegal monopolies within the ad-tech sector. Despite this cloud, optimism surrounding the tech sector’s growth prospects remained intact, driving broader gains across the market.

Enthusiasm cooled somewhat later in the day following comments from US President Donald Trump, whose interview with Time magazine unsettled risk sentiment. Trump suggested he would view the imposition of tariffs between 20% and 50% on foreign goods as a "total victory," raising fears of renewed trade tensions. Hopes had been building earlier in the week that US-China trade relations might be moving towards a thaw, providing a lift to equities and other risk assets. Reports that Beijing was considering exemptions for certain US goods from its retaliatory tariffs had bolstered this narrative. According to Reuters, a task force within China’s Ministry of Commerce is gathering input from businesses to compile a list of products that could be spared, a move interpreted as a gesture toward easing tensions.

While optimism around trade developments supported markets midweek, caution returned as mixed signals emerged. This uncertainty helped stabilize safe-haven demand for the Japanese yen, which saw buyers stepping in during the Asian session on Monday. The yen's nearly week-long decline against the US dollar paused, reflecting investor hesitance as hopes for a swift resolution to the US-China dispute dimmed. Additionally, speculation that Japan and the United States are nearing a trade agreement helped underpin the yen.

Yet expectations for a near-term interest rate hike from the Bank of Japan have been tempered by concerns that elevated US tariffs could weigh on global growth. Still, signs of broadening inflationary pressures in Japan leave the door open for further BoJ policy tightening later in 2025.

In commodities, gold prices started the new week under pressure, falling toward the $3,267 level during the Asian session. A notable decline in China’s gold consumption during the first quarter of 2025 was cited as a key factor behind the easing demand for the traditional safe-haven asset. Meanwhile, the US dollar struggled to extend its recent recovery from multi-year lows, despite having notched its first weekly gain since March. Prospects for future Federal Reserve rate cuts and ongoing geopolitical tensions could offer some support to gold in the near term, helping to cushion the downside.

Apart from that, the New Zealand dollar faced renewed pressure, with the NZD/USD pair retreating to around 0.5950 during Asian hours. Fresh demand for the greenback weighed on the kiwi, even as some signs of easing global trade frictions emerged. Traders were closely watching a press conference in China, where officials outlined a range of policy initiatives designed to stabilize the economy in the face of US tariffs. Chinese authorities reiterated plans to step up debt issuance, loosen monetary policy, and roll out new support measures for businesses and workers affected by trade tensions. The announcement included promises of additional economic stimulus to be unveiled during the second quarter, which could offer some tailwinds for currencies tied closely to China’s economic performance, such as the New Zealand dollar.

Nonetheless, expectations that the Reserve Bank of New Zealand will cut rates soon continue to weigh on sentiment. Markets are fully pricing in a 25-basis-point cut in May, with the official cash rate projected to fall from 3.5% to 2.75% by the end of the year. These dovish forecasts have kept the kiwi on the defensive, even amid efforts by China to boost economic growth.

Meanwhile, the US dollar continued to gain against its Canadian counterpart, with the USD/CAD pair hovering near 1.3880 during early Monday trading. The greenback’s strength, combined with falling oil prices, has placed additional pressure on the Canadian dollar. West Texas Intermediate crude prices extended their decline, undermined by progress in US-Iran nuclear negotiations that could bring additional Iranian crude supplies to the market. The hope that OPEC+ might expand output for a second consecutive month also weighed on the commodity, amplifying headwinds for oil-linked currencies like the loonie.

Looking ahead, investors will turn their attention to a series of crucial US economic reports that could shape the Federal Reserve’s next moves. Tuesday brings the Job Openings and Labor Turnover Survey (JOLTS), offering insights into labor market dynamics. On Wednesday, the spotlight shifts to Personal Consumption Expenditures (PCE) data  -  the Fed’s preferred inflation gauge. Finally, Friday’s release of the nonfarm payrolls report will likely provide further clues about the health of the labor market and the broader economy. Together, these data points could have significant implications for monetary policy expectations and broader market sentiment, particularly across equities, commodities, and currency markets.