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Barclays has revised its U.S. growth forecasts upward, now expecting a 0.5% increase this year and 1.6% next year, citing reduced U.S.-China trade tensions. The bank also adjusted its euro area growth outlook to flat for this year, though it anticipates a technical recession in the euro zone by late 2025, with ongoing uncertainty and stalled tariff negotiations with the U.S.
Barclays has revised its outlook, stating that a U.S. recession is no longer likely following a recent trade truce. This development suggests improved economic stability and potential growth prospects in the near future.
Barclays has revised its U.S. growth forecasts upward, now expecting a 0.5% increase this year and 1.6% next year, citing reduced U.S.-China trade tensions. The bank also adjusted its euro area growth outlook to flat for this year, though it anticipates a technical recession in the euro zone by late 2025, with ongoing uncertainty and stalled tariff negotiations with the U.S.
UBS's Lovell indicates that U.S. equity returns will be modest moving forward, with the market currently rangebound after a recovery since April. Concerns over inflation and economic growth persist, while utilities are highlighted as a strong sector due to their defensive characteristics and structural growth potential. Additionally, there is a renewed interest in global equities, particularly in China and select European industrials, as investors seek diversification amid changing market dynamics.
UBS warns that despite recent tariff pauses, the Trump administration is preparing for targeted increases in sectors like pharmaceuticals, semiconductors, and critical minerals. These strategic tariffs could raise the U.S. effective tariff rate significantly, contributing to ongoing economic uncertainty and market volatility.
Ongoing tariff uncertainty may lead to increased market volatility, despite a recent rebound in the S&P 500 index. The US effective tariff rate remains significantly elevated, and while some tariffs may be rolled back, the potential for new, strategic tariffs looms, raising concerns about inflation and economic growth. Investors are advised to consider capital preservation strategies amid these risks.
Deutsche Bank has reported a surprising 0.7% GDP growth in the UK for Q1 2025, driven by significant increases in business investment and exports. However, this growth may be short-lived due to escalating trade tensions, rising US tariffs, and potential declines in consumer spending, which could impact the economic outlook.
Wall Street has rebounded sharply since early April, with the Russell 2000 index rising 23.4% from its low, now facing resistance at 2150 points where profit-taking may increase. Future trade announcements will be crucial, while medium to long-term prospects remain positive despite potential economic risks. Entry for short positions is suggested at 2100 points, targeting 2000 points, with a stop at 2150 points, indicating a risk/reward ratio of 2.
Barclays has updated its forecast for a key junk-bond measure, attributing the revision to a cooling trade war. This adjustment reflects changing market conditions and investor sentiment in the wake of recent economic developments.
Deutsche Bank forecasts that U.S. equities will continue to outperform in the short term, driven by easing trade tensions and tariff cuts benefiting U.S. companies. However, analysts caution that tariffs will still pose a significant burden compared to European firms, and broader underperformance may linger until substantial tariff reductions occur.
Global Trade Developments
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